-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O5zHlAZx3BXcLrMFGiRHtzgSrMuNK1fKDH6NpF+bLWgNUErgKo7hD4/43z0YA4Q2 H6R20dlTTYZarHySNt2hog== 0001187897-03-000007.txt : 20030408 0001187897-03-000007.hdr.sgml : 20030408 20030408114720 ACCESSION NUMBER: 0001187897-03-000007 CONFORMED SUBMISSION TYPE: SB-2 PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 20030408 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEXXAR INC CENTRAL INDEX KEY: 0001208671 IRS NUMBER: 134049603 FILING VALUES: FORM TYPE: SB-2 SEC ACT: 1933 Act SEC FILE NUMBER: 333-104368 FILM NUMBER: 03642289 MAIL ADDRESS: STREET 1: 19 ENGINEERS LANE CITY: FARMINGDALE STATE: NY ZIP: 11735 SB-2 1 texxaregister.txt REGISTRATION STATEMENT Registration Number: UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM SB-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 TEXXAR, INC. ----------------------- (Name of small business issuer in its charter) Delaware 1623 13-4049603 - ----------------------- ---------------------------- ------------------- (State of incorporation (Primary Standard Industrial (I.R.S. Employer or jurisdiction Classification Code Number) Identification No.) of organization) 19 Engineers Lane, Farmingdale, New York 11735 (631)756-9116 - -------------------------------------------------------------------------------- (Address and telephone number of principal executive offices), 19 Engineers lane, Farmingdale, New York 11735 (631)756-9116 - -------------------------------------------------------------------------------- (Address of principal place of business or intended principal place of business) Aron Govil, 19 Engineers lane, Farmingdale, New York 11735 (631)756-9116 - -------------------------------------------------------------------------------- (Name, address, and telephone number of agent for service) Copies to: Joel Pensley, Esq. 211 Schoolhouse Road Norfolk, Connecticut 06058 Phone: (860) 542-1122 Fax: (626) 608-3076 APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of the registration statement until such time that all of the shares of common stock registered hereunder have been sold. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. /x/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under 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, check the following box. / / ------------------------ CALCULATION OF REGISTRATION FEE Proposed Proposed Title of Maximum Maximum Each Class of Amount Offering Aggregate Amount of Securities Being Being Price Per Offering Registration Registered Registered Share (1) Price(1) Fee - ------------------------------------------------------------------------------- Shares of common stock 1,496,300 $ 0.50 $ 748,150 $ 68.83 owned by existing stockholders Shares of common stock to be resold by investor pursuant to stock purchase agreement 4,000,000 $ 0.50 $2,000,000 184.00 ----------- ---------- TOTAL $2,795,700 $252.83 (1) Estimated solely for the purposes of computing the registration fee pursuant to Rule 457. The registrant hereby amends the 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 the registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL, NOR DOES IT SEEK AN OFFER TO BUY, THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. Subject to completion: Dated April 8, 2003 PROSPECTUS TEXXAR, INC. 1,496,300 SHARES OF COMMON STOCK UP TO 4,000,000 SHARES OF COMMON STOCK This prospectus relates to the resale by the selling stockholders who presently own our shares of common stock of 1,496,300 shares of our common stock. The selling stockholders may sell at $.50 per share from time to time until a market develops and thereafter at the prevailing market price or in negotiated transactions. All the shares offered are currently outstanding. None of our affiliates are selling stockholders. We will not receive any of the proceeds from the sale of the shares by the selling stockholders. In addition, we registering up to 4,000,000 shares for resale by Nexgen Holdings, which may acquire up to 4,000,000 shares in a private placement under a stock purchase agreement with us. In addition to being a selling stockholder, Nexgen Holdings is considered to be an underwriter within the meaning of the Securities Act of 1933 with respect to these shares. Nexgen Holdings may sell our common stock at prices and on terms determined by the market or in negotiated transactions. We will not receive any proceeds from the sale of shares by Nexgen Holdings; however, we will receive proceeds from Nexgen Holdings to the extent it acquires our common stock under the stock purchase agreement. We are not required to sell any shares to Nexgen Holdings under the stock purchase agreement, and we may decide not to do so. A description of the agreement is found beginning on page xx of the prospectus. Nexgen Holdings, Inc. may use this prospectus in connection with sales of up to 4,000,000 shares of our common stock. AS YOU REVIEW THIS PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DESCRIBED IN "RISK FACTORS" BEGINNING ON PAGE 4. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL, NOR DOES IT SEEK AN OFFER TO BUY, THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of the prospectus is April , 2003 TABLE OF CONTENTS PAGE ---- Prospectus Summary..................................................... 3 Information About ouf Stock Purchase Agreement with Nexgen Holdings.... 