SARATOGO HOLDINGS I INC, SB-2, 1998-12-01

SARATOGO HOLDINGS I INC
SB-2, 1998-12-01

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As filed with the Securities and Exchange Commission on ________, 1998

Commission File Number 33-________

SECURITIES AND EXCHANGE COMMISSION
450 FIFTH STREET N.W.
WASHINGTON, D.C. 20549

FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

SARATOGA HOLDINGS I, INC.
(Exact name of Registrant as specified in charter)

TEXAS 74-2896910
(State of incorporation) (Primary Standard Industrial (IRS Employer
Classification Code Number) Identification No.)

301 Congress Avenue, Suite 1550
Austin, Texas 78701
(512) 478-5717

(Address and telephone number of principal executive offices and
principal place of business or intended principal place of business)

Thomas F. Cooke
301 Congress Avenue, Suite 1550
Austin, Texas 78701
(512) 478-5717
(Name, address and telephone number or agent for service)

Please send copies of all communications to:
J. Rowland Cook
Jenkens & Gilchrist, A Professional Corporation
2200 One American Center
600 Congress Avenue
Austin, Texas 78701
(512) 499-3814

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: AS SOON AS PRACTICABLE
AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Securities Act"), please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]

<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED PER SHARE.* OFFERING PRICE REGISTRATION FEE

Shares of Common Stock 100,000 $0.003 $ 300.00 $0.0834
Outstanding Common Stock 3,465,292 $0.003 $10,395.88** $2.89
================================================== =========== ============== ============ ================
Total 3,565,292 $10,695.88** $2.97
================================================== =========== ============== ============ ================
</TABLE>

* Arbitrary price as no trading market is contemplated.
** Calculated only for purposes of calculating the Registration Fee.

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 determined.

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[OUTSIDE FRONT COVER PAGE]

PRELIMINARY PROSPECTUS DATED _________, 1998,
SUBJECT TO COMPLETION

SARATOGA HOLDINGS I, INC.

3,565,292 SHARES OF COMMON STOCK

Saratoga Resources, Inc., a Delaware corporation ("Saratoga"), proposes
to spin off its wholly-owned subsidiary, Saratoga Holdings I, Inc., a Texas
corporation (the "Company"), by distributing 3,465,292 shares of the Common
Stock (the "Dividend Shares") of the Company, as a dividend to all holders of
record of Saratoga stock on ____________ , 1998. On or about ___________, 1998
(or as soon thereafter as practicable), Saratoga will distribute one Dividend
Share for each share of Saratoga Common Stock. The Dividend Shares, which
represent approximately 92% of the issued and outstanding capital stock of the
Company. The Saratoga shareholders will not be charged or assessed for the
Dividend Shares and neither the Company nor Saratoga will receive any proceeds
from the offering of the Dividend Shares.

With respect to Saratoga shareholders residing in states in which the
state securities laws do not permit a readily available exemption for the
transfer of the Dividend Shares, Saratoga reserves the right to issue cash in
lieu of Dividend Shares, at a price of $.003 per share.

In addition, the Company proposes to sell 100,000 shares of its common
stock, $0.001 par value per share (the "Common Stock"), to the public at a price
of $0.003 per share (the "Shares"). The Company is selling the Shares in an
effort to satisfy one of the listing requirements of Nasdaq and certain
exchanges. The Shares will be sold on a best efforts basis by the Company for a
45 day period. The minimum purchase requirement per new investor is 350 Shares
at an aggregate purchase price of $1.05. The Company does not intend to place
any money received from the sale of the Shares into any escrow, trust or similar
account.

Neither the Nasdaq Stock Market nor any national securities exchange
lists the Common Stock.

Prior to this offering, there has been no public market for the Common
Stock. There can be no assurance that a market for such securities will develop.
While the Company is selling the Shares in an effort to satisfy one of the many
listing requirements of Nasdaq and certain exchanges, there are many other
listing requirements which the Company does not satisfy and may not be able to
satisfy in the foreseeable future.

------------------

WE URGE YOU TO READ THIS PROSPECTUS CAREFULLY SINCE IT CONTAINS
INFORMATION THAT IS IMPORTANT TO YOU. ALSO, PAY PARTICULAR ATTENTION TO THE
"RISK FACTORS" BEGINNING ON PAGE 6.
------------------

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORS HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
PROCEEDS TO
PRICE TO UNDERWRITING DISCOUNTS THE COMPANY
THE PUBLIC AND COMMISSIONS(1) OR OTHER PERSONS
---------- ------------------ ----------------

Per Share $0.003 $0.00 $ 0.003
Per Dividend Share $0.000 $0.00 $ 0.000
TOTAL - - - $0.00 $300.000

(1) No underwriters are involved or are expected to be involved in the offer
or sale of the Shares or the Dividend Shares. The Shares are offered by
the officers, directors and employees of the Company on a best efforts
basis. The Dividend Shares are being distributed by Saratoga as a
dividend in exchange for no consideration. No selling commissions will
be paid to the officers, directors or employees of the Company for
Shares sold by them. See "Plan of Distribution."

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 this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

THE COMPANY HAS NOT APPLIED TO REGISTER THE SHARES IN ANY STATE. AN
EXEMPTION FROM REGISTRATION WILL BE RELIED UPON IN THE STATES WHERE SHARES ARE
SOLD AND THE SHARES MAY ONLY BE TRADED IN SUCH JURISDICTIONS AFTER COMPLIANCE
WITH APPLICABLE SECURITIES LAWS. THERE CAN BE NO ASSURANCES THAT THE SHARES WILL
BE ELIGIBLE FOR SALE OR RESALE IN SUCH JURISDICTIONS. THE COMPANY MAY APPLY TO
REGISTER THE SHARES IN SEVERAL STATES FOR OFFER HEREUNDER OR FOR SECONDARY
TRADING, HOWEVER IT IS UNDER NO REQUIREMENT TO DO SO. RATHER, THE COMPANY
RETAINS THE OPTION AND ANTICIPATES THAT IT WILL PAY THE DIVIDEND IN CASH RATHER
THAN IN DIVIDEND SHARES TO HOLDERS OF SARATOGA COMMON STOCK THAT RESIDE IN
STATES WHICH DO NOT PROVIDE FOR AN EXEMPTION FROM STATE REGISTRATION FOR THIS
OFFERING.

THE SHARES ARE BEING OFFERED BY THE COMPANY SUBJECT TO PRIOR SALE WHEN,
AS AND IF DELIVERED TO AND ACCEPTED BY THE COMPANY, AND SUBJECT TO APPROVAL OF
CERTAIN LEGAL MATTERS BY COUNSEL AND CERTAIN OTHER CONDITIONS. THE COMPANY
RESERVES THE RIGHT TO WITHDRAW, CANCEL OR MODIFY THIS OFFERING AND TO REJECT ANY
ORDER IN WHOLE OR IN PART.

The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement field with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED NOVEMBER __, 1998
<PAGE>
[INSIDE FRONT OR OUTSIDE BACK COVER PAGE]

PROSPECTUS

TABLE OF CONTENTS
PAGE
----

PROSPECTUS SUMMARY INFORMATION...........................................5

THE COMPANY..............................................................5

THE OFFERING.............................................................5

FORWARD LOOKING INFORMATION..............................................5

WHERE YOU CAN GET MORE INFORMATION.......................................6

RISK FACTORS.............................................................6

THE COMPANY.............................................................10

INFORMATION CONCERNING SARATOGA ........................................11

USE OF PROCEEDS.........................................................11

FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION.....................11
Federal Income Tax Consequences to Shareholders.................12

DETERMINATION OF OFFERING PRICE.........................................13

PLAN OF DISTRIBUTION....................................................13
Introduction....................................................13
Method of Distribution and Subsequent Trading...................14

DIVIDENDS...............................................................14

CAPITALIZATION..........................................................14

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION..............................16
Liquidity.......................................................16

THE BUSINESS...........................................................16
Research and Development Activities.............................17
Compliance with Environmental Laws..............................17
Competition.....................................................17
Customers and Suppliers.........................................17
Government Regulation...........................................17

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Employees.......................................................17
Properties......................................................18

MANAGEMENT..............................................................18
Directors and Executive Officers................................18
Compensation of Directors and Executive Officers................18

PRINCIPAL SHAREHOLDERS..................................................19

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..........................20

DESCRIPTION OF SECURITIES...............................................20
Common Stock....................................................20
Preferred Stock.................................................21
Anti-Takeover Provisions........................................21
Indemnification of Officers and Directors; Limitation of
Director Liability.............................................21

SHARES ELIGIBLE FOR FUTURE SALE.........................................22

REPORTS TO SHAREHOLDERS.................................................23

TRANSFER AGENT..........................................................23

LEGAL MATTERS...........................................................23

EXPERTS ................................................................23

AVAILABLE INFORMATION...................................................25

INDEX TO FINANCIAL STATEMENTS..........................................F-1

INDEPENDENT AUDITOR'S REPORT...........................................F-2

BALANCE SHEET..........................................................F-3

NOTES TO FINANCIAL STATEMENTS..........................................F-4

Dealer Prospectus Deliver Obligation

Until ___________, 1999, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.

---------------------

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<PAGE>
PROSPECTUS SUMMARY INFORMATION

Please read all of this Prospectus carefully. It describes our company,
finances and products. Federal and state securities laws require that we include
in this Prospectus all important information that investors will need to make an
investment decision. You should rely only on the information contained in this
Prospectus to make your investment decision. We have not authorized anyone to
provide you with information that is different from what is contained in this
Prospectus. The following is a summary of certain information (including
financial statements and notes thereto) contained in this Prospectus and is
qualified in its entirety by the more detailed information appearing elsewhere
herein.

THE COMPANY

Saratoga Holdings I, Inc., a Texas corporation (the "Company"), was
incorporated under the laws of the State of Texas on October 29, 1998 by
Saratoga, with a view toward the sale of the Shares and the distribution of the
Dividend Shares to which this Prospectus relates. The Company is in the business
of purchasing portfolios of accounts receivable at a discount and of collecting
such receivables or reselling them in the same or in differently configured
portfolios. With respect to its first such portfolio acquired in November, 1998,
the Company has retained a third party to collect its accounts receivable in
exchange for a 30% commission. The Company had no predecessors and had no
history prior to its date of organization. Since the date of its incorporation
the Company has conducted minimal business activity other than organizational
activities. The Company's present address is c/o Saratoga Resources, Inc., 301
Congress Avenue, Suite 1550, Austin, Texas 78701, telephone: (512) 478-5717.

THE OFFERING

Type of Security Offered Common Stock, $0.001 par value per
share

Number of Outstanding Shares 3,766,667 shares

Common Stock Offered For Cash 100,000 shares

Common Stock Offered as Dividend Shares 3,465,292 shares(1)

Common Stock Outstanding After Offering 3,866,667 shares(1)
- -----------------------------------

(1) The Company may pay the dividend in cash instead of shares of common
stock in any state which does not exempt the transfer of the Dividend
Shares.

FORWARD LOOKING INFORMATION

Some of the statements contained in this prospectus, including
information incorporated by reference, discuss future expectations, contain
projections of results of operation or financial condition or include other
"forward-looking information." Those statement are subject to known and unknown
risks, uncertainties and other factors that could cause the actual results to
differ materially from those contemplated by the statements. The forward looking
information is based on various factors and

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<PAGE>
assumptions. Important factors that may cause actual results to differ from
projections include, for example,

o the success or failure of our efforts to implement our business
strategy

o our ability to collect or resell the Receivables on favorable
terms

o our ability to purchase additional portfolios of past due
accounts receivable

o the effect of changing economic conditions

o our ability to attract and retain quality employees

o other risks which may be described in our future filings with the
SEC, however we do not promise to update forward-looking
information to reflect actual results or changes in assumptions
or other factors that could affect forward looking statements

WHERE YOU CAN GET MORE INFORMATION

At your request, we will provide you, without charge, a copy of any
information incorporated by reference in this prospectus. If you want more
information, write or call us at:

Saratoga Holdings I, Inc.
c/o Saratoga Resources, Inc.,
301 Congress Avenue, Suite 1550
Austin, Texas 78701
Telephone: (512) 478-5717

Our fiscal year ends on December 31. We intend to furnish our
shareholders annual reports containing audited financial statements and other
appropriate reports. In addition, we intend to become a reporting company and
file annual, quarterly and current reports, proxy statement or other information
with the SEC. You may read and copy any reports, statements or other information
we file at the SEC's public reference room in Washington D.C. You can request
copies of these documents, upon payment of a duplicating fee by writing to the
SEC. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference rooms. Our SEC filings are also available to
the public on the SEC Internet site at http\\www.sec.gov.

RISK FACTORS

The Common Stock of the Company should be considered an investment
involving a high degree of risk. Factors which holders and prospective
purchasers of Common Stock should weigh carefully include the following:

Lack of Operating History. The Company was organized in October 1998. On
November 12, 1998, it entered into a Purchase and
Sale Agreement pursuant to which it acquired 149
accounts receivable with a total face value of
$223,907.05 (the "Receivables") in exchange for
$10,299.72. The Receivables were

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<PAGE>
purchased without recourse or any representation
as to the character, accuracy or sufficiency of
the information provided to the Company by the
seller of the Receivables (the "Seller"). In
addition, the Company entered into a Service
Agreement pursuant to which the Company shall
transfer the Receivables to a third party (the
"Agent") for collection. The Service Agreement
provides that the Agent shall use reasonable
efforts to collect the Receivables and authorizes
the Agent to settle any of the Receivables
transferred to the Agent for 50% or more of the
outstanding balance. In exchange for the services
provided under the Service Agreement, the Agent is
entitled to retain a commission in the amount of
30% of the amount collected.

Conflicts of Interest. Randall Johnson, the President of the Company, is
a shareholder, officer and director of both the
Seller and the Agent. The Company may purchase
additional receivables from the Seller.

Potential Liquidity Problems.If our shares are not listed or
qualified for trading on an established market,
trading, if any, would be conducted in the
over-the-counter market in the so-called "pink
sheets" or the OTC Bulletin Board, which was
established for securities that do not meet the
Nasdaq SmallCap Market(SM) listing requirements.
Consequently, selling our shares would be more
difficult because smaller quantities of shares
could be bought and sold, transactions could be
delayed, and coverage of the Company would be
reduced or nonexistent. These factors could result
in lower prices and larger spreads in the bid and
ask prices for our shares. See "Description of
Securities."

Risks of Low Priced Shares. If our shares are not listed on The Nasdaq
SmallCap Market(SM) and/or any stock exchange,
they may become subject to Rule 15g-9 under the
Securities Exchange Act. That rule imposes
additional sales practice requirements on
broker-dealers that sell low-priced securities to
persons other than established customers and
institutional accredited investors. For
transactions covered by this rule, a broker-dealer
must make a special suitability determination for
the purchaser and have received the purchaser's
written consent to the transaction prior to sale.
Consequently, the rule may affect the ability of
broker-dealers to sell our shares and may affect
the ability of holders to sell the Common Stock in
the secondary market. See "Description of
Securities."

Penny Stock Regulations. The SEC's regulations define a "penny stock" to be
any equity security that has a market price less
than $5.00 per share or with an exercise price of
less than $5.00 per share, subject to certain
exceptions. The penny stock rules require a
broker-dealer to deliver a standardized risk
disclosure document prepared by the SEC, to
provide the customer with current bid and offer
quotations for the penny stock, the compensation
of the broker-dealer and its salesperson in the
transaction, monthly account statements showing
the market value of each penny stock held in the
customers's account, to make a special written
determination that the penny stock is suitable
investment for the purchaser and receive the

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purchaser's written agreement to the transaction.
These disclosure requirements may have the effect
of reducing the level of trading activity in the
secondary market for a stock that becomes subject
to the penny stock rules. As the Company's
securities will be subject to the penny stock
rules, investors in this offering may find it more
difficult to sell their securities. If the
Company's securities were subject to the existing
or proposed regulations on penny stocks, the
market liquidity for the Company's securities
could be severely and adversely affected by
limiting the ability of broker/dealers to sell the
Company's securities and the ability of purchasers
in this offering to sell their securities in the
secondary market.

No Dividends. We intend to retain any future earnings to fund
the operation and expansion of our business. We do
not anticipate paying cash dividends on our shares
in the foreseeable future. See "Description of
Securities -- Common Stock" and "Dividend Policy."

We Cannot Predict the We are unable to predict the effect that sales
Effect of Resales. made under Rule 144, or other sales may have on
the then prevailing market price of the Company's
Common Stock. It is likely that market sales of
large amounts of these or other shares of the
Company after this offering (or the potential for
those sales even if they do not actually occur),
will have the effect of depressing the market
price of the Common Stock. See "Description of
Securities -- Shares Eligible for Future Sale."

Limited Insurance. We currently do not carry any general liability
insurance, but instead rely on general liability
insurance carried by the Agent. If we suffered a
liability beyond the limits of or outside the
scope of the Agent's insurance coverage, it could
have an adverse effect on our business. The
Company anticipates that it will acquire general
liability insurance if at any time it undertakes
activities not covered by the Agent's insurance.

Control by Inside Shareholder. Giving effect to the sale
of the Shares and the distribution of the Dividend
Shares, Thomas F. Cooke, the sole director, chief
executive officer and secretary of the Company,
will be the owner of approximately 57% of the
Company's Common Stock and will also control an
additional 301,375 shares held by Saratoga and
150,000 shares held by its wholly-owned
subsidiaries. Control of the Company's policies
and proceedings will therefore rest with Mr. Cooke
individually and as the sole director of the
Company.

Management Inexperience. Mr. Johnson is the sole employee of the Company
who has any experience with respect to the
business engaged in by the Company. The loss of
the services of Mr. Johnson or other members of
its senior management could have a materially
adverse effect on the Company. In addition, the
Company may be forced to rely on consultants or
outside advisors. There are no contracts or
agreements or any proposal, with consultants or
advisors and the Company has extremely limited
funds to pay any consultants. Further, management
will not be attending to the Company's

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affairs on a full time basis. It is estimated that
management will devote approximately one-third of
its time to affairs of the Company.

Competition. The accounts receivable management industry is
highly competitive. The Company competes with
large national corporations in addition to many
regional and local firms. Some of the Company's
competitors have substantially greater resources,
offer more diversified services and operate in
broader geographic areas than the Company. In
addition, the accounts receivable management
services offered by the Company, in many
instances, are performed in-house. Moreover, many
larger clients retain multiple accounts receivable
management providers which exposes the Company to
continuous competition in order to remain a
preferred vendor. See "Competition."

Year 2000. If the Company's clients or significant
suppliers and contractors do not successfully
achieve year 2000 compliance, the Company's
business and results of operations could be
adversely affected, resulting from, among other
things, the Company's inability to properly
exchange and/or receive data.

Potential Insufficiency The Company had initial assets totaling $11,300,
of Capital. of which approximately $10,300 was spent to
acquire the Receivables. The Company presently has
no credit facilities or identifiable sources of
additional capital. The Dividend Shares represent
approximately 92% of the issued and outstanding
capital stock of the Company. Although Thomas F.
Cooke will control the management of both Saratoga
and the Company immediately after the dividend
distribution, he has advised both companies that
he plans to treat the two companies as separate,
independent entities except that Saratoga has
agreed to make advances of up to $20,000 on behalf
of the Company for registration and distribution
costs and for legal fees and other similar
expenses, which advances may be reimbursed by the
Company if it becomes profitable. There are no
assurances that additional capital would be
available or, if available, could be obtained
without the issuance of additional equity
securities with resultant dilution in the equity
of the holders of Common Stock, or that financing
could be arranged, if at all, on terms favorable
to the Company.

Absence of Trading Market There is currently no market for trading of the
Company's Common Stock for the Company's
Securities.currently and no assurance that a
market will ever develop or, if established, will
be maintained. The Company's Common Stock does not
now, and may never, qualify for listing on a
securities exchange. In the absence of an
over-the-counter market in the Company's Common
Stock, or listing on an exchange, holders of the
Common Stock will be unable to sell their Shares
through normal brokerage channels and may be
unable to determine the value of their securities
accurately. The Company has not had any
discussions with any market makers regarding
participation as a market maker for the Company's
securities.

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Restrictions on Sales of the Persons who are deemed "affiliates" of the Company
Company's Common Stock. under the rules and regulations of the Securities
Exchange Commission may not sell shares of the
Company's Common Stock they receive upon
distribution of the dividend unless their Shares
are sold in compliance with Rule 144 under the Act
or another exemption from registration. To the
knowledge of Saratoga and the Company, there is no
shareholder other than Mr. Cooke and Mr. Kevin
Smith, a director of Saratoga, who may be deemed
an affiliate of the Company by virtue of their
ownership of in excess of 5% of Saratoga. See
"Management" and "Principal Shareholders."

Regulatory Matters. The accounts receivable industry is regulated
under various federal and state statutes. In
particular, the federal Fair Debt Collection
Practices Act (the "FDCPA") establishes specific
guidelines and procedures which debt collectors
must follow in communicating with consumer
debtors, including the time, place and manner of
such communications. The Company is also subject
to the Fair Credit Reporting Act which regulates
the consumer credit reporting industry and which
may impose liability on the Company to the extent
that the adverse credit information reported on a
consumer to a credit bureau is false or
inaccurate.

The accounts receivable management business is
also subject to state regulation, and some states
require that the Company be licensed as a debt
collection company. The failure to comply with
applicable statutes and regulations could have a
materially adverse effect on the Company. There
can be no assurance that additional federal or
state legislation, or changes in regulatory
implementation, would not limit the activities of
the Company in the future or significantly
increase the cost of regulatory compliance.

The Company has contracted with the Agent to
collect the Company's initial portfolio of
accounts receivable and has received covenants
that the Agent will comply with such.

THE COMPANY

The Company was organized in October 1998. The Company has no operations
or assets other than, as of November 12, 1998, accounts receivable with a cost
basis of approximately $10,300 and a face value of $223,907.05 (the
"Receivables"). On November 12, 1998, the Company entered into a Purchase and
Sale Agreement pursuant to which it acquired the Receivables in exchange for
approximately $10,300 in cash. The Receivables were purchased without recourse
or any representation as to the character, accuracy or sufficiency of the
information provided to the Company by the Seller of the Receivables. In
addition, the Company entered into a Service Agreement pursuant to which the
Company has transferred the Receivables to a third party (the "Agent") for
collection. The Service Agreement provides that the Agent will use reasonable
efforts to collect the Receivables and authorizes the Agent to settle any of the
Receivables transferred to the Agent for collection for 50% or more of the
outstanding balance. In exchange for the services provided under the Service
Agreement, the Agent is entitled to retain a commission in the amount of 30% of
the amount collected.

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The Company may also participate with other entities in buying large
portfolios of past-due receivables and enter into arrangements with such other
companies for the collection and servicing of such accounts. The Company may
also form separate entities, such as limited partnerships, through which to
raise funds for the purchase of portfolios, and to engage in the collection
thereof directly or by contracting such function to third parties. In addition,
the Company may acquire portfolios of delinquent receivables and subdivide such
receivables into two or more separate portfolios to be sold or retained for
collection. The Company may also pursue merger and acquisition opportunities in
the receivables collection or other industries, or enter into strategic
alliances with third parties to further expand the Company's revenue base.

Saratoga is in the business of oil and gas which is separate and
distinct from the Company's business. The purpose of the spin-off of the Company
is to separate the two businesses so that over time the management of each of
the businesses will be able to focus solely on its own business. Another purpose
of the spin-off is to provide employees of the Company with stock-based
incentives which are tied solely to the Company. In addition, the Company hopes
to enhance access to financing by enabling the financial community to focus on
the Company.

INFORMATION CONCERNING SARATOGA

Saratoga is a Delaware Corporation, which, historically has been an oil
and gas company whose main focus was the development of and exploration for oil
and natural gas reserves, primarily in the Gulf Coast area of the United States.
In 1996, Saratoga entered into an agreement providing for the foreclosure sale
of all of its assets. Pursuant to the terms of the foreclosure agreement, all of
Saratoga's liabilities were settled so that Saratoga had no material liabilities
going forward. Its principal asset at the time of the completion of the
foreclosure consisted of approximately $1,500,000 in cash which has been
available for the pursuit of new business opportunities or for other proper
corporate purposes. Saratoga, as of September 30, 1998 had no material assets
other than approximately $393,000 in cash and $70,000 in equipment and other
assets. At September 30, 1998, the Company employed two full time employees
consisting of one executive officer (the Chief Executive Officer) and an office
manager.

Saratoga is a public company and has 3,465,292 shares of common stock
outstanding as of December 31, 1997. As of that date, there were 1,374 record
holders of its common stock.

USE OF PROCEEDS

The Company will not receive any proceeds relating to the distribution
of the Dividend Shares. However, the Company anticipates that it will receive
approximately $300 in proceeds from the sale of 100,000 shares of its Common
Stock, assuming an offering price of $0.003 per share. The Company anticipates
that these proceeds will be used to pay offering expenses, including legal,
accounting and printing, and for general working capital purposes. Since the
proceeds will not be sufficient to cover all of these costs, Saratoga has agreed
to bear such expenses.

FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION

The following discussion is a summary of the material U.S. federal
income tax consequences of the distribution of the Company's shares to its
shareholders. However, it is not intended to be a complete discussion of all
potential tax effects that might be relevant to the distribution of the
Company's shares.

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<PAGE>
It also is limited to domestic non-corporate shareholders. It may not be
applicable to certain classes of taxpayers, including, without limitation,
corporations, nonresident aliens, insurance companies, tax-exempt organizations,
financial institutions, securities dealers, and broker-dealers. Such classes of
taxpayers should consult their own tax advisors regarding the tax consequences
of the distribution.

The following summary is based on laws, regulations, rulings, practice
and judicial decisions in effect at the date of this Registration Statement.
Legislative, regulatory, or interpretive changes, or future court decisions may
significantly modify the statements made in this description. Any such changes
or interpretations may or may not be retroactive and could affect the tax
consequences described herein.
EACH SHAREHOLDER IS URGED TO CONSULT WITH THE SHAREHOLDER'S OWN TAX ADVISOR AS
TO THE PARTICULAR TAX CONSEQUENCES TO THE HOLDER OF THE DISTRIBUTION OF THE
COMPANY'S SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR
FOREIGN TAX LAWS, AND OF CHANGE IN THE APPLICABLE LAWS.

FEDERAL INCOME TAX CONSEQUENCES TO SHAREHOLDERS

Saratoga has not requested nor does it intend to request a ruling from
the Internal Revenue Service as to the federal income tax consequences of the
distribution. However, based on the facts of the proposed transaction, it is the
opinion of management of Saratoga that the transaction will not qualify as a
"tax free" spin off under Section 355 of the Internal Revenue Code of 1986, as
amended. Rather, Saratoga will report the transaction as a taxable distribution
to which Section 301 applies.

The amount of the distribution for purposes of Section 301 of the Code
is equal to the fair market value of the Company's Common Stock on the date of
the distribution. Since the Company is a development stage company and has
minimal operations, it is not expected to have earnings or profits as of the
date of the distribution. Furthermore, because there is no current public market
for the Company's Common Stock, the fair market value of the shares and hence
the amount of the distribution will probably be minimal on the date of
distribution. The net book value of the Company on the date of the distribution
is expected to be approximately $0.003 per share. This is the amount that
Saratoga intends to report as the taxable value of the distribution per share.

Holders of Saratoga common stock will be taxed on the distribution as a
dividend to the extent of Saratoga's consolidated current and accumulated
earnings and profits, computed as of the close of the tax year which the
distribution occurs. For the year ended December 31, 1997, Saratoga had no
accumulated consolidated earnings and profits. Saratoga does not anticipate
having any current consolidated earnings and profits for the year ending
December 31, 1998. Thus, no portion of the distribution should be taxed as an
ordinary dividend.

Instead, the distribution should first reduce a shareholder's adjusted
basis in his Saratoga common stock, but not below zero. If the amount of the
distribution would have the effect of reducing a shareholder's adjusted basis in
his Saratoga common stock below zero, the excess will be treated as a gain from
the sale or exchange of property. If the Saratoga common stock is a capital
asset in the hands of the shareholder, the gain will be a capital gain, either
long-term or short-term depending on whether the shareholder held his Saratoga
common stock for more than 12 months. The maximum federal income tax rate on
long-term capital gains is 20%, while the maximum federal income tax rate on
short-term capital gains is 39.6%.

A shareholder's tax basis in the Common Stock received in the
distribution will equal the fair market value of the Common Stock on the date of
the distribution. The holding period for measuring a

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<PAGE>
shareholder's gain or loss on a subsequent sale of the Common Stock will
generally begin on the day following the date of the distribution.

The foregoing sets forth the opinion of management of Saratoga. Saratoga
will report the amount of the distribution to the Internal Revenue Service based
on the net book value of the Company on the date of distribution. The Internal
Revenue Service is not bound thereby and no assurance exists that it will concur
with the position of management regarding the value of the stock or other
matters herein discussed. Specifically, it is possible that the Internal Revenue
Service may assert that a substantially higher fair market value existed for the
stock on the date of distribution. If the Internal Revenue Service were to
successfully assert that a substantially higher value should be placed on the
amount of the distribution, the taxation of the transaction to Saratoga and its
stockholders would be based on such higher value. In such event, the tax impact
would increase significantly and would not be minimal. Saratoga would recognize
gain to the extent the value placed on the amount of the distribution exceeded
its adjusted basis in the stock (which approximates the net book value of the
Company). The stockholders of Saratoga would be taxed on the amount so
determined for the distribution as a dividend to the extent of any current year
or accumulated earnings and profits of Saratoga and would recognize gain on the
balance of the distribution to the extent it exceeded their adjusted basis in
the Company's shares owned by them.

EACH SHAREHOLDER IS URGED TO CONSULT WITH THE SHAREHOLDER'S OWN TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO THE HOLDER OF THE DISTRIBUTION
OF THE COMPANY'S SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE,
LOCAL OR FOREIGN TAX LAWS, AND OF CHANGE IN THE APPLICABLE LAWS.

DETERMINATION OF OFFERING PRICE

There is no market for trading the Company's securities. The initial
public offering price of the Shares has been arbitrarily determined by the
Company and does not bear any relationship to any valuation of the assets, book
value or prospective earnings. However, the per share offering price is equal to
the price paid by Saratoga for the all of the Common Stock of the Company that
is currently outstanding.

PLAN OF DISTRIBUTION

INTRODUCTION

The Company was incorporated in Texas on October 29, 1998 with a view
toward the development of a receivables business. At that time, Saratoga
purchased 3,766,667 shares of common stock from the Company for $11,300 in cash.
The Board of Directors of the Company has determined that it would be beneficial
to spin off 3,465,292 shares of the Company's common stock in order to pursue
strategic alternatives and to position the Company for future growth. The
Company's management has determined that such a transaction has the greatest
potential for enhancing the competitive position of the business and thereby
enhancing overall stockholder value. In addition to the distribution, the
Company intends to offer an additional 100,000 authorized but unissued shares
for sale to new investors.

The Board of Directors of Saratoga has declared a stock dividend, and
has authorized the distribution of the Dividend Shares subject to the
effectiveness of the registration statement covering the

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<PAGE>
shares to be distributed to shareholders. The terms of the distribution were
arbitrarily determined and bear no relation to assets or any other criteria.

It is expected that the Company will expend a total of approximately
$________ for legal fees, printing, organization costs and other costs involved
in the distribution of the Dividend Shares to the Saratoga stockholders and the
sale of the Shares.

METHOD OF DISTRIBUTION AND SUBSEQUENT TRADING

No underwriters are involved or are expected to be involved in the offer
or sale of the Shares or the Dividend Shares. The Shares are offered to the
public for cash by the officers, directors and employees of the Company on a
best efforts basis. The Dividend Shares are being distributed by Saratoga as a
dividend in exchange for no consideration. No selling commissions will be paid
to the officers, directors or employees of the Company for Shares sold by them.