3 The Offering........................................................... 4 Summary Financial Information.......................................... 4 Risk Factors........................................................... 6 Use of Proceeds........................................................ 8 Capitalization......................................................... 9 Dividend Policy........................................................ 9 Management's Discussion and Analysis of Financial Condition and Results of Operations............................................ 9 Business............................................................... 12 Management............................................................. 17 Certain Related Party Transactions..................................... 20 Principal Stockholders................................................. 20 Description of Securities.............................................. 20 Selling Stockholders................................................... 21 Plan of Distribution of Shares of Existing Stockholders ............... 23 Stock Purchase Agreement............................................... 25 Nexgen Holdings' Plan of Distribution.................................. 28 Shares Eligible for Future Sale........................................ 29 Where You Can Find More Information.................................... 30 Legal Proceedings...................................................... 30 Legal Matters.......................................................... 31 Experts................................................................ 31 Financial Statements................................................... F-1 ------------------------ You may rely only on the information contained in the prospectus. We have not authorized anyone to provide information different from that contained in this prospectus. Neither the delivery of this prospectus nor sale of common stock means that information contained in the prospectus is correct after the date of the prospectus. This prospectus is not an offer to sell or solicitation of an offer to buy these shares of common stock in any circumstances under which the offer or solicitation is unlawful. 2 PROSPECTUS SUMMARY You should read the following summary together with the more detailed information in the prospectus including our financial statements and notes to those statements appearing elsewhere in the prospectus. The prospectus contains forward-looking statements based on current expectations of our company and our industry. These forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of the factors described in the "Risk Factors" section and elsewhere in the prospectus. On November 15, 2001, we, under the name World Wide Yacht Deliveries, Inc., merged with Texxar Inc. We were the surviving company. We then changed our name to Texxar, Inc. We supply advanced air pollution control systems and flue gas emissions measurement instrumentation systems for power plants, refineries, cement plants and a variety of other industrial and health care facilities in the United States and abroad. We design, manufacture, assemble and market equipment, integrated with instrumentation, which monitors, ameliorates or abates industrial environmental emissions. Through use of our equipment and instrumentation, our clients can both recover valuable products from their exhaust gaseous streams and, at the same time, comply with United States Environmental Protection Agency and state and local emission regulations on dust, particulate, fumes, acid gases and other toxic pollutants into the atmosphere. Since the inception of our business in 1938, we have supplied equipment to thousands installations worldwide. INFORMATION ABOUT OUR STOCK PURCHASE AGREEMENT WITH NEXGEN HOLDINGS We have entered into a stock puchase agreement with Nexgen Holdings to raise up to $2 million through a series of sales of our common stock. The dollar amount of each sale is limited by our common stock's price and a minimum period of time that must elapse between each sale. Each sale will be to Nexgen Holdings. In turn, Nexgen Holdings will either hold our stock in its own portfolio, sell our stock in the open market, or place our stock through negotiated transactions with other investors. The prospectus covers the resale of our stock by Nexgen Holdings either in the open market or to other investors. The stock purchase agreement provides that from time to time, upon our providing written notice but not more often than every seven trading days, over a two year period following the date our stock commences trading, Nexgen Holdings will purchase our common stock from us. We decide, in our sole discretion (without any penalties for non-use), whether and the extent to which we wish to require Nexgen Holdings to purchase our common stock. We choose the dates and the number of shares we sell to Nexgen Holdings. We may sell between $25,000 and $50,000 of our common stock, each time, at 70% of the average closing bid price for the five trading days preceding the notice of our intention to sell our stock. In order for us to sell our shares to Nexgen Holdings, the trading volume for the five preceding days must average at least 25,000 shares per day. Nexgen Holdings may not purchase our shares of common stock if, at the conclusion of any purchase, it would hold in excess of 9.9% of our issued and outstanding common stock. We intend to use proceeds of stock sales to Nexgen Holdings for working capital. Our agreement with Nexgen Holdings is not a convertible debenture, convertible preferred stock, or similar type of investment instrument. In addition, we are not borrowing from Nexgen Holdings as with a conventional cash line of credit. 