Certificates representing Dividend Shares will be distributed on
____________, 1998 or as soon thereafter as practicable to holders of Saratoga
common stock of record on _____________, 1998. The distribution will result in
there being about 1,374 shareholders of the Company. The dividend will be
distributed on the basis of one share of the Company's Common Stock for each one
share of issued and outstanding Saratoga common stock. It is anticipated that
Certificates representing fractional shares will not be issued. No exchange of
shares, payment or other action by holders of Saratoga common stock will be
required.

A copy of this Prospectus is being mailed to each Saratoga holder of
record on __________, 1998 together with stock certificates representing the
Dividend Shares. Copies of this Prospectus are also being mailed to brokers and
dealers who are known to trade or make a market in Saratoga common stock and to
other brokers and dealers who may reasonably be expected in the future to trade
or make a market in the Company Common Stock. However, the Company does not
anticipate that an active market for the Common Stock will develop within the
foreseeable future. There can be no assurance that any trading market will
develop at any time.

If the Company fails to qualify for an exemption in any state in which
the Saratoga stockholders reside, the Company anticipates that, instead of
distributing the Dividend Shares in such state, Saratoga may pay the dividend in
cash.

DIVIDENDS

The Company has not paid any dividends on its Common Stock and does not
anticipate paying any dividends in the foreseeable future.

CAPITALIZATION

The following table shows the capitalization of the Company as of
November 12, 1998 and as adjusted to reflect the results of this offering,
assuming all 100,000 of the Shares are sold.

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<PAGE>
AS OF
NOVEMBER 12, 1998
-----------------------
ACTUAL AS ADJUSTED
---------- -----------
Debt ................................................. $ 0.00 $ 0.00

Stockholder's Equity

Preferred stock, $0.001 par value, 100,000
shares authorized, none issued or outstanding ........ -- --

Common stock, $0.001 par value, 100,000,000
shares authorized, 3,766,667 issued and outstanding,
and 3,866,667 issued and outstanding as adjusted ..... $ 3,766.66 $ 3,866.67

Additional paid in capital ........................... $ 7,533.33 $ 7,733.33

Total Stockholder's Equity .................... $11,300.00 $11,600.00

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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION

The Company was incorporated on October 29, 1998. The Company was formed
by Saratoga which currently owns 3,766,667 shares of the Company's Common Stock.

The Company has no operations or assets other than, as of November 12,
1998, accounts receivable with a cost basis of approximately $10,300 and a face
value of $223,907.05 (the "Receivables"). On November 12, 1998, the Company
entered into a Purchase and Sale Agreement pursuant to which it acquired the
Receivables in exchange for approximately $10,300 in cash. The Receivables were
purchased without recourse or any representation as to the character, accuracy
or sufficiency of the information provided to the Company by the Seller of the
Receivables. In addition, the Company entered into a Service Agreement pursuant
to which the Company has transferred the Receivables to a third party (the
"Agent") for collection. The Service Agreement provides that the Agent will use
reasonable efforts to collect the Receivables and authorizes the Agent to settle
any of the Receivables transferred to the Agent for collection for 50% or more
of the outstanding balance. In exchange for the services provided under the
Service Agreement, the Agent is entitled to retain a commission in the amount of
30% of the amount collected.

LIQUIDITY

The Company currently does not have any expenses other than legal and
accounting. Saratoga has agreed to cover the Company's expenses for the first 12
months of its operations subject to repayment if and when the Company becomes
profitable. In addition, the Company hopes that it will be able to support some
of its operations though the collection of accounts receivable.

THE BUSINESS

The Company may also participate with other entities in buying large
portfolios of past-due receivables and enter into arrangements with such other
companies for the collection and servicing of such accounts. The Company may
also form separate entities, such as limited partnerships, through which to
raise funds for the purchase of portfolios, and to engage in the collection
thereof directly or by contracting such function to third parties. In addition,
the Company may acquire portfolios of delinquent receivables and subdivide such
receivables into two or more separate portfolios to be sold or retained for
collection.

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<PAGE>
The Company may also pursue merger and acquisition opportunities in the
receivables collection or other industries, or enter into strategic alliances
with third parties to further expand the Company's revenue base.

RESEARCH AND DEVELOPMENT ACTIVITIES

The Company did not spend any material amount on research or development
activities during the past two years.

COMPLIANCE WITH ENVIRONMENTAL LAWS

The Company does not believe that it will incur any material cost
relating to efforts to comply with environmental laws.

COMPETITION

The accounts receivable management industry is highly competitive. The
Company competes with large national corporations in addition to many regional
and local firms. Some of the Company's competitors have substantially greater
resources, offer more diversified services and operate in broader geographic
areas than the Company. In addition, the accounts receivable management services
offered by the Company, in many instances, are performed in-house. Moreover,
many larger clients retain multiple accounts receivable management providers
which exposes the Company to continuous competition in order to remain a
preferred vendor.

CUSTOMERS AND SUPPLIERS

The Company does not provide goods or services. However, the Company is
currently dependent upon it relationship with The Premium Group as a source of
accounts receivable and the services of Premium Recoveries, Inc. for collection
of accounts receivable.

GOVERNMENT REGULATION

The accounts receivable industry is regulated under various federal and
state statutes. In particular, the Company is subject to the federal Fair Debt
Collection Practices Act (the "FDCPA") which establishes specific guidelines and
procedures which debt collectors must follow in communicating with consumer
debtors, including the time, place and manner of such communications. The
Company is also subject to the Fair Credit Reporting Act which regulates the
consumer credit reporting industry and which may impose liability on the Company
to the extent that the adverse credit information reported on a consumer to a
credit bureau is false or inaccurate.

The accounts receivable management business is also subject to state
regulation, and some states require that the Company be licensed as a debt
collection company. The failure to comply with applicable statutes and
regulations could have a materially adverse effect on the Company. There can be
no assurance that additional federal or state legislation, or changes in
regulatory implementation, would not limit the activities of the Company in the
future or significantly increase the cost of regulatory compliance.

EMPLOYEES

The Company currently has two employees, neither of which is full time.

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<PAGE>
PROPERTIES

The Company has no property or office of its own. It is utilizing,
without charge, the address and telephone number of Saratoga as its office.
Currently there are no plans for office facilities in the future.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of the Company and their respective
ages and positions are as follows:

NAME AGE POSITION

Randall B. Johnson 50 President

Thomas F. Cooke 50 Chief Executive Officer and
Secretary

RANDALL B. JOHNSON has served as president of the Company since its
formation on October 29, 1998. In addition, since 1992, Mr. Johnson has served
as the Managing Partner of Capital Analysis Partners, which, from 1992 through
1995 was in the business of making venture capital investment ranging in size
from $100,000 to over $5,000,000. In 1994, Capital Analysis Partners became
involved in the accounts receivable management business. In 1997, it changed its
name to CAP Ventures and in 1998 to the Premium Group. Mr. Johnson continues to
serve as the Managing Partner of The Premium Group. In addition, since August,
1998, Mr. Johnson has served as the Vice President of Premium Recoveries, Inc.,
a commercial collection agency located in Austin, Texas and a subsidiary of The
Premium Group.

THOMAS F. COOKE is the sole director, chief executive officer and the
secretary of the Company. Mr. Cooke has held these positions with the Company
since its formation on October 29, 1998. Mr. Cooke was one of the co-founders of
Saratoga in 1990. He was a self employed independent oil and gas producer for 16
years. Mr. Cooke has served as a director of Saratoga since September of 1993,
and as Chairman of the Board and Chief Operating Officer. In April of 1996, Mr.
Cooke also assumed the duties of Chief Executive Officer of Saratoga. Mr. Cooke
is also a principal shareholder of Saratoga.

Both Mr. Johnson and Mr. Cooke may be deemed a "parent" or "promoter" of
the Company as those terms are defined in the Rules and Regulations promulgated
under the Securities Act of 1933 as amended.

The officers hold office for a term expiring at the next annual meeting
of Shareholders and upon the election and qualification of his successors.
Officers serve at the pleasure of the Board of Directors of the Company until
their successors are elected and qualified.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

The Company has paid no remuneration to its director or officers, other
than as provided in the following paragraph, and does not anticipate the payment
of remuneration, other than as provided below, until the Board of Directors
determines otherwise.

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<PAGE>
The Company has granted Mr. Johnson a three-year option to purchase
25,000 shares of the Company's common stock at an exercise price of $0.50 per
share. There are no other outstanding options or warrants to purchase shares of
the Company's common stock.

PRINCIPAL SHAREHOLDERS

Prior to the distribution of the Dividend Shares and the sale of the
Shares, Saratoga owns 100% of the issued and outstanding Common Stock of the
Company. After the distribution of the Dividend Shares and sale of the Shares,
Saratoga will own approximately 7.8%.

The following table sets forth certain information regarding the
beneficial ownership of the Common Stock as adjusted to reflect the distribution
of the Dividend Shares and the sale of the Shares by (i) each director of the
Company (ii) each Named Executive Officer, (iii) each person known or believed
by the Company to own beneficially 5% or more of the Common Stock and (iv) all
directors and executive officers as a group. Unless otherwise indicated, each
person will have sole voting and dispositive power with respect to such shares.

NAME OF
BENEFICIAL OWNER NUMBER OF SHARES PERCENT BENEFICIALLY OWNED(1)
---------------- ---------------- -----------------------------

Thomas F. Cooke 2,220,422(2) 57%

Randall B. Johnson 25,000(3) *

Kevin M. Smith 238,295(4)

All Officers and Directors 2,245,422 58%
as a Group
- ----------------------

* Less than 1%

(1) Shares of Common Stock that are not outstanding but that can be acquired
by a person within 60 days upon exercise of an option or similar right
are included in the number of shares beneficially owned and in computing
the percentage for such person but are not included in the number of
shares beneficially owned and in computing the percentage for any other
person.

(2) Includes 109,148 shares of Common Stock beneficially owned by June
Cooke, the spouse of Mr. Cooke.

(3) Consists of immediately exercisable options to purchase 25,000 shares of
Common Stock.

(4) Includes 20,000 shares of Common Stock beneficially owned by Sandra
Smith, the spouse of Mr. Smith. Mr. Smith is a director of Saratoga but
not of the Company. His address is 2000 Dairy Ashford, Suite 410,
Houston, Texas 77077.

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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Mr. Cooke and Mr. Johnson may be considered promoters for purposes of
the securities laws.

The Company is a wholly owned subsidiary of Saratoga. Mr. Thomas Cooke,
the Chief Executive Officer, Secretary and sole director of the Company is also
the President and holder of a majority of the shares of Saratoga. Saratoga
purchased 3,766,667 shares of the Company on or about November 12, 1998 at a
price of $0.003 per share.

Mr. Randall B. Johnson, the President of the Company is also the
Managing Partner, an officer, director and a shareholder of The Premium Group
("Premium") and Premium Recoveries, Inc. ("Premium Recoveries"). The Company
purchased the Receivables from Premium pursuant to the terms of that certain
Purchase Agreement dated November 12, 1998 between the Company and Premium
pursuant to which the Company purchased the Receivables which have a face value
of $223,907.05 in exchange for approximately $10,300 in cash. In addition, the
Company entered into that certain Services Agreement also dated November 12,
1998 with Premium Recoveries pursuant to which Premium Recoveries will use its
reasonable efforts to collect the Receivables in exchange for a commission equal
to 30% of the amount collected. In addition, the Company has granted to Mr.
Johnson a three-year option to purchase 25,000 shares of the Common Stock for
$0.50.

DESCRIPTION OF SECURITIES

The authorized capital stock of the Company consists of 100,000,000 of
Common Stock, $0.001 par value and 100,000 shares of undesignated preferred
stock, $0.001 par value.

COMMON STOCK

The holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of shareholders voting with the holders of the
Company's preferred stock as a single class, except where class voting is
required by the Texas Business Corporation Act (the "TBCA") or by a Certificate
of Designation adopted by the Board of Directors. Cumulative voting in the
election of directors is prohibited. Accordingly, the holders of a majority of
the combined number of outstanding shares of Common Stock and the Company's
preferred stock entitled to vote in any election of directors may elect all of
the directors standing for election.

Holders of Common Stock are entitled to receive ratably such dividends,
if any, as may be declared by the Board of Directors out of funds legally
available therefor, subject to any preferential dividend rights of outstanding
preferred stock. Upon a liquidation, dissolution or winding up of the Company,
the holders of Common Stock are entitled to receive ratably the net assets of
the Company available after the payment of all debts and other liabilities and
subject to the prior rights of any outstanding preferred stock. The holders of
Common Stock have no preemptive, subscription, redemption or conversion rights.
The outstanding shares of Common Stock are, and the shares issued in the
offering will be, when issued and paid for, fully paid and nonassessable.

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<PAGE>
PREFERRED STOCK

There are 100,000 shares of undesignated preferred stock authorized and
no shares of preferred stock issued or outstanding.

ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Articles of Incorporation and
Bylaws, and the indemnification agreements with directors and officers of the
Company may be deemed to have an anti-takeover effect and may delay, defer or
prevent a tender offer or takeover attempt that a shareholder might consider to
be in that shareholder's best interest, including attempts that might result in
a premium over the market price for the shares held by shareholders.

Pursuant to the Company's Articles of Incorporation, the Company's Board
of Directors may issue additional shares of common stock or establish one or
more series of preferred stock having the number of shares, designations,
relative voting rights, dividend rates, liquidation and other rights,
preferences and limitations that the Board of Directors fixes without
shareholder approval. Any additional issuance of Common Stock or designation of
rights, preferences, privileges and limitations with respect to preferred stock
could have the effect of impeding or discouraging the acquisition of control of
the Company by means of a merger, tender offer, proxy contest or otherwise, and
thereby protect the continuity of the Company's management. Specifically, if, in
the due exercise of its fiduciary obligations, the Board of Directors were to
determine that a takeover proposal was not in the Company's best interest,
shares could be issued by the Board of Directors without shareholder approval in
one or more transactions that might prevent or render more difficult or costly
the completion of the takeover transactions by diluting the voting or other
rights of the proposed acquiror or insurgent shareholder group, by putting a
substantial voting lock in institutional or other hands that might undertake to
support the position of the incumbent Board of Directors, by effecting an
acquisition that might complicate or preclude the takeover, or otherwise. The
Company's Articles of Incorporation and Bylaws provide that special meetings of
shareholders generally can be called only by the President or Board of Directors
or 10% or more of the voting stockholders.

INDEMNIFICATION OF OFFICERS AND DIRECTORS; LIMITATION OF DIRECTOR LIABILITY

The Company has entered or proposes to enter into indemnification
agreements with all of its directors and executive officers, which, among other
things, indemnify directors of the Company against liability arising from
shareholder claims of a breach of duty by a director if a director votes against
a transaction that would result in a change of control of the Company. The
Company's Articles of Incorporation also provide that its directors shall not be
liable for monetary damages caused by an act or omission occurring in their
capacity as directors. This provision does not eliminate the duty of care, and,
in appropriate circumstances, equitable remedies such as injunctive or other
forms of non-monetary relief will remain available under Texas law. In addition,
each director will continue to be subject to liability for breach of the
director's duty of loyalty to the Company, for acts or omissions not in good
faith or involving intentional misconduct, for knowing violations of law, for
actions leading to improper personal benefit to a director and for payment of
dividends or acts or omissions for which a director is made expressly liable by
applicable statute. The limitations on liability provided for in the Company's
Articles of Incorporation do not restrict the availability of non-monetary
remedies and do not affect a director's responsibilities under any other law,
such as the federal securities laws or state or federal environmental laws.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or

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<PAGE>
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 Act and is, therefore, unenforceable.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the offering, the Company will have outstanding
3,866,667 shares of Common Stock. The 3,465,292 Dividend Shares distributed to
the holders of Saratoga common stock and the 100,000 shares sold in the offering
will be freely tradeable in the public market without restriction or further
registration under the Securities Act, except for any shares acquired by
"affiliates" of the Company as that term is defined in Rule 144 ("Rule 144")
promulgated under the Securities Act. The remaining 301,375 outstanding shares
of Common Stock of the Company (the "Restricted Shares") to be held by Saratoga
following this offering are deemed to be "restricted securities" within the
meaning of Rule 144 and may be publicly resold only if registered under the
Securities Act or sold in accordance with an eligible exemption from
registration, such as Rule 144. All of the Restricted Shares will be available
for resale in the public market commencing on or about November 12, 1999,
subject to certain volume and other restrictions under Rule 144.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are required to be aggregated), including an affiliate of the
Company, who beneficially owns "restricted securities" acquired from the Company
or an affiliate of the Company at least one year prior to the sale is entitled
to sell within any three-month period a number of shares that does not exceed
the greater of (i) 1% of the then outstanding shares of Common Stock, and (ii)
the average weekly reported trading volume of the Common Stock during the four
calendar weeks immediately preceding the date on which notice of such sale is
filed with the Securities and Exchange Commission (the "Commission"), provided
certain manner of sale and notice requirements and requirements as to the
availability of current public information concerning the Company are satisfied.
Under Rule 144(k), a person who has not been an affiliate of the Company for a
period of three months preceding a sale of securities by him, and who
beneficially owns such "restricted securities" acquired from the Company or an
affiliate of the Company at least two years prior to such sale, would be
entitled to sell such shares without regard to volume limitations, manner of
sale provisions, notification requirements or requirements as to the
availability of current public information concerning the Company. Shares held
by persons who are deemed to be affiliates of the Company, including any shares
acquired by affiliates in the offering, are subject to such volume limitations,
manner of sale provisions, notification requirements and requirements as to the
availability of current public information concerning the Company, regardless of
how long the shares have been owned or how they were reacquired. In addition,
the sale of any "restricted securities" beneficially owned by an affiliate of
the Company and not registered pursuant to this offering is subject to the
one-year holding requirement of Rule 144. As defined in Rule 144, an "affiliate"
of an issuer is a person that directly or indirectly through the use of one or
more intermediaries, controls, or is controlled by, or is under common control
with, such issuer.

The Company has outstanding non-statutory options to purchase an
aggregate of 25,000 shares of Common Stock, all of which are exercisable as of
the date of this Prospectus. Shares of Common Stock issued pursuant to options
may be subject to Rule 144.

Prior to the offering, there has been no public market for the Common
Stock, and no prediction can be made as to the effect, if any, that the sale of
shares or the availability of shares for sale will have on the market price
prevailing from time to time. Nevertheless, sales of substantial amounts of the

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<PAGE>
Common Stock in the public market could adversely affect prevailing market
prices and the ability of the Company to raise equity capital in the future.

Saratoga currently holds all of the issued and outstanding Common Stock
of the Company. The Company has not paid or declared any cash dividends with
respect to its Common Stock.

REPORTS TO SHAREHOLDERS

The Company will furnish record holders of the Company's Common Stock
annual reports containing audited financial statements of the Company, the first
of which will relate to its fiscal year ending December 31, 1999. The Company
may also furnish record holders of Common Stock unaudited quarterly reports, the
first of which will relate to the fiscal quarter during which the Company
commences active operations.

TRANSFER AGENT

The Transfer Agent and Registrant for the Common Stock is Chase Mellon.

LEGAL MATTERS

Jenkens & Gilchrist, A Professional Corporation, 600 Congress Avenue,
Suite 2200, Austin, Texas 78701 has acted as legal counsel to Saratoga and the
Company in connection with this Prospectus and related matters.

EXPERTS

The financial statements of the Company included in this Prospectus have
been examined by Hein + Associates, LLP, Certified Public Accountants, and are
included in reliance upon the authority of that firm as experts in accounting
and auditing.

AVAILABLE INFORMATION

The Company does not presently file reports and or any other information
with the Securities and Exchange Commission (the "Commission"). However,
following completion of this Offering, the Company intends to furnish its
stockholders with annual reports containing audited financial statements
examined and reported upon by its independent public accounting firm and such
interim reports, in each case as it may determine to furnish or as may be
required by law. After the effective date of this Offering, the Company will be
subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and in accordance therewith will file periodic
reports and other information with the Commission.

Reports and other information filed by the Company can be inspected and
copied at the public reference facilities maintained at the Commission at Room
1024, 450 Fifth Street N.W., Washington, D.C. 20549 and at certain of the
Commission's regional offices located at 7 World Trade Center, New York, New
York 10048 and 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material can be

23
<PAGE>
obtained upon written request addressed to the Commission, Pubic Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Commission also maintains a web site on the Internet (http://www.sec.gov)
that contains reports and other information regarding issuers that file
Electronically with the Commission through the Electronic Data Gathering,
Analysis and Retrieval System ("EDGAR"). The Company has filed, through EDGAR,
with the Commission a registration statement on Form SB-2 (herein together with
all amendments and exhibits referred to as the 'Registration Statement') under
the Act of which this Prospectus forms a part. This Prospectus does not contain
all of the information set forth in the Registration Statement, certain parts of
which have been omitted in accordance with the rules and regulations of the
Commission. For further information reference is made to the Registration
Statement.

This Prospectus contains information concerning the Company as of
November __, 1998. The delivery of this Prospectus at any time does not
constitute a representation that the information contained herein is correct as
of any other date, and the delivery of this Prospectus shall not imply that
there has been no change in the business or affairs of the Company since that
date. No dealer, salesman or other person has been authorized to furnish
information or to make any representations other than as set forth in this
Prospectus. If furnished or made, such information or representation must not be
relied upon as having been authorized by Saratoga or the Company.

24
<PAGE>
INDEX TO FINANCIAL STATEMENTS

PAGE
----

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT ......................... F-2

BALANCE SHEET ............................................................. F-3

NOTES TO THE FINANCIAL STATEMENTS ......................................... F-4

F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT

Board of Directors
Saratoga Holdings I, Inc.
301 Congress, Suite 1550
Austin, Texas 78701

We have audited the balance sheet of Saratoga Holdings I, Inc. as of November
12, 1998. This financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement 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 balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall balance sheet presentation. We believe that our audit
of the balance sheet provides a reasonable basis for our opinion.

In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Saratoga Holdings I, Inc. as of
November 12, 1998 in conformity with generally accepted accounting principles.

/s/ HEIN + ASSOCIATES, LLP
HEIN + ASSOCIATES, LLP

Houston, Texas
November 20, 1998

F-2
<PAGE>
SARATOGA HOLDINGS I, INC.
BALANCE SHEET
-------------

November 12, 1998

ASSETS
------

ASSETS

Current Assets - Cash ....................................... $ 1,000
Investment in past due trade receivable ..................... $10,300
-------

TOTAL ASSETS ........................................................ $11,300
-------

LIABILITIES AND STOCKHOLDER EQUITY
----------------------------------

STOCKHOLDERS EQUITY

Preferred stock, par value $.001
100,000 shares authorized, none outstanding .......... --
Common stock par value $.001
100,000,000 shares authorized
3,766,667 shares issued and outstanding .............. 3,766
Additional paid in capital .................................. 7,533
(Deficit) accumulated during the
development stage ........................................... -0-
-------

TOTAL STOCKHOLDERS EQUITY ........................................... $11,300
-------

The accompanying notes are an integral part of this financial statement.

F-3
<PAGE>
SARATOGA HOLDINGS I, INC.
(A WHOLLY OWNED SUBSIDIARY)
NOTES TO FINANCIAL STATEMENT

Note 1: ORGANIZATION AND NATURE OF OPERATIONS

Saratoga Holdings I, Inc., a Texas corporation, is a wholly owned
subsidiary of Saratoga Resources, Inc. As of November 12, 1998,
the Company has no operations other than those related to a
portfolio of past due account receivables purchased on November
12, 1998.

On November 12, 1998, Saratoga Resources, Inc., the parent
company of Saratoga Holdings I, Inc., purchased 3,766,667 shares
of Saratoga Holdings I, Inc.'s common stock for $11,300. It is
the intention of Saratoga Resources, Inc. to register 3,465,292
of those shares with the Securities and Exchange Commission and
to distribute them to the stockholders of Saratoga Resources,
Inc. in the form of a dividend. The Company is also offering
100,000 shares of common stock to the public on a best efforts
basis, at $0.003 per share.

Note 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ACCOUNTING POLICIES

Saratoga Holdings I, Inc.'s accounting policies conform to
generally accepted accounting principles. Significant policies
followed are described below.

ACCOUNTING ESTIMATES

Preparation of the Company's financial statements in conformity
with generally accepted accounting principles requires the
Company's management to make estimates, and assumptions that
affect the amounts reported in this financial statement. Actual
results could differ from those estimates.

Note 3: INVESTMENT IN PAST DUE ACCOUNT RECEIVABLES

On November 12, 1998, the Company acquired a portfolio of past
due account receivables for approximately $10,300. These
receivables represent amounts previously due various major retail
businesses arising from the sale of various consumer products.
The face amount of these receivables totals $223,907. The
ultimate collection of these receivables will depend on a variety
of factors, many of which are outside the Company's control.

Note 4: PREFERRED STOCK

The Company may issue preferred stock in one or more series which
will have such designations, preferences, limitations and
relative rights as authorized by the Board of Directors.

Note 5: STOCK OPTIONS

The Company issued an option to an officer to acquire 25,000
shares of its Common Stock at $0.50 per share. The option, which
was unexercised as of November 12, 1998, expires in 2001.

F-4
<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Registrant has authority under Articles 2.02(A)(16) and 2.02-1 of
the Texas Business Corporation Act (the "TBCA") to indemnify its directors and
officers to the extent provided for in such statute. The Registrant's articles
of incorporation and bylaws allow indemnification of directors and officers to
the full extent permitted by said provisions of the TBCA. The TBCA provides in
part that a corporation may indemnify a director or officer or other person who
was, is, or is threatened to be made a named defendant or respondent in a
proceeding because the person is or was a director, officer, employee or agent
of the corporation, if it is determined that (i) such person conducted himself
in good faith; (ii) reasonably believed, in the case of conduct in his official
capacity as a director or officer of the corporation, that his conduct was in
the corporation's best interests, and, in all other cases, that his conduct was
at least not opposed to the corporation's best interest; and (iii) in the case
of any criminal proceeding, had no reasonable cause to believe that his conduct
was unlawful.

A corporation may indemnify a person under the TBCA against judgments,
penalties (including excise and similar taxes), fines, settlement, and
reasonable expenses actually incurred by the person in connection with the
proceeding. If the person is found liable to the corporation or is found liable
on the basis that personal benefit was improperly received by the person, the
indemnification is limited to reasonable expenses actually incurred by the
person in connection with the proceeding, and shall not be made in respect of
any proceeding in which the person shall have been found liable for willful or
intentional misconduct in the performance of his duty to the corporation. A
corporation may also pay or reimburse expenses incurred by a person in
connection with his appearance as a witness or other participation in a
proceeding at a time when he is not a named defendant or respondent in the
proceeding.

Reference is also made to the articles of incorporation, which limit or
eliminate a director's liability for monetary damages to the Registrant or its
shareholders for acts or omissions in the director's capacity as a director,
except that the articles of incorporation do not eliminate the liability of a
director for (i) a breach of the director's duty of loyalty to the Registrant or
its shareholders, (ii) an act or omission not in good faith that constitutes a
breach of duty of the director to the Registrant or an act or omission that
involves intentional misconduct or a knowing violation of the law, (iii) a
transaction from which a director received an improper benefit, whether or not
the benefit resulted from an action taken within the scope of the director's
office, or (iv) an act or omission for which the liability of a director is
expressly provided for by an applicable statute. The Registrant's Bylaws further
provide that the Registrant shall indemnify its officers and directors to the
fullest extent permitted by law.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Following are the estimated expenses which will be incurred by the
Company with respect to the distribution of the Dividend Shares and the sale of
the Shares. Of the total $__________, in estimated expenses, Saratoga, as the
selling shareholder, has agreed to $_________ of such expenses.

II-1
<PAGE>
Securities and Exchange Commission Registration Fee.................$ 100.00
Printing and Engraving..............................................$ ____.00
Fees of Transfer Agent..............................................$ ____.00
Legal Fees and Expenses.............................................$ ____.00
Accountant's Fees and Expenses......................................$ ____.00
Miscellaneous.......................................................$ .00
$ .00

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

Since inception, the Registrant has sold the following securities which
were not registered under the Securities Act.

1. On November 12, 1998, the Company issued 3,766,667 shares of Common Stock to
Saratoga for a total cash price of $11,300. This transaction was exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) of the
Securities Act.

2. Also on November 12, 1998, the Company granted an three-year option to its
President to acquire 25,000 shares of the Company's Common Stock at an exercise
price of $0.50 per share. This transaction was exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) and Rule 701
thereunder.

ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

3.1 Certificate of Incorporation
3.2 Bylaws
*5.1 Opinion of Jenkens & Gilchrist, a Professional Corporation
10.1 Purchase and Sale Agreement dated effective November 12, 1998
between the Company and The Premium Group
10.2 Service Agreement dated as of November 12, 1998 between the
Company and Premium Recoveries, Inc.
*23.01 Consent of Jenkens & Gilchrist, a Professional Corporation -
Contained in Exhibit 5.1
23.02 Consent of Hein + Associates, LLP
27 Financial Data Schedule

- ----------------
* TO BE FILED BY AMENDMENT

ITEM 28. UNDERTAKINGS

The undersigned registrant hereby undertakes:

A. To file, during any period in which offers or sales are being
made, a post-effective amendment of this registration statement:

(i) To include any Prospectus required by Section 10(a) (3) of
the Securities Act of 1933.

(ii) To include in the Prospectus any facts or events arising
after the effective date of the registration statement (or most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement.

II-2
<PAGE>
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement:

B. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

C. To remove from registration by means of post-effective
amendment any of the securities registered which remain unsold at the
termination of the offering.

D. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to any charter provisions, by-laws, contract,
arrangements, statute or otherwise, the registrant 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 the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant of expenses incurred or paid by
a director, officer or controlling person of the registrant 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, the registrant will, unless in the opinion of its counsel the matter
has been settled by a controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

E. Subject to the terms and conditions of Section 15(d) of the
Securities Exchange Act of 1934, as amended, the Registrant hereby undertakes to
file with the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the commission heretofore or hereafter duly adopted pursuant to
authority conferred in that Section.

F. The undersigned Registrant hereby undertakes to provide at the
Closing, certificates in such denominations and registered in such names as
required to permit prompt delivery to each purchaser.

II-3
<PAGE>
SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that he has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this Registration
Statement or amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Austin and State of Texas on the 24th day of
November, 1998.

SARATOGA HOLDINGS I, INC.

By: /s/RANDALL B. JOHNSON
Randall B. Johnson, President

In accordance with the requirements of the Securities Act of 1933, this
Registration Statement or amendment has been signed below by the following
persons in the capacities and on the dates indicated.

/s/RANDALL B. JOHNSON President November 24, 1998
Randall B. Johnson

/s/THOMAS F. COOKE Chief Executive Officer, Secretary November 24, 1998
Thomas F. Cooke and Director (Principal Accounting
and Financial Officer)

II-4

EXHIBIT 3.1

ARTICLES OF INCORPORATION
OF
SARATOGA HOLDINGS I, INC.

I, the undersigned, a natural person of the age of eighteen years or more
acting as the incorporator of a corporation (hereinafter called the
"Corporation") under the Texas Business Corporation Act, do hereby adopt the
following Articles of Incorporation for the Corporation:

ARTICLE ONE

The name of the Corporation is Saratoga Holdings I, Inc.

ARTICLE TWO

The period of duration of the Corporation is perpetual.

ARTICLE THREE

The purpose for which the Corporation is organized is to engage in the
transaction of any and all lawful businesses for which corporations may be
incorporated under the Texas Business Corporation Act.

ARTICLE FOUR

The total number of shares of all classes of capital stock which the
Corporation shall have authority to issue is 100,100,000 of which (a)
100,000,000 shares shall be designated as Common Stock, par value $0.001 per
share, and (b) 100,000 shares shall be designated as Preferred Stock, par value
$0.001 per share.