3 THE OFFERING Shares offered by the selling stockholders who are holders of their shares as of the date of the prospectus.............. 1,496,300 shares of common stock Shares offered for resale pursuant to the stock purchase agreement............. A maximum of 4,000,000 shares of common stock Offering price of ahares......... The shares underlying the stock purchase agreement, the resale of which are being registered hereunder, are being offered to Nexgen Holdings, Inc. from time to time at 70% of the then current market price. Common stock outstanding.......... 25,691,400 shares Common stock to be................ 29,691,400 shares. outstanding after the Pursuant to the terms of the stock purchase private placement pursuant agreement with Nexgen Holdings, we are not to the Stock Purchase Agreement obligated to sell any of our shares, unless it is beneficial to us. SUMMARY FINANCIAL INFORMATION STATEMENT OF OPERATIONS
Three Months Ended Year Ended December 31, September 30, 2002 2001 2002 2001 ------------- ------------- ------------- ------------- (unaudited) (unaudited) Sales $1,062,485 $1,028,398 $3,790,496 $4,270,282 Cost of Sales 562,029 812,312 2,379,733 3,111,744 ------------- ------------- ------------- ------------- Gross Profit 500,456 216,086 1,410,763 1,158,538 Operating Expenses 423,527 277,692 1,234,830 1,151,484 Interest Expense 21,345 40,470 23,376 60,075 ------------- ------------- ------------- ------------- Income (Loss) Before Income Taxes 55,584 (102,076) 152,557 (53,021) Income Tax Provision 0 0 0 0 ------------- ------------- ------------- ------------- Net income (Loss) $55,584 $(102,076) $152,557 $ (53,021) ======= ========= ======== ======== Net Income (Loss) Per Share $0.00 ($0.01) $0.01 ($0.05) ====== ====== ====== ====== Weighted Average Common Shares Outstanding* 23,591,400 12,991,400 18,134,257 991,400 ========== ========== ========== =======
4 Balance Sheet Data December 31, September 30, 2002 2002 (unaudited) ----------- ------------- Total Assets $1,308,809 $1,302,905 Total Liabilities $1,154,766 $1,219,446 ---------- ---------- Stockholders' Equity $ 154,043 $ 83,459 ========== ========== CAPITALIZATION December 31, 2002 (Unaudited) ------------------ Total Long Term Liabilities $ 0 STOCKHOLDERS' EQUITY Preferred stock $ .001 par value, 5,000,000 shares authorized, -0- issued 0 Common stock, $0.001 par value, 50,000,000 shares authorized; 23,591,400 shares issued and outstanding, December 31, 2002 23,591 Additional Paid in Capital 91,409 Retained Earnings 39,043 ------------ Total Stockholders' Equity 154,043 ------------ Total Long Term Liabilities and Stockholders' Equity $ 154,043 ============ (1) Pro-forma diluted loss per share excludes the 4,000,000 shares of common stock underlying the stock purchase agreement since the issuance of shares under that agreement would be antidilutive. 5 RISK FACTORS You should carefully consider the following factors in addition to the other information in this prospectus, including the financial statements and related notes, before investing in our common stock. These risk factors are all those which we believe are material to our business. Risks and uncertainties that we do not presently know about or that we currently believe are immaterial may also impair our business. If any of the following risks actually occurs, our business, financial condition or results of operations will likely suffer. Our business is dependent on environmental regulation. - ------------------------------------------------------ The market for air pollution control products and systems is directly dependent upon the existence and enforcement of laws and regulations which limit or prohibit the release of pollutants into the atmosphere and impose penalties for non-compliance. The potential enactment of legislative proposals which seek to abolish or reduce enforcement of environmental laws and regulations could reduce the corporate funding for environmental control systems. Such reductions in funding would reduce our our future revenues and thus our profitability. We cannot not protect our technologies. - --------------------------------------- The technologies we use in our products are not patented. Thus, we rely on a combination of trade secrets and know-how to protect our intellectual property. Our trade secrets may become known to or independently developed by our competitors. If competitors offer products using our technology, we could not compete through the incorporation of proprietary features. We may thus fail to a win many of the contracts on which we bid. In that event, our revenues and profits would decline. We may be unable to post bid and performance bonds on large scale projects. - --------------------------------------------------------------------------- Large projects, such as power plant flue gas desulfurization or waste incineration, require bid and performance bonds. Presently, we are unable to obtain bonding for large-scale projects and are thus prevented from bidding and obtaining such projects. If we cannot raise substantial funds through the stock purchase agreement or otherwise, this situation will continue. As a result, we would continue to be unable to penetrade the market for large scale projects. As a result, we may not be able to grow our business. Permitting delays may cause curtailment or elimination of projects. - ------------------------------------------------------------------- Generally, before we can commence construction of projects which we have been awarded, we must obtain permits by one or more governmental agencies. Political and other considerations often delay or curtail the issuance of permits. Permitting, at best, delays many projects or, at worst, causes their cancellation. The permitting process delays or reduces our revenues, cash flow and profits. 