The following is a statement of the designations, preferences,
limitations, and relative rights, including voting rights, in respect of the
classes of stock of the Corporation and of the authority with respect thereto
expressly vested in the Board of Directors of the Corporation:

COMMON STOCK

(1) Each share of Common Stock of the Corporation shall have identical
rights and privileges in every respect. The holders of shares of Common Stock
shall be entitled to vote upon all matters submitted to a vote of the
shareholders of the Corporation and shall be entitled to one vote for each share
of Common Stock held.

(2) Subject to the prior rights and preferences, if any, applicable to
shares of the Preferred Stock or any series thereof, the holders of shares of
the Common Stock shall be entitled to receive such dividends (payable in cash,
stock, or otherwise) as may be declared thereon by the Board of Directors at any
time and from time to time out of any funds of the Corporation legally available
therefor.
<PAGE>
(3) In the event of any voluntary or involuntary liquidation, dissolution,
or winding-up of the Corporation, after distribution in full of the preferential
amounts, if any, to be distributed to the holders of shares of the Preferred
Stock or any series thereof, the holders of shares of the Common Stock shall be
entitled to receive all of the remaining assets of the Corporation available for
distribution to its shareholders, ratably in proportion to the number of shares
of the Common Stock held by them. A liquidation, dissolution, or winding-up of
the Corporation, as such terms are used in this Paragraph (3), shall not be
deemed to be occasioned by or to include any merger of the Corporation with or
into one or more corporations or other entities, any acquisition or exchange of
the outstanding shares of one or more classes or series of the Corporation, or
any sale, lease, exchange, or other disposition of all or a part of the assets
of the Corporation.

PREFERRED STOCK

(4) Shares of the Preferred Stock may be issued from time to time in one
or more series, the shares of each series to have such designations,
preferences, limitations, and relative rights, including voting rights, as shall
be stated and expressed herein or in a resolution or resolutions providing for
the issue of such series adopted by the Board of Directors of the Corporation.
Each such series of Preferred Stock shall be designated so as to distinguish the
shares thereof from the shares of all other series and classes. The Board of
Directors of the Corporation is hereby expressly authorized, subject to the
limitations provided by law, to establish and designate series of the Preferred
Stock, to fix the number of shares constituting each series, and to fix the
designations and the preferences, limitations, and relative rights, including
voting rights, of the shares of each series and the variations of the relative
rights and preferences as between series, and to increase and to decrease the
number of shares constituting each series, provided that the Board of Directors
may not decrease the number of shares within a series to less than the number of
shares within such series that are then issued. The relative powers, rights,
preferences, and limitations may vary between and among series of Preferred
Stock in any and all respects so long as all shares of the same series are
identical in all respects, except that shares of any such series issued at
different times may have different dates from which dividends thereon cumulate.
The authority of the Board of Directors of the Corporation with respect to each
series shall include, but shall not be limited to, the authority to determine
the following:

(a) The designation of such series;

(b) The number of shares initially constituting such series;

(c) The rate or rates and the times at which dividends on the shares
of such series shall be paid, the periods in respect of which dividends
are payable, the conditions upon such dividends, the relationship and
preferences, if any, of such dividends to dividends payable on any other
class or series of shares, whether or not such dividends shall be
cumulative, partially cumulative, or noncumulative, if such dividends
shall be cumulative or partially cumulative, the date or dates from and
after which, and the amounts in which, they shall accumulate, whether such
dividends shall be share dividends, cash or other dividends, or any
combination thereof, and if such dividends shall include share dividends,
whether such share dividends shall be payable in shares of the same or any

2
<PAGE>
other class or series of shares of the Corporation (whether now or
hereafter authorized), or any combination thereof and the other terms and
conditions, if any, applicable to dividends on shares of such series;

(d) Whether or not the shares of such series shall be redeemable or
subject to repurchase at the option of the Corporation or the holder
thereof or upon the happening of a specified event, if such shares shall
be redeemable, the terms and conditions of such redemption, including but
not limited to the date or dates upon or after which such shares shall be
redeemable, the amount per share which shall be payable upon such
redemption, which amount may vary under different conditions and at
different redemption dates, and whether such amount shall be payable in
cash, property, or rights, including securities of the Corporation or
another corporation;

(e) The rights of the holders of shares of such series (which may
vary depending upon the circumstances or nature of such liquidation,
dissolution, or winding up) in the event of the voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation and the
relationship or preference, if any, of such rights to rights of holders of
stock of any other class or series. A liquidation, dissolution, or winding
up of the Corporation, as such terms are used in this subparagraph (e),
shall not be deemed to be occasioned by or to include any merger of the
Corporation with or into one or more corporations or other entities, any
acquisition or exchange of the outstanding shares of one or more classes
or series of the Corporation, or any sale, lease, exchange, or other
disposition of all or a part of the assets of the Corporation;

(f) Whether or not the shares of such series shall have voting
powers and, if such shares shall have such voting powers, the terms and
conditions thereof, including, but not limited to, the right of the
holders of such shares to vote as a separate class either alone or with
the holders of shares of one or more other classes or series of stock and
the right to have more (or less) than one vote per share; provided,
however, that the right to cumulate votes for the election of directors is
expressly denied and prohibited;

(g) Whether or not a sinking fund shall be provided for the
redemption of the shares of such series and, if such a sinking fund shall
be provided, the terms and conditions thereof;

(h) Whether or not a purchase fund shall be provided for the shares
of such series and, if such a purchase fund shall be provided, the terms
and conditions thereof;

(i) Whether or not the shares of such series, at the option of
either the Corporation or the holder or upon the happening of a specified
event, shall be convertible into stock of any other class or series and,
if such shares shall be so convertible, the terms and conditions of
conversion, including, but not limited to, any provision for the adjust
ment of the conversion rate or the conversion price;

3
<PAGE>
(j) Whether or not the shares of such series, at the option of
either the Corporation or the holder or upon the happening of a specified
event, shall be exchangeable for securities, indebtedness, or property of
the Corporation and, if such shares shall be so exchangeable, the terms
and conditions of exchange, including, but not limited to, any provision
for the adjustment of the exchange rate or the exchange price; and

(k) Any other preferences, limitations, and relative rights as shall
not be inconsistent with the provisions of this Article Four or the
limitations provided by law.

(5) Except as otherwise required by law or in any resolution of the Board
of Directors creating any series of Preferred Stock, the holders of shares of
Preferred Stock and all series thereof who are entitled to vote shall vote
together with the holders of shares of Common Stock, and not separately by
class.

ARTICLE FIVE

No holder of any shares of capital stock of the Corporation, whether now
or hereafter authorized, shall, as such holder, have any preemptive or
preferential right to receive, purchase, or subscribe to (a) any unissued or
treasury shares of any class of stock (whether now or hereafter authorized) of
the Corporation, (b) any obligations, evidences of indebtedness, or other
securities of the Corporation convertible into or exchangeable for, or carrying
or accompanied by any rights to receive, purchase, or subscribe to, any such
unissued or treasury shares, (c) any right of subscription to or to receive, or
any warrant or option for the purchase of, any of the foregoing securities, or
(d) any other securities that may be issued or sold by the Corporation.

ARTICLE SIX

The Corporation will not commence business until it has received for the
issuance of its shares consideration of the value of at least $1,000.00.

ARTICLE SEVEN

Cumulative voting for the election of directors is expressly denied and
prohibited.

ARTICLE EIGHT

No contract or transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers or have a financial interest,
shall be void or voidable solely for this reason, solely because the director or
officer is present at or participates in the meeting of the Board of Directors
or committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if:

4
<PAGE>
(a) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the Board of
Directors or the committee, and the Board of Directors or committee in
good faith authorizes the contract or transaction by the affirmative vote
of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or

(b) The material facts as to his relationship or interest and as to
the contract or transaction are disclosed or are known to the shareholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the shareholders; or

(c) The contract or transaction is fair as to the Corporation as of
the time it is authorized, approved, or ratified by the Board of
Directors, a committee thereof, or the shareholders.

Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or of a committee which authorizes
the contract or transaction.

This provision shall not be construed to invalidate a contract or
transaction which would be valid in the absence of this provision or to subject
any director or officer to any liability that he would not be subject to in the
absence of this provision.

ARTICLE NINE

The Corporation shall indemnify any person who was, is, or is threatened
to be made a named defendant or respondent in a proceeding (as hereinafter
defined) because the person (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, to the
fullest extent that a corporation may grant indemnification to a director under
the Texas Business Corporation Act, as the same exists or may hereafter be
amended. Such right shall be a contract right and as such shall run to the
benefit of any director or officer who is elected and accepts the position of
director or officer of the Corporation or elects to continue to serve as a
director or officer of the Corporation while this Article Nine is in effect. Any
repeal or amendment of this Article Nine shall be prospective only and shall not
limit the rights of any such director or officer or the obligations of the
Corporation with respect to any claim arising from or related to the services of
such director or officer in any of the foregoing capacities prior to any such
repeal or amendment of this Article Nine. Such right shall include the right to
be paid or reimbursed by the Corporation for expenses incurred in defending any
such proceeding in advance of its final disposition to the maximum extent
permitted under the Texas Business Corporation Act, as the same exists or may
hereafter be amended. If a claim for indemnification or advancement of expenses
hereunder is not paid in full by the Corporation within ninety days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim, and if successful in

5
<PAGE>
whole or in part, the claimant shall be entitled to be paid also the expenses of
prosecuting such claim. It shall be a defense to any such action that such
indemnification or advancement of costs of defense are not permitted under the
Texas Business Corporation Act, but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including its Board
of Directors or any committee thereof, special legal counsel, or shareholders)
to have made its determination prior to the commencement of such action that
indemnification of, or advancement of costs of defense to, the claimant is
permissible in the circumstances nor an actual determination by the Corporation
(including its Board of Directors or any committee thereof, special legal
counsel, or shareholders) that such indemnification or advancement is not
permissible, shall be a defense to the action or create a presumption that such
indemnification or advancement is not permissible. In the event of the death of
any person having a right of indemnification under the foregoing provisions,
such right shall inure to the benefit of his heirs, executors, administrators,
and personal representatives. The rights conferred above shall not be exclusive
of any other right which any person may have or hereafter acquire under any
statute, bylaw, resolution of shareholders or directors, agreement, or
otherwise.

The Corporation may additionally indemnify any person covered by the grant
of mandatory indemnification contained above to such further extent as is
permitted by law and may indemnify any other person to the fullest extent
permitted by law.

To the extent permitted by then applicable law, the grant of mandatory
indemnification to any person pursuant to this Article Nine shall extend to
proceedings involving the negligence of such person.

As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding.

ARTICLE TEN

Any action of the Corporation which, under the provisions of the Texas
Business Corporation Act or any other applicable law, is required to be
authorized or approved by the holders of any specified fraction which is in
excess of one-half or any specified percentage which is in excess of fifty
percent of the outstanding shares (or of any class or series thereof) of the
Corporation shall, notwithstanding any law, be deemed effectively and properly
authorized or approved if authorized or approved by the vote of the holders of
more than fifty percent of the outstanding shares entitled to vote thereon (or,
if the holders of any class or series of the Corporation's shares shall be
entitled by the Texas Business Corporation Act or any other applicable law to
vote thereon separately as a class, by the vote of the holders of more than
fifty percent of the outstanding shares of each such class or series). Without
limiting the generality of the foregoing, the foregoing provisions of this
Article Ten shall be applicable to any required shareholder authorization or
approval of: (a) any amendment to these Articles of Incorporation; (b) any plan
of merger, share exchange, or reorganization involving the Corporation; (c) any
sale,

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lease, exchange, or other disposition of all, or substantially all, the property
and assets of the Corporation; and (d) any voluntary dissolution of the
Corporation.

Directors of the Corporation shall be elected by a plurality of the votes
cast by the holders of shares entitled to vote in the election of directors of
the Corporation at a meeting of shareholders at which a quorum is present.

Except as otherwise provided in this Article Ten or as otherwise required
by the Texas Business Corporation Act or other applicable law, with respect to
any matter, the affirmative vote of the holders of a majority of the
Corporation's shares entitled to vote on that matter and represented in person
or by proxy at a meeting of shareholders at which a quorum is present shall be
the act of the shareholders.

Nothing contained in this Article Ten is intended to require shareholder
authorization or approval of any action of the Corporation whatsoever unless
such approval is specifically required by the other provisions of these Articles
of Incorporation, the bylaws of the Corporation, or by the Texas Business
Corporation Act or other applicable law.

ARTICLE ELEVEN

The street address of the initial registered office of the Corporation is
301 Congress Avenue, Suite 1550, Austin, Texas 78701, and the name of its
initial registered agent at such address is Thomas F. Cooke.

ARTICLE TWELVE

The number of directors constituting the initial Board of Directors is one
and the name and address of each person who is to serve as director until the
first annual meeting of shareholders and until such director's successor is
elected and qualified or, if earlier, until such director's death, resignation,
or removal as director, are as follows:

NAME ADDRESS

Thomas F. Cooke 301 Congress Avenue, Suite 1550
Austin, Texas 78701

ARTICLE THIRTEEN

To the fullest extent permitted by applicable law, a director of the
Corporation shall not be liable to the Corporation or its shareholders for
monetary damages for an act or omission in the director's capacity as a
director, except that this Article Thirteen does not eliminate or limit the
liability of a director of the Corporation to the extent the director is found
liable for:

(a) a breach of the director's duty of loyalty to the Corporation or
its shareholders;

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(b) an act or omission not in good faith that constitutes a breach
of duty of the director to the Corporation or an act or omission that
involves intentional misconduct or a knowing violation of the law;

(c) a transaction from which the director received an improper
benefit, whether or not the benefit resulted from an action taken within
the scope of the director's office; or

(d) an act or omission for which the liability of a director is
expressly provided by an applicable statute.

Any repeal or amendment of this Article Thirteen by the shareholders of
the Corporation shall be prospective only and shall not adversely affect any
limitation on the personal liability of a director of the Corporation arising
from an act or omission occurring prior to the time of such repeal or amendment.
In addition to the circumstances in which a director of the Corporation is not
personally liable as set forth in the foregoing provisions of this Article
Thirteen, a director shall not be liable to the Corporation or its shareholders
to such further extent as permitted by any law hereafter enacted, including
without limitation any subsequent amendment to the Texas Miscellaneous
Corporation Laws Act or the Texas Business Corporation Act.

ARTICLE FOURTEEN

Any action which may be taken, or which is required by law or the Articles
of Incorporation or bylaws of the Corporation to 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 have been signed by the holder or holders of shares
having 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 action were present and voted.

ARTICLE FIFTEEN

The name and address of the incorporator are as follows:

NAME ADDRESS

Anna R. Raines 600 Congress Avenue, Suite 2200
Austin, Texas 78701

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EXECUTED this 29th day of October, 1998.

/s/ANNA R. RAINES
Anna R. Raines

I, the undersigned incorporator of Saratoga Holdings I, Inc., a
corporation to be filed with the Texas Secretary of State, do hereby disclaim
any and all interests in said corporation.

/s/ANNA R. RAINES
Anna R. Raines

EXHIBIT 3.2

BYLAWS

SARATOGA HOLDINGS, INC.

<PAGE>
TABLE OF CONTENTS

PAGE
PREAMBLE

ARTICLE ONE: OFFICES
1.01 Registered Office and Agent....................................... 1
1.02 Other Offices..................................................... 1

ARTICLE TWO: SHAREHOLDERS
2.01 Annual Meetings................................................... 1
2.02 Special Meetings.................................................. 1
2.03 Place of Meetings................................................. 2
2.04 Notice............................................................ 2
2.05 Voting List....................................................... 2
2.06 Voting of Shares.................................................. 2
2.07 Quorum............................................................ 2
2.08 Majority Vote; Withdrawal of Quorum............................... 3
2.09 Method of Voting; Proxies......................................... 3
2.10 Closing of Transfer Books; Record Date............................ 3
2.11 Officers Duties at Meeting........................................ 4

ARTICLE THREE: DIRECTORS
3.01 Management........................................................ 4
3.02 Number; Election; Term; Qualification............................. 4
3.03 Changes in Number................................................. 4
3.04 Removal........................................................... 5
3.05 Vacancies......................................................... 5
3.06 Place of Meetings................................................. 5
3.07 First Meeting..................................................... 5
3.08 Regular Meetings.................................................. 5
3.09 Special Meetings; Notice.......................................... 5
3.10 Quorum; Majority Vote............................................. 5
3.11 Procedure; Minutes................................................ 6
3.12 Presumption of Assent............................................. 6
3.13 Compensation...................................................... 6

ARTICLE FOUR: COMMITTEES
4.01 Designation....................................................... 6
4.02 Number; Qualification; Term....................................... 6
4.03 Authority......................................................... 6
4.04 Committee Changes; Removal........................................ 7
4.05 Regular Meetings.................................................. 7
4.06 Special Meetings.................................................. 7
4.07 Quorum; Majority Vote............................................. 7

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4.08 Minutes........................................................... 8
4.09 Compensation...................................................... 8
4.10 Responsibility.................................................... 8

ARTICLE FIVE: GENERAL PROVISIONS RELATING TO MEETINGS
5.01 Notice............................................................ 8
5.02 Waiver of Notice................................................... 8
5.03 Telephone and Similar Meetings..................................... 8
5.04 Action Without Meeting............................................. 9

ARTICLE SIX: OFFICERS AND OTHER AGENTS
6.01 Number; Titles; Election; Term; Qualification...................... 9
6.02 Removal............................................................ 9
6.03 Vacancies.......................................................... 9
6.04 Authority.......................................................... 9
6.05 Compensation.......................................................10
6.06 Chairman of the Board............................................. 10
6.07 President......................................................... 10
6.08 Vice Presidents................................................... 10
6.09 Treasurer......................................................... 10
6.10 Assistant Treasurers.............................................. 10
6.11 Secretary......................................................... 11
6.12 Assistant Secretaries............................................. 11

ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.01 Certificated and Uncertificated Shares............................ 11
7.02 Certificates for Certificated Shares.............................. 11
7.03 Issuance.......................................................... 12
7.04 Consideration for Shares.......................................... 12
7.05 Lost, Stolen, or Destroyed Certificates........................... 12
7.06 Transfer of Shares................................................ 13
7.07 Registered Shareholders........................................... 13
7.08 Legends........................................................... 13
7.09 Regulations....................................................... 13

ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.01 Dividends......................................................... 14
8.02 Reserves.......................................................... 14
8.03 Books and Records................................................. 14
8.04 Fiscal Year....................................................... 14
8.05 Seal.............................................................. 14
8.06 Attestation by the Secretary...................................... 14
8.07 Resignation....................................................... 14
8.08 Securities of Other Corporations.................................. 15
8.09 Amendment of Bylaws............................................... 15

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8.10 Invalid Provisions................................................ 15
8.11 Headings; Table of Contents....................................... 15

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BYLAWS

SARATOGA HOLDINGS I, INC.

A Texas Corporation

PREAMBLE

These bylaws are subject to, and governed by, the Texas Business
Corporation Act and the articles of incorporation of Saratoga Holdings I, Inc.
(the "Corporation"). In the event of a direct conflict between the provisions of
these bylaws and the mandatory provisions of the Texas Business Corporation Act
or the provisions of the articles of incorporation of the Corporation, such
provisions of the Texas Business Corporation Act or the articles of
incorporation of the Corporation, as the case may be, will be controlling.

ARTICLE ONE: OFFICES

1.01 REGISTERED OFFICE AND AGENT. The registered office and registered
agent of the Corporation shall be as designated from time to time by the
appropriate filing by the Corporation in the office of the Secretary of State of
Texas.

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 TWO: SHAREHOLDERS

2.01 ANNUAL MEETINGS. An annual meeting of shareholders of the Corporation
shall be held during each calendar year on such date and at such time as shall
be designated from time to time by the board of directors and stated in the
notice of the meeting, if not a legal holiday in the place where the meeting is
to be held, and, if a legal holiday in such place, then on the next business day
following, at the time specified in the notice of the meeting. At such meeting,
the shareholders shall elect directors and transact such other business as may
properly be brought before the meeting.

2.02 SPECIAL MEETINGS. A special meeting of the shareholders may be called
at any time by the president, the board of directors, or the holders of not less
than ten percent of all shares entitled to vote at such meeting. Only business
within the purpose or purposes described in the notice of special meeting may be
conducted at such special meeting.
<PAGE>
2.03 PLACE OF MEETINGS. The annual meeting of shareholders may be held at
any place within or without the State of Texas designated by the board of
directors. Special meetings of shareholders may be held at any place within or
without the State of Texas designated by the person or persons calling such
special meeting as provided in Section 2.02 above. Meetings of shareholders
shall be held at the principal office of the Corporation unless another place is
designated for meetings in the manner provided herein.

2.04 NOTICE. Except as otherwise provided by law, written or printed
notice stating the place, day, and hour of each meeting of the shareholders 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 sixty days before the
date of the meeting by or at the direction of the president, the secretary, or
the person calling the meeting, to each shareholder of record entitled to vote
at such meeting.

2.05 VOTING LIST. At least ten days before each meeting of shareholders,
the secretary shall prepare a complete list of shareholders entitled to vote at
such meeting, arranged in alphabetical order, including the address of each
shareholder and the number of voting shares held by each shareholder. For a
period of ten days prior to such meeting, such list shall be kept on file at the
registered office of the Corporation and shall be subject to inspection by any
shareholder during usual business hours. Such list shall be produced at such
meeting, and at all times during such meeting shall be subject to inspection by
any shareholder. The original stock transfer books shall be prima facie evidence
as to who are the shareholders entitled to examine such list.

2.06 VOTING OF SHARES. Treasury shares, shares of the Corporation's own
stock owned by another corporation the majority of the voting stock of which is
owned or controlled by the Corporation, and shares of the Corporation's own
stock held by the Corporation in a fiduciary capacity shall not be shares
entitled to vote or to be counted in determining the total number of outstanding
shares. Shares standing in the name of another domestic or foreign corporation
of any type or kind may be voted by such officer, agent, or proxy as the bylaws
of such corporation may authorize or, in the absence of such authorization, as
the board of directors of such corporation may determine. Shares held by an
administrator, executor, guardian, or conservator may be voted by him, either in
person or by proxy, without transfer of such shares into his name so long as
such shares form a part of the estate served by him and are in the possession of
such estate. Shares held by a trustee may be voted by him, either in person or
by proxy, only after the shares have been transferred into his name as trustee.
Shares standing in the name of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such receiver
without transfer of such shares into his name if authority to do so is contained
in the court order by which such receiver was appointed. A shareholder whose
shares are pledged shall be entitled to vote such shares until they have been
transferred into the name of the pledgee, and thereafter, the pledgee shall be
entitled to vote such shares.

2.07 QUORUM. The holders of a majority of the outstanding shares entitled
to vote, present in person or represented by proxy, shall constitute a quorum at
any meeting of shareholders, except as otherwise provided by law, the articles
of incorporation, or these bylaws. If a quorum shall not be present or
represented at any meeting of shareholders, a majority of the shareholders
entitled to vote at the meeting, who are present in person or represented by
proxy,

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may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
any reconvening of an adjourned meeting at which a quorum shall be present or
represented by proxy, any business may be transacted which could have been
transacted at the original meeting, if a quorum had been present or represented.

2.08 MAJORITY VOTE; WITHDRAWAL OF QUORUM. If a quorum is present in person
or represented by proxy at any meeting, the vote of the holders of a majority of
the outstanding shares entitled to vote, present in person or represented by
proxy, shall decide any question brought before such meeting, unless the
question is one on which, by express provision of law, the articles of
incorporation, or these bylaws, a different vote is required, in which event
such express provision shall govern and control the decision of such question.
The shareholders present at a duly convened meeting may continue to transact
business until adjournment, notwithstanding any withdrawal of shareholders which
may leave less than a quorum remaining.

2.09 METHOD OF VOTING; PROXIES. Every shareholder of record shall be
entitled at every meeting of shareholders to one vote on each matter submitted
to a vote, for every share standing in his name on the original stock transfer
books of the Corporation 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. Such stock transfer books shall be prima facie evidence as to the
identity of shareholders entitled to vote. At any meeting of shareholders, every
shareholder having the right to vote may vote either in person or by a proxy
executed in writing by the shareholder or by his duly authorized
attorney-in-fact. Each such proxy shall be filed with the secretary of the
Corporation before, or at the time of, the meeting. No proxy shall be valid
after eleven months from the date of its execution, unless otherwise provided in
the proxy. If no date is stated on a proxy, such proxy shall be presumed to have
been executed on the date of the meeting at which it is to be voted. Each proxy
shall be revocable unless the proxy form conspicuously states that the proxy is
irrevocable and the proxy is coupled with an interest.

2.10 CLOSING OF TRANSFER BOOKS; RECORD DATE. For the purpose of
determining shareholders entitled to notice of, or to vote at, any meeting of
shareholders or any reconvening thereof, or entitled to receive a distribution
(other than a distribution involving a purchase or redemption by the Corporation
of any of its own shares) or a share dividend, or in order to make a
determination of shareholders for any other proper purpose, the board of
directors may provide that the stock transfer books of the Corporation shall be
closed for a stated period but not to exceed in any event sixty days. If the
stock transfer books are closed for the purpose of determining shareholders
entitled to notice of, or to vote at, a meeting of shareholders, such books
shall be closed for at least ten days immediately preceding such meeting. In
lieu of closing the stock transfer books, the board of directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than sixty days and, in case of a meeting
of shareholders, not less than ten days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
If the stock transfer books are not closed and if no record date is fixed for
the determination of shareholders entitled to notice of, or to vote at, a
meeting of shareholders or entitled to receive a distribution (other than a
distribution involving a purchase or redemption by the Corporation of any of its
own shares) or

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a share dividend, the date on which the notice of the meeting is mailed or the
date on which the resolution of the board of directors declaring such
distribution or share dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders.

2.11 OFFICERS DUTIES AT MEETINGS. The president shall preside at, and the
secretary shall prepare minutes of, each meeting of shareholders, and in the
absence of either such officer, his duties shall be performed by some person or
persons elected by the vote of the holders of a majority of the outstanding
shares entitled to vote, present in person or represented by proxy.

ARTICLE THREE: DIRECTORS

3.01 MANAGEMENT. The business and property of the Corporation shall be
managed by the board of directors, and subject to the restrictions imposed by
law, the articles of incorporation, or these bylaws, the board of directors may
exercise all the powers of the Corporation.

3.02 NUMBER; ELECTION; TERM; QUALIFICATION. The number of directors which
shall constitute the board of directors shall be not less than one. The first
board of directors shall consist of the number of directors named in the
articles of incorporation. Thereafter, the number of directors which shall
constitute the entire board of directors shall be determined by resolution of
the board of directors at any meeting thereof or by the shareholders at any
meeting thereof, but shall never be less than one. At each annual meeting of
shareholders, directors shall be elected to hold office until the next annual
meeting of shareholders and until their successors are elected and qualified. No
director need be a shareholder, a resident of the State of Texas, or a citizen
of the United States.

3.03 CHANGES IN NUMBER. No decrease in the number of directors
constituting the entire board of directors 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 may be filled by (i) the shareholders at
any annual or special meeting of shareholders called for that purpose or (ii)
the board of directors for a term of office continuing only until the next
election of one or more directors by the shareholders; provided that the board
of directors may not fill more than two such directorships during the period
between any two successive annual meetings of shareholders. Notwithstanding the
foregoing, whenever the holders of any class or series of shares are entitled to
elect one or more directors by the provisions of the articles of incorporation,
any newly created directorship(s) of such class or series to be filled by reason
of an increase in the number of such directors may be filled by the affirmative
vote of a majority of the directors elected by such class or series then in
office or by a sole remaining director so elected or by the vote of the holders
of the outstanding shares of such class or series, and such directorship(s)
shall not in any case be filled by the vote of the remaining directors or by the
holders of the outstanding shares of the Corporation as a whole unless otherwise
provided in the articles of incorporation.

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3.04 REMOVAL. At any meeting of shareholders called expressly for that
purpose, any director or the entire board of directors may be removed, with or
without cause, by a vote of the holders of a majority of the shares then
entitled to vote on the election of directors.

3.05 VACANCIES. Any vacancy occurring in the board of directors may be
filled by (i) the shareholders at any annual or special meeting of shareholders
called for that purpose or (ii) the 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 to serve for the unexpired
term of his predecessor in office. Notwithstanding the foregoing, whenever the
holders of any class or series of shares are entitled to elect one or more
directors by the provisions of the articles of incorporation, any vacancies in
such directorship(s) may be filled by the affirmative vote of a majority of the
directors elected by such class or series then in office or by a sole remaining
director so elected or by the vote of the holders of the outstanding shares of
such class or series, and such directorship(s) shall not in any case be filled
by the vote of the remaining directors or the holders of the outstanding shares
of the Corporation as a whole unless otherwise provided in the articles of
incorporation.

3.06 PLACE OF MEETINGS. The board of directors may hold its meetings and
may have an office and keep the books of the Corporation, except as otherwise
provided by law, in such place or places within or without the State of Texas as
the board of directors may from time to time determine.

3.07 FIRST MEETING. Each newly elected board of directors may hold its
first meeting for the purpose of organization and the transaction of business,
if a quorum is present, immediately after and at the same place as the annual
meeting of shareholders, and notice of such meeting shall not be necessary.

3.08 REGULAR MEETINGS. Regular meetings of the board of directors may be
held without notice at such times and places as may be designated from time to
time by resolution of the board of directors and communicated to all directors.

3.09 SPECIAL MEETINGS; NOTICE. Special meetings of the board of directors
shall be held whenever called by the president or by any director. The person
calling any special meeting shall cause notice of such special meeting,
including therein the time and place of such special meeting, to be given to
each director at least two days before such special meeting. Neither the
business to be transacted at, nor the purpose of, any special meeting of the
board of directors need be specified in the notice or waiver of notice of any
special meeting.

3.10 QUORUM; MAJORITY VOTE. At all meetings of the board of directors, a
majority of the directors, fixed in the manner provided in these bylaws, shall
constitute a quorum for the transaction of business. If a quorum is not present
at a meeting, a majority of the directors present may adjourn the meeting from
time to time, without notice other than an announcement at the meeting, until a
quorum is present. The act of a majority of the directors present at a meeting
at which a quorum is in attendance shall be the act of the board of directors,
unless the act of a greater number is required by law, the articles of
incorporation, or these bylaws.

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3.11 PROCEDURE; MINUTES. At meetings of the board of directors, business
shall be transacted in such order as the board of directors may determine from
time to time. The board of directors shall appoint at each meeting a person to
preside at the meeting and a person to act as secretary of the meeting. The
secretary of the meeting shall prepare minutes of the meeting which shall be
delivered to the secretary of the Corporation for placement in the minute books
of the Corporation.

3.12 PRESUMPTION OF ASSENT. A director of the Corporation who is present
at any meeting of the board of directors at which action on any matter is taken
shall be presumed to have assented to the action unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the person acting as secretary of the meeting before
the adjournment thereof or shall forward any dissent by certified or registered
mail to the secretary of the Corporation immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a director who voted in
favor of such action.

3.13 COMPENSATION. Directors, in their capacity as directors, may receive,
by resolution of the board of directors, a fixed sum and expenses of attendance,
if any, for attending meetings of the board of directors or a stated salary. No
director shall be precluded from serving the Corporation in any other capacity
or receiving compensation therefor.

ARTICLE FOUR: COMMITTEES

4.01 DESIGNATION. The board of directors may, by resolution adopted by a
majority of the entire board of directors, designate executive and other
committees.

4.02 NUMBER; QUALIFICATION; TERM. Each committee shall consist of one or
more directors appointed by resolution adopted by a majority of the entire board
of directors. The number of committee members may be increased or decreased from
time to time by resolution adopted by a majority of the entire board of
directors. Each committee member shall serve as such until the earliest of (i)
the expiration of his term as director, (ii) his resignation as a committee
member or as a director, or (iii) his removal, as a committee member or as a
director.