6 We are dependent on subcontractors for the manufacture, fabrication and installation of our products. - -------------------------------------------------------------------------------- Generally, we do not manufacture or fabricate our own products, relying instead upon the services of third party manufacturers and fabricators. We also do not engage in the field construction of our systems but rely on field construction subcontractors operating under the supervision of our employees. If the manufacturers or subcontractors we rely upon are not available when their services are needed, or fail to deliver products or services of acceptable quality and price, we may default on contracts or lose money on contracts. As a result, our trade reputation would decline as would our revenues and profits. Many of our contracts are for a fixed price and may not be profitable. - ---------------------------------------------------------------------- Many of the contracts on which we bid are fixed price contracts. Even if we are chosen as a contracting party, our actual costs in performing contracts may exceed the estimates upon which our bids were based. Thus, we may lose money on the contracts we win. Thus, fixed price contracts may not be profitable and may cause us negative cash flow. We may be unable to bid on major contracts because we lack capital. - ------------------------------------------------------------------- Although many projects on which we bid, involve our receiving progress payments as the work is completed, for other projects, the customer does not pay until after completion. Thus, for those projects, we must pay for engineering, fabrication and installation prior to the receipt of any payments from the client. As a result, we are limited to bid on smaller contracts where our capital is sufficient to pay the costs of contract performance before receiving payment. Thus, in the absence of additional funding, we find it difficult to expand because we are unable to bid on larger projects which lack progress payments. We may be subject to product liability claims. - ---------------------------------------------- We do not carry product liability or professional liability insurance which would cover claims relating to the design, manufacture or installation of our products. In addition, our failure to have insurance has excluded us from obtaining contracts which are conditioned upon the vendor having insurance coverage. We need additional funding before we can purchase product liability insurance. Our continued inability to obtain adequate coverage not only interferes with our ability to book new business, but also exposes us to liabilities which could disrupt or destroy our business. We may be unable to obtain sufficient funds from the stock purchase agreement with Nexgen Holdings to meet our liquidity needs. - -------------------------------------------------------------------------------- When we desire to obtain funds for our business through the stock purchase agreement with Nexgen Holdings, the volume of trading may too low to sell stock to Nexgen Holdings, or the market price of our stock may result in unacceptable dilution or any sale may result in Nexgen Holdings's owning more than 9.9% of our issued and outstanding common stock which would prohibit us from selling our stock to Nexgen Holdings. As a result, we may be unable to obtain any or sufficient funds from Nexgen Holdings to meet our financial needs for bonding and for funding larger contracts. Thus, we will not be able to expand our business. 7 An active market for our common stock may not develop, making it difficult for you to sell your stock and preventing us from raising money through our stock purchase agreement. - -------------------------------------------------------------------------------- Prior to the date of the prospectus, there has been no public market for our common stock. It is uncertain the extent to which a trading market will develop or how liquid that market might become. An illiquid market for our stock may result in price volatility and poor execution of buy and sell orders for investors. Historically, stock prices and trading volumes for newly public companies fluctuate widely for a number of reasons, including some reasons that may be unrelated to their business or results of operations. The price of our common stock may be low and our volume below that which we need to sell our stock to Nexgen Holdings pursuant to the stock purchase agreement. Thus, the possibility of funding our ongoing operations will cease in the event an active trading market does not develop. The exercise of our rights to sell