4.03 AUTHORITY. Each committee, to the extent expressly provided in the
resolution establishing such committee, shall have and may exercise all of the
authority of the board of directors in the management of the business and
property of the Corporation, including, without limitation, the power and
authority to declare a dividend and to authorize the issuance of shares of the
Corporation. Notwithstanding the foregoing, however, no committee shall have the
authority of the board of directors in reference to:

(a) amending the articles of incorporation;

(b) approving a plan of merger or consolidation;

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(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 the board of directors or of any
committee;

(g) filling any directorship to be filled by reason of an increase
in the number of directors;

(h) electing or removing officers or committee members;

(i) fixing the compensation of any committee member; or

(j) altering or repealing any resolution of the board of directors
which by its terms provides that it shall not be amendable or
repealable.

4.04 COMMITTEE CHANGES; REMOVAL. The board of directors shall have the
power at any time to fill vacancies in, to change the membership of, and to
discharge any committee. However, a committee member may be removed by the board
of directors, only if, in the judgment of the board of directors, the best
interests of the Corporation will be served thereby.

4.05 REGULAR MEETINGS. Regular meetings of any committee may be held
without notice at such time and place as may be designated from time to time by
the committee and communicated to all members thereof.

4.06 SPECIAL MEETINGS. Special meetings of any committee may be held
whenever called by any committee member. The committee member calling any
special meeting shall cause notice of such special meeting, including therein
the time and place of such special meeting, to be given to each committee member
at least two days before such special meeting. Neither the business to be
transacted at, nor the purpose of, any special meeting of any committee need be
specified in the notice or waiver of notice of any special meeting.

4.07 QUORUM; MAJORITY VOTE. At meetings of any committee, a majority of
the number of members designated by the board of directors shall constitute a
quorum for the transaction of business. If a quorum is not present at a meeting
of any committee, a majority of 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. The act of a majority of the members present at any meeting
at which a quorum is in attendance shall be the act of a committee, unless the
act of a greater number is required by law, the articles of incorporation, or
these bylaws.

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4.08 MINUTES. Each committee shall cause minutes of its proceedings to be
prepared and shall report the same to the board of directors upon the request of
the board of directors. The minutes of the proceedings of each committee shall
be delivered to the secretary of the Corporation for placement in the minute
books of the Corporation.

4.09 COMPENSATION. Committee members may, by resolution of the board of
directors, be allowed a fixed sum and expenses of attendance, if any, for
attending any committee meetings or a stated salary.

4.10 RESPONSIBILITY. The designation of any committee and the delegation
of authority to it shall not operate to relieve the board of directors or any
director of any responsibility imposed upon it or such director by law.

ARTICLE FIVE: GENERAL PROVISIONS RELATING TO MEETINGS

5.01 NOTICE. Whenever by law, the articles of incorporation, or these
bylaws, notice is required to be given to any committee member, director, or
shareholder and no provision is made as to how such notice shall be given, it
shall be construed to mean that any such notice may be given (a) in person, (b)
in writing, by mail, postage prepaid, addressed to such committee member,
director, or shareholder at his address as it appears on the books of the
Corporation or, in the case of a shareholder, the stock transfer records of the
Corporation, or (c) by any other method permitted by law. Any notice required or
permitted to be given by mail shall be deemed to be delivered and given at the
time when the same is deposited in the United States mail, postage prepaid, and
addressed as aforesaid. Any notice required or permitted to be given by
telegram, telex, cable, telecopier, or similar means shall be deemed to be
delivered and given at the time transmitted with all charges prepaid and
addressed as aforesaid.

5.02 WAIVER OF NOTICE. Whenever by law, the articles of incorporation, or
these bylaws, any notice is required to be given to any committee member,
shareholder, or director of the Corporation, a waiver thereof in writing signed
by the person or persons entitled to such notice, whether before or after the
time notice should have been given, shall be equivalent to the giving of such
notice. Attendance of a committee member, shareholder, or director at a meeting
shall constitute a waiver of notice of such meeting, except where such 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.

5.03 TELEPHONE AND SIMILAR MEETINGS. Shareholders, directors, or committee
members may participate in and hold a meeting by means of a conference telephone
or similar communications equipment by means of which persons participating in
the meeting can hear each other. Participation in such a meeting shall
constitute presence in person at such 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.

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5.04 ACTION WITHOUT MEETING. Any action which may be taken, or is required
by law, the articles of incorporation, or these bylaws to be taken, at a meeting
of shareholders, the directors, or any committee members 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, directors, or committee members, as the case
may be, entitled to vote with respect to the subject matter thereof, and such
consent shall have the same force and effect, as of the date stated therein, as
a unanimous vote of such shareholders, directors, or committee members, as the
case may be, and may be stated as such in any document filed with the Secretary
of State of Texas or in any certificate or other document delivered to any
person. The consent may be in one or more counterparts so long as each
shareholder, director, or committee member signs one of the counterparts. The
signed consent shall be placed in the minute books of the Corporation.

ARTICLE SIX: OFFICERS AND OTHER AGENTS

6.01 NUMBER; TITLES; ELECTION; TERM; QUALIFICATION. The officers of the
Corporation shall be a president and secretary, and if the board of directors
determines appropriate, one or more vice presidents (and, in the case of each
vice president, with such descriptive title, if any, as the board of directors
shall determine), and a treasurer. The Corporation may also have a chairman of
the board, one or more assistant treasurers, one or more assistant secretaries,
and such other officers and such agents as the board of directors may from time
to time elect or appoint. The board of directors shall elect a president and
secretary and such other officers as it deems appropriate at its first meeting
at which a quorum shall be present after the annual meeting of shareholders or
whenever a vacancy exists. The board of directors then, or from time to time,
may also elect or appoint one or more other officers or agents as it shall deem
advisable. Each officer and agent shall hold office for the term for which he is
elected or appointed and until his successor has been elected or appointed and
qualified. Any person may hold any number of offices. No officer or agent need
be a shareholder, a director, a resident of the State of Texas, or a citizen of
the United States.

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 interest of the Corporation will be served thereby, but 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 may
be filled by the board of directors.

6.04 AUTHORITY. Officers 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.

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6.05 COMPENSATION. The compensation, if any, of officers and agents shall
be fixed from time to time by the board of directors; provided, that the board
of directors may by resolution delegate to any one or more officers of the
Corporation the authority to fix such compensation.

6.06 CHAIRMAN OF THE BOARD. The chairman of the board shall have such
powers and duties as may be prescribed by the board of directors.

6.07 PRESIDENT. Unless and to the extent that such powers and duties are
expressly delegated to a chairman of the board by the board of directors, the
president shall be the chief executive officer of the Corporation and, subject
to the supervision of the board of directors, shall have general management and
control of the business and property of the Corporation in the ordinary course
of its business with all such powers with respect to such general management and
control as may be reasonably incident to such responsibilities, including, but
not limited to, the power to employ, discharge, or suspend employees and agents
of the Corporation, to fix the compensation of employees and agents, and to
suspend, with or without cause, any officer of the Corporation pending final
action by the board of directors with respect to continued suspension, removal,
or reinstatement of such officer. The president may, without limitation, agree
upon and execute all division and transfer orders, bonds, contracts, and other
obligations in the name of the Corporation.

6.08 VICE PRESIDENTS. Each vice president shall have such powers and
duties as may be prescribed by the board of directors or as may be delegated
from time to time by the president and (in the order as designated by the board
of directors, or in the absence of such designation, as determined by the length
of time each has held the office of vice president continuously) shall exercise
the powers of the president during that officer's absence or inability to act.
As between the Corporation and third parties, any action taken by a vice
president in the performance of the duties of the president shall be conclusive
evidence of the absence or inability to act of the president at the time such
action was taken.

6.09 TREASURER. The treasurer shall have custody of the Corporation's
funds and securities, shall keep full and accurate accounts of receipts and
disbursements, and shall deposit all moneys and valuable effects in the name and
to the credit of the Corporation in such depository or depositories as may be
designated by the board of directors. The treasurer shall audit all payrolls and
vouchers of the Corporation, receive, audit, and consolidate all operating and
financial statements of the Corporation and its various departments, shall
supervise the accounting and auditing practices of the Corporation, and shall
have charge of matters relating to taxation. Additionally, the treasurer shall
have the power to endorse for deposit, collection, or otherwise all checks,
drafts, notes, bills of exchange, and other commercial paper payable to the
Corporation and to give proper receipts and discharges for all payments to the
Corporation. The treasurer shall perform such other duties as may be prescribed
by the board of directors or as may be delegated from time to time by the
president.

6.10 ASSISTANT TREASURERS. Each assistant treasurer shall have such powers
and duties as may be prescribed by the board of directors or as may be delegated
from time to time by the president. The assistant treasurers (in the order as
designated by the board of directors or, in the

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<PAGE>
absence of such designation, as determined by the length of time each has held
the office of assistant treasurer continuously) shall exercise the powers of the
treasurer during that officer's absence or inability to act. As between the
Corporation and third parties, any action taken by an assistant treasurer in the
performance of the duties of the treasurer shall be conclusive evidence of the
absence or inability to act of the treasurer at the time such action was taken.

6.11 SECRETARY. The secretary shall maintain minutes of all meetings of
the board of directors, of any committee, and of the shareholders or consents in
lieu of such minutes in the Corporation's minute books, and shall cause notice
of such meetings to be given when requested by any person authorized to call
such meetings. The secretary may sign with the president, in the name of the
Corporation, all contracts of the Corporation and affix the seal of the
Corporation thereto. The secretary shall have charge of the certificate books,
stock transfer books, stock ledgers, and such other stock books and papers as
the board of directors may direct, all of which shall at all reasonable times be
open to inspection by any director at the office of the Corporation during
business hours. The secretary shall perform such other duties as may be
prescribed by the board of directors or as may be delegated from time to time by
the president.

6.12 ASSISTANT SECRETARIES. Each assistant secretary shall have such
powers and duties as may be prescribed by the board of directors or as may be
delegated from time to time by the president. The assistant secretaries (in the
order designated by the board of directors or, in the absence of such
designation, as determined by the length of time each has held the office of
assistant secretary continuously) shall exercise the powers of the secretary
during that officer's absence or inability to act. As between the Corporation
and third parties, any action taken by an assistant secretary in the performance
of the duties of the secretary shall be conclusive evidence of the absence or
inability to act of the secretary at the time such action was taken.

ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS

7.01 CERTIFICATED AND UNCERTIFICATED SHARES. The shares of the Corporation
may be either certificated shares or uncertificated shares. As used herein, the
term "certificated shares" means shares represented by instruments in bearer or
registered form, and the term "uncertificated shares" means shares not
represented by instruments and the transfers of which are registered upon books
maintained for that purpose by or on behalf of the Corporation.

7.02 CERTIFICATES FOR CERTIFICATED SHARES. The certificates representing
certificated shares of stock of the Corporation shall be in such form as shall
be approved by the board of directors in conformity with law. The certificates
shall be consecutively numbered, shall be entered as they are issued in the
books of the Corporation or in the records of the Corporation's designated
transfer agent, if any, and shall state upon the face thereof: (a) that the
Corporation is organized under the laws of the State of Texas; (b) the name of
the person to whom issued; (c) the number and class of shares and the
designation of the series, if any, which such certificate represents; (d) the
par value of each share represented by such certificate, or a statement that the
shares are without par value; and (e) such other matters as may be required by
law. The certificates shall

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<PAGE>
be signed by the president or any vice president and also by the secretary, an
assistant secretary, or any other officer; however, the signatures of any of
such officers may be facsimiles. The certificates may be sealed with the seal of
the Corporation or a facsimile thereof.

7.03 ISSUANCE. Shares with or without par value may be issued for such
consideration and to such persons as the board of directors may from time to
time determine, except in the case of shares with par value the consideration
must be at least equal to the par value of such shares. Shares may not be issued
until the full amount of the consideration has been paid. After the issuance of
uncertificated shares, the Corporation or the transfer agent of the Corporation
shall send to the registered owner of such uncertificated shares a written
notice containing the information required to be stated on certificates
representing shares of stock as set forth in Section 7.02 above and such
additional information as may be required by Article 2.19 of the Texas Business
Corporation Act as currently in effect and as the same may be amended from time
to time hereafter.

7.04 CONSIDERATION FOR SHARES. The consideration for the issuance of
shares shall consist of money paid, labor done (including services actually
performed for the Corporation), or property (tangible or intangible) actually
received. Neither promissory notes nor the promise of future services shall
constitute payment or part payment for the issuance of shares. 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. 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. The consideration received
for shares shall be allocated by the board of directors, in accordance with law,
between stated capital and capital surplus accounts.

7.05 LOST, STOLEN, OR DESTROYED CERTIFICATES. The Corporation shall issue
a new certificate or certificates in place of any certificate representing
shares previously issued if the registered owner of the certificate:

(a) CLAIM. Makes proof by affidavit, in form and substance
satisfactory to the board of directors, that a previously
issued certificate representing shares has been lost,
destroyed, or stolen;

(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;

(c) BOND. Delivers to the Corporation a bond in such form, with
such surety or sureties, and with such fixed or open penalty,
as the board of directors may direct, in its discretion, 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

(d) OTHER REQUIREMENTS. Satisfies any other reasonable
requirements imposed by the board of directors.

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<PAGE>
7.06 TRANSFER OF SHARES. Shares of stock of the Corporation shall be
transferable only on the books of the Corporation by the shareholders thereof in
person or by their duly authorized attorneys or legal representatives. With
respect to certificated shares, upon surrender to the Corporation or the
transfer agent of the Corporation for transfer of a certificate representing
shares duly endorsed and accompanied by any reasonable assurances that such
endorsements are genuine and effective as the Corporation may require and after
compliance with any applicable law relating to the collection of taxes, the
Corporation or its transfer agent shall, if it has no notice of an adverse claim
or if it has discharged any duty with respect to any adverse claim, issue one or
more new certificates to the person entitled thereto, cancel the old
certificate, and record the transaction upon its books. With respect to
uncertificated shares, upon delivery to the Corporation or the transfer agent of
the Corporation of an instruction originated by an appropriate person (as
prescribed by ss.8.107 of the Texas Uniform Commercial Code as currently in
effect and as the same may be amended from time to time hereafter) and
accompanied by any reasonable assurances that such instruction is genuine and
effective as the Corporation may require and after compliance with any
applicable law relating to the collection of taxes, the Corporation or its
transfer agent shall, if it has no notice of an adverse claim or has discharged
any duty with respect to any adverse claim, record the transaction upon its
books, and shall send to the new registered owner of such uncertificated shares,
and, if the shares have been transferred subject to a registered pledge, to the
registered pledgee, a written notice containing the information required to be
stated on certificates representing shares of stock set forth in Section 7.02
above and such additional information as may be required by Article 2.19 of the
Texas Business Corporation Act as currently in effect and as the same may be
amended from time to time hereafter.

7.07 REGISTERED SHAREHOLDERS. The Corporation shall be entitled to treat
the shareholder of record as the shareholder in fact of any shares and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such shares on the part of any other person, whether or not it shall
have actual or other notice thereof, except as otherwise provided by law.

7.08 LEGENDS. The board of directors shall cause an appropriate legend to
be placed on certificates representing shares of stock as may be deemed
necessary or desirable by the board of directors in order for the Corporation to
comply with applicable federal or state securities or other laws.

7.09 REGULATIONS. The board of directors shall have the power and
authority to make all such rules and regulations as it may deem expedient
concerning the issue, transfer, registration, or replacement of certificates
representing shares of stock of the Corporation.

ARTICLE EIGHT: MISCELLANEOUS PROVISIONS

8.01 DIVIDENDS. Subject to provisions of applicable statutes and the
articles of incorporation, dividends may be declared by and at the discretion of
the board of directors at any meeting and may be paid in cash, in property, or
in shares of stock of the Corporation.

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8.02 RESERVES. The board of directors may create out of funds of the
Corporation legally available therefor such reserve or reserves out of the
Corporation's surplus as the board of directors from time to time, in its
discretion, considers proper to provide for contingencies, to equalize
dividends, to repair or maintain any property of the Corporation, or for such
other purpose as the board of directors shall consider beneficial to the
Corporation. The board of directors may modify or abolish any such reserve.

8.03 BOOKS AND RECORDS. The Corporation shall keep correct and complete
books and records of account, shall keep minutes of the proceedings of its
shareholders, board of directors, and any committee, 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 shareholder.