our common stock may substantially dilute the interests of other security holders. - -------------------------------------------------------------------------------- We will issue shares to Nexgen Holdings upon exercise of our rights to sell our common stock under the stock purchase agreement at a price equal to 70% of the average closing bid price for the five days preceding the date we give notice of our intention to exercise any put. Accordingly, the sale of our stock to Nexgen Holdings under the stock purchase agreement may result in substantial dilution to other holders of our common stock. Depending on the price per share of our common stock, we may need to register additional shares for resale to access the full amount of financing available. Registering additional shares could have a further dilutive effect on the value of our common stock. If we are unable to register the additional shares of common stock, we may experience delays in, or be unable to, access some of the $2 million available under the stock purchase agreement. nward pressure on the price of our common stock. CAPITALIZATION The following table sets forth our capitalization as of December 31, 2002. December 31, 2002 (Unaudited) ----------------- Total Long Term Liabilities $ 0 STOCKHOLDERS' EQUITY Preferred stock $ .001 par value, 5,000,000 shares authorized, -0- issued 0 Common stock, $0.001 par value, 50,000,000 shares authorized; 23,591,400 shares issued and outstanding 23,591 Additional Paid in Capital 91,409 Retained Earnings 39,043 ------------ Total Stockholders' Equity 154,043 ------------ Total Long Term Liabilities and Stockholders' Equity $ 154,043 ============ 8 DIVIDEND POLICY We have not declared or paid any cash dividends on our capital stock and do not anticipate paying any cash dividends in the foreseeable future. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview - -------- The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and notes appearing elsewhere in the prospectus. It is difficult for us to forecast our revenues or earnings accurately. We believe that future period-to-period comparisons of our operating results may not be meaningful and should not be relied upon as an indication of future performance as we have and will have no backlog of orders. Our operating results in one or more future quarters may fall below investor expectations which, assuming our common stock trades on a recognized market, would almost certainly cause the future trading price of our common stock to decline. You should read the following discussion together with the consolidated financial statements and their accompanying notes, included elsewhere in the prospectus. Management's Discussion and Analysis of Financial Condition and Results of Operations for the Quarter Ended December 31, 2002 and December 31, 2001 - -------------------------------------------------------------------------------- The following discussion of our financial condition and results of operations should be read in conjunction with the Financial Statements and Notes thereto appearing elsewhere herein. Results of Operations - --------------------- The following table sets forth, for the three months ended December 31, 2002 and 2001, certain data from our statements of income and the percentage of such data to net revenues. This data has been derived from the unaudited financial statements as of and for the three months ended December 31, 2002 and 2001. These operating results are not necessarily indicative of the results that may be expected for any future period. Results of Operations for the three months ended December 31, 2002 as compared to the three months ended December 31, 2001 - -------------------------------------------------------------------------------- Net sales were $1,062,485 for the three months ended December 31, 2002 as compared to $1,028,398 for the three months ended December 31, 2001, representing an increase of $34,087 or 3.31%. This increase in revenues was the result of the timing of completion of in house projects. Cost of goods sold for the three months ended December 30, 2002 was $562,029 or 52.9% of net sales as compared to $812,312 or 78.9% of net sales for the three months ended December 31, 2001. The percent of net sales decrease resulted primarily from improved profit margins of the projects. Selling, operations, and general and administrative costs increased $145,835 or 52.5% to $423,527 for the three months ended December 31, 2002 compared to $277,672 for the three months ended December 31, 2001. The increase is primarily due to increased marketing, advertising and traveling expenses. 