8.04 FISCAL YEAR. The fiscal year of the Corporation shall be fixed by the
board of directors; provided, that if such fiscal year is not fixed by the board
of directors and the board of directors does not defer its determination of the
fiscal year, the fiscal year shall be the calendar year.

8.05 SEAL. The seal, if any, of the Corporation shall be in such form as
may be approved from time to time by the board of directors. If the board of
directors approves a seal, the affixation of such seal shall not be required to
create a valid and binding obligation against the Corporation.

8.06 ATTESTATION BY THE SECRETARY. With respect to any deed, deed of
trust, mortgage, or other instrument executed by the Corporation through its
duly authorized officer or officers, the attestation to such execution by the
secretary of the Corporation shall not be necessary to constitute such deed,
deed of trust, mortgage, or other instrument a valid and binding obligation
against the Corporation unless the resolutions, if any, of the board of
directors authorizing such execution expressly state that such attestation is
necessary.

8.07 RESIGNATION. Any director, committee member, officer, or agent may
resign by so stating at any meeting of the board of directors or by giving
written notice to the board of directors, the president, or the secretary. Such
resignation shall take effect at the time specified in the statement at the
board of directors' meeting or in the written notice, but in no event may the
effective time of such resignation be prior to the time such statement is made
or such notice is given. If no effective time is specified in the resignation,
the resignation shall be effective immediately. Unless a resignation specifies
otherwise, it shall be effective without being accepted.

8.08 SECURITIES OF OTHER CORPORATIONS. The president or any vice president
of the Corporation shall have the power and authority to transfer, endorse for
transfer, vote, consent, or take any other action with respect to any securities
of another issuer which may be held or owned by the Corporation and to make,
execute, and deliver any waiver, proxy, or consent with respect to any such
securities.

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8.09 AMENDMENT OF BYLAWS. The power to amend or repeal these bylaws or to
adopt new bylaws is vested in the board of directors, but is subject to the
right of the shareholders to amend or repeal these bylaws or to adopt new
bylaws.

8.10 INVALID PROVISIONS. If any part of these bylaws is held invalid or
inoperative for any reason, the remaining parts, so far as is possible and
reasonable, shall remain valid and operative.

8.11 HEADINGS; TABLE OF CONTENTS. The headings and table of contents used
in these bylaws are for convenience only and do not constitute matter to be
construed in the interpretation of these bylaws.

The undersigned, the secretary of the Corporation, hereby certifies that
the foregoing bylaws were adopted by the board of directors of the Corporation
as of ________________, 19__.

Thomas F. Cooke, Secretary

EXHIBIT 10.1

PURCHASE AND SALE AGREEMENT

This Agreement is entered into by and between The Premium Group, located at 116
W. 8th, Suite 105, Georgetown, Texas 78626, (hereafter "Premium") and Saratoga
Holdings I, Inc., located at 301 Congress Ave., Suite 1550, Austin, Texas 78701,
(hereinafter the "Buyer"). In consideration of the mutual covenants contained in
this Agreement and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:

1. Agreement to Sell Receivables. Premium owns certain accounts receivable (the
"Receivables"), as detailed in Exhibit A attached to this document. Premium
wishes to sell to Buyer, and Buyer wishes to purchase from Seller, said
Receivables, under the terms and conditions set forth in this document.

2. Ownership of Receivables. Premium hereby warrants that it has full right and
title to the Receivables. Under the terms of this agreement, Premium agrees to
transfer full right and title, including the full principal balance of each
account and any accrued interest owed by the debtor on each account, to the
Buyer.

3. Warrants and Representations. This purchase shall be expressly made without
recourse or representation as to the character, accuracy or sufficiency of the
information furnished to the Buyer, either expressed or implied, except as
specifically stated as follows:
a. Premium warrants that these Receivables shall not include accounts,
which as of the date of this agreement, are classified as follows
(hereinafter referred as Unqualified Accounts): (1) Bankrupt (as
determined by the Clerk of the Bankruptcy Court stamp); (2) Deceased
(as determined by the date of death); (3) Fraud (as determined by
the date that the fraud lawsuit was filed), (4) Prior Settlement or
Payment Agreement; or (5) Outside the applicable statute of
limitations.
b. Premium has good and clear title to the Receivables.

4. Repurchase or Replacement. Premium warrants that any "Unqualified Accounts"
will be repurchased from Buyer at the exact price paid for each account, or will
be replaced by like and similar Qualified accounts, at Premium's option, for a
period of 90 days from the date of this agreement. Buyer or its agent must
report any accounts requiring repurchase or replacement to Seller no later than
90 days from the date of this agreement.

5. Purchase Price and Payment Terms. The Purchase Price, Terms, and Closing Date
of this sale are stated in Exhibit B of this agreement (the "Closing
Statement"). Upon receipt of certified funds, Premium will sign Exhibit C (the
"Bill of Sale"), and will fax a signed copy immediately to Buyer, with originals
sent to Buyer within 3 business days of closing.
<PAGE>
6. Documentation and Shipping of Files. Premium will ship all available hardcopy
files on the Receivables to Buyer immediately, via UPS ground, at Buyer's
expense. In the event that files are delivered to Buyer that are not listed on
the Exhibit A of this agreement, Buyer will return said files to Premium. In
addition to the hardcopy listing of each account included under this agreement
(Exhibit A), Premium will provide to Buyer a copy stored on magnetic media (3
1/2 Inch Disk) in Microsoft Excel spreadsheet format, within three business days
of the Closing Date. On all documentation not immediately available at closing,
Buyer agrees to request documentation only through Premium, on an individual
account basis. Premium is responsible for requesting said documentation, through
the appropriate channels, from the originator, and forwarding said documentation
to Buyer. Premium will provide documentation to Buyer at the exact cost paid by
Premium to the originator, but the cost to the Buyer shall not exceed $7.50 per
document. Premium will use best efforts to obtain and provide said documentation
and forward such to Buyer as soon as practicable, but all documentation is
provided on an "as available" basis.

7. Seller's Indemnification. Premium shall hold harmless and indemnify Buyer
from any and all liability, claim, demand, litigation, damages, or legal fees
resulting from any actions taken by Premium with regard to the collection of
accounts being sold hereunder prior to the date of Closing of this transaction.

8. Buyer's Indemnification. Buyer shall hold harmless and indemnify Premium from
any and all liability, claim, demand, litigation, damages, or legal fees
resulting from any actions taken by Buyer with regard to the collection of
accounts being sold hereunder after the date of Closing of this transaction.

9. Buyer's Authority. Buyer represents that they have full authority under any
applicable organization or corporate bylaws or resolutions to enter into this
agreement with Premium.

10. Buyer' Warrants. Buyer warrants and agrees that in the collection of all of
the accounts listed in Exhibit A, that Buyer will comply with all applicable
state and federal debt collection laws. Buyer also agrees that within sixty (60)
days after the Closing Date, Buyer shall notify or attempt to notify all debtors
at the last known address that the account ownership has been transferred, and
that all payments or correspondence concerning the accounts shall thereafter be
directed to the Buyer.

11. Binding Agreement. This Agreement shall be binding upon both parties, their
heirs, executors, successors, or assigns. If any term, provision, or condition
of this Agreement shall be held invalid, void or unenforceable, the remainder
herein shall survive and remain in full force and effect. The parties agree that
any claim or action brought concerning this Agreement shall be brought in
Williamson County, Texas, and agree to forebear from filing a claim in any other
jurisdiction. This Agreement shall be governed by the laws of the State of
Texas. In any litigation arising under the terms of this Agreement, the
prevailing party shall be entitled to reasonable legal fees and expenses in
addition to any amount of the judgment.

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<PAGE>
By signing below, Buyer represents and warrants that they have read and
understand this Agreement.

EXECUTED and effective this 12th day of November, 1998.

Buyer: Premium:
Saratoga Holdings I, Inc. The Premium Group

By: /s/THOMAS F. COOKE By: /s/RANDALL B. JOHNSON

Thomas F. Cooke, CEO Randall B. Johnson, Managing Partner

3
<PAGE>
EXHIBIT A

Inventory of accounts included under this agreement (Attach Detailed Listing).

4
<PAGE>
EXHIBIT B

CLOSING STATEMENT

Number of Accounts: 149

Total Face Value of Accounts: $223,907.05

Total Purchase Price: $10,299.72

Total Due at Closing: $10,299.72

Terms: Certified Funds at Closing

Closing Date: November 12, 1998

EXHIBIT 10.2

PREMIUM RECOVERIES, INC.
SERVICE AGREEMENT

This Agreement is entered into by and between Premium Recoveries, Inc., located
at 308 West Seventh Street, Suite A, Georgetown, Texas 78626, (hereafter the
"Agency") and Saratoga Holdings I, Inc., located at 301 Congress Ave., Suite
1550, Austin, Texas 78701, (hereinafter the "Client"). In consideration of the
mutual covenants contained in this Agreement and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:

1. Transfer of Accounts. Client shall, during the term of this agreement,
transfer certain accounts receivable (the "Accounts") to the Agency for
collection. Client agrees not to transfer any such Account(s) to any other
collection agency while the Account is in Agency's possession. Referral of
Accounts shall be at the Client's sole discretion.

2. Collection Efforts. Agency shall use reasonable efforts to effect the
collection of said Accounts referred to it by the Client. Agency agrees
that it shall comply will all provisions of the Fair Debt Collection
Practices Act (FDCPA) and all applicable state statutes.

3. Direct Payments. Client shall immediately notify Agency of all direct
payments made to them on all referred Accounts. Client understands and
agrees that full commissions are due and payable to Agency on such direct
payments. Client further agrees to indemnify Agency as detailed in
paragraph 15 below for all losses caused by Client not reporting any such
direct payments.

4. Escrow Account. All funds collected by Agency on behalf of Client shall be
deposited in Agency's escrow account. Client authorizes Agency to endorse
negotiable instruments made payable to Client for purposes of depositing
funds in said account. Any interest earned on funds shall be retained by
Agency.

5. Client Payments. Agency shall remit monies collected on the referred
Accounts during the preceding month, less commissions and associated
expenses, no later than the 15th of the following month. Agency will
provide Client with a statement summary detailing the collections for each
period. Each party shall maintain true and correct records pertaining to
the Accounts which are the subject of this agreement, and each party shall
have the right to audit sufficient to verify the accounting of all funds,
and the accuracy and appropriateness of all charges.

6. Documentation Requirements. Client acknowledges that in connection with
the collection of delinquent consumer debts, the FDCPA requires that the
Agency provide the consumer with verification of the underlying obligation
if that request is made to the Agency, in
<PAGE>
writing, by the consumer within 30 days of our initial communication with
the consumer. The law prohibits Agency from collecting on any obligation
once a verification request is made to the Agency from the consumer, until
such time as said verification has been mailed by the Agency to the
consumer. Client acknowledges that in any situation in which it does not
provide Agency with the requested verification, Agency can no longer
legally attempt to collect the debt.

[ X ] Client agrees to designate Agency as its agent to assist in
obtaining Documentation from the originator on the Accounts. In this
event, any costs of obtaining said documentation from the
originator, not to exceed $7.50 per Account, shall be reimbursed by
the Client to the Agency. Such reimbursement shall be made from
collection proceeds on a monthly basis.

7. Skip Tracing. Agency, in the general course of its operations, provides
initial skip tracing of the Accounts, in order to locate the debtor for
whom a current address is not available. Client understands and agrees
that this process shall be limited to an automated review of certain
national databases.

[ X ] Client agrees that in the event that certain accounts require
additional and more advanced skip-tracing in order to locate the
debtor, Client will reimburse Agency for the cost of such
activities, not to exceed $3.00 per account. Such reimbursement
shall be made from collection proceeds on a monthly basis.

8. Account Returns. Agency shall return, at no charge, any account placed in
error.

9. Term of Agreement. This agreement shall be for an initial term of ______
months from the date of execution of this agreement. After the initial
term, this agreement shall continue on a month to month basis. After the
initial term, this agreement may be terminated by either party upon thirty
(30) days written notice to the other. Notice of termination shall be sent
by certified or registered mail, and by facsimile. Payment arrangements,
promises to pay, and legal accounts placed with the Agency prior to the
effective date of the termination will be retained by the Agency for
further collection, until ultimate resolution of the account.

10. Credit Bureau Reporting. Client hereby authorizes Agency, at its sole
discretion, to report to credit reporting bureaus all assigned account
information provided under this agreement. Client agrees not to report to
such credit reporting bureaus any collection account information
authorized to be reported by the Agency.

11. Settlements. Agency shall not initiate legal action nor accept settlement
on an account without prior written authorization of the Client. Legal
action will be brought in the Client's name where applicable.
Authorization by client for legal action will be on a claim by claim
basis. Client agrees to advance all court costs associated with the filing
of legal

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action on an account, and agrees that it will be reimbursed such costs if
recovered from the debtor.

12. Base Settlement Authority. Without prior notification on an individual
account basis, Client agrees to authorize Agency to settle any account
placed for a percentage of the outstanding balance equal to fifty percent
or greater.

13. Commissions. In consideration for the collection efforts of the Agency, a
commission shall be retained by Agency of thirty percent of the monies
collected from first placement efforts, and thirty percent of the monies
collected from accounts authorized for legal collection efforts.

14. Agency's Indemnification. Agency shall hold harmless and indemnify Client
from any and all liability, claim, demand, litigation, damages, or legal
fees resulting from any actions taken by Agency with regard to the
collection of accounts during the term of this agreement.

15. Client's Indemnification. Client shall hold harmless and indemnify Agency
from any and all liability, claim, demand, litigation, damages, or legal
fees resulting from any actions taken by Client with regard to the
collection of accounts prior to the date of this agreement. Client hereby
states that the information provided to Agency is true and correct to the
best of their knowledge and control, and shall hold harmless and indemnify
Agency from any and all liability, claim, demand, litigation, damages, or
legal fees resulting from the inaccuracy of such information.

16. Binding Agreement. This Agreement shall be binding upon both parties,
their heirs, executors, successors, or assigns. If any term, provision, or
condition of this Agreement shall be held invalid, void or unenforceable,
the remainder herein shall survive and remain in full force and effect.
The parties agree that any claim or action brought concerning this
Agreement shall be brought in Williamson County, Texas, and agree to
forebear from filing a claim in any other jurisdiction. This Agreement
shall be governed by the laws of the State of Texas. In any litigation
arising under the terms of this Agreement, the prevailing party shall be
entitled to reasonable legal fees and expenses in addition to any amount
of the judgment.

By signing below, Client represents and warrants that they have read and
understand this Agreement.

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EXECUTED and effective this 12th day of November, 1998.

Client: Agency:
Saratoga Holdings I, Inc. Premium Recoveries, Inc.

By: /s/THOMAS F. COOKE By: /s/RANDALL B. JOHNSON
Thomas F. Cooke, CEO Randall B. Johnson, Vice President

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EXHIBIT C

ASSIGNMENT AND BILL OF SALE

The Premium Group (the "Seller"), has entered into a Purchase Agreement dated
November 12, 1998, (the "Agreement") for the sale of certain accounts receivable
described in the Purchase Agreement so dated, with Saratoga Holdings I, Inc.
(the "Buyer"), upon the terms and conditions set forth in the Agreement.

Now, therefore, for good and valuable consideration, Seller hereby sells,
assigns, and transfers to Buyer, its successor and assigns, all of the Seller's
rights, title, and interest in each and every one of the accounts described in
the Agreement.

Buyer and Seller agree that the Purchase Price shall be as stated in "Exhibit
B", the Closing Statement of the Agreement.

In witness thereof, Seller has assigned and delivered this instrument on the
12th day of November, 1998.

The Premium Group

By: /s/RANDALL B. JOHNSON
Randall B. Johnson, Managing Partner

EXHIBIT 23.02

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We hereby consent to the use in this Registration Statement of our report dated
November 20, 1998 relating to the financial statements of Saratoga Holdings I,
Inc. and to the reference to our Firm under the caption "Experts," in this
Registration Statement and related Prospectus.

/s/ HEIN + ASSOCIATES LLP
HEIN + ASSOCIATES LLP
Houston, Texas
November 24, 1998