9 Management believes that the amount of selling, operations, and general and administrative costs will increase as the Company continues to create the necessary infrastructure to meet our goals in connection with our marketing of our products and services. Net profit for the three months ended December 31, 2002 was $55,584 compared to a net loss of $102,076 for the three months ended December 31, 2001. During the three months ended December 31, 2002 and 2001, we paid our officers and directors an aggregate of $31,250 and $31,250 respectively in salary and related compensation. We have never paid any dividends on our shares of common stock and anticipate that all future earnings, if any, will be retained for use in our business. Liquidity and Capital Resources - ------------------------------- Cash used in Operations for the three months ended December 31, 2002 as compared to the three months ended December 31, 2001 - -------------------------------------------------------------------------------- Net cash used by operating activities was $249,913 for the three months ended December 31, 2002 compared to net cash provided by operating activities of $57,333 for the three months ended December 31, 2001. The net cash used by operating activities in the the three months ended December 31, 2002 reflects net profit of $55,584, depreciation and amortization of $ 9,149 offset by a increase in accounts receivable of $204,288 and an decrease in accounts payable of $129,880. The net cash provided by operating activities in the three months ended December 31, 2001 includes an increase in accounts payable, partially offset by a net loss of $102,076, increases in accounts receivable $152,949 and increases in inventory of $91,731. Net cash used in investing activities was $0 for the three months ended December 31, 2002 compared to net cash used in investing activities of $150,000 for the three months ended December 31, 2001 used to purchase distribution rights for a line of pollution monitoring equipment. Net cash provided from financing activities was $65,200 for the three months ended December 31, 2002 from an increase in notes payable compared to net cash provided by financing activities of $127,907 for the three months ended December 31, 2001, primarily due to a increase in note payable of $79,506 and an acquisition note payable of $50,000. At December 31, 2002 and 2001, we had cash and cash equivalents of $68,099 and $128,067 respectively. The amount of cash is the result of the levels of account receivable collected and accounts payables carried. We believe that our existing cash, cash equivalents and short-term investments and any cash generated from operations will be sufficient to fund our operating activities, capital expenditures and other obligations for the foreseeable future. However, if during that period or thereafter, we are not successful in generating sufficient cash flow from operations or otherwise when required in sufficient amounts and on terms acceptable to us, we would cease marketing initiatives and new products, and would decrease our payroll to levels which can support our present level of business but leave no room for expansion. As of December 31, 2002, we had a stockholders' equity of $154,043 compared to the stockholders' deficit of $171,174 as at December 31, 2001. 10 We anticipate that the stock purchase agreement with Nexgen Holdings will be sufficient to meet our cash needs. However, there can be no assurance that we will be able to obtain the needed additional equity financing in the future. In addition, the Nexgen Holdings stock purchase agreement can only be utilized by us upon the effectiveness of this registration statement with the SEC, and then only if certain conditions are met and certain conditions precedent exist. It is possible due to market conditions that the amount of funding available under the Nexgen Holdings financing agreement may be limited and not necessarily cover funding for capital requirements and bonding needed for larger scale projects. In such an event, we may raise additional operating capital through private placements of equity and/or debt securities. However there can be no assurances that we will be successful in its endeavors. Management's Discussion and Analysis of Financial Condition and Results of Operations for the Years Ended September 30, 2002 and September 30, 2001 - -------------------------------------------------------------------------------- Results of Operations - --------------------- The following table sets forth, for the years ended September 30, 2002 and 2001, certain data from our statements of income and the percentage of such data to net revenues. This data has been derived from the audited financial statements as of and for the years ended September 30, 2002 and 2001. These operating results are not necessarily indicative of the results that may be expected for any future period. Results of Operations for the Fiscal Year Ended September 30, 2002 as compared to the Fiscal Year Ended September 30, 2001 - -------------------------------------------------------------------------------- Net sales were $3,790,496 for the year ended September 30, 2002 as compared to $4,270,282 for the year ended September 30, 2001, representing a decrease of $479,786 or 11.2%. This decrease in revenues resulted from the timing of bookings and completion of in house projects. Cost of goods sold for the year ended September 30, 2002 was $2,379,733 or 62.8% of net sales as compared to $3,111,744 or 72.9% of net sales for the year ended September 30, 2001. The percent of cost of goods compared to net sales decreased primarily from the improved profit margins of the projects completed. Selling, operations, and general and administrative costs increased $83,346 or 7.2% to $1,234,830 for the year ended September 30, 2002 compared to $1,151,484 for the year ended September 30, 2001. Management believes that the selling, operations, and general and administrative costs will increase as we continue to create the necessary infrastructure to increase our revenues by marketing our products and services. Net profit for the year ended September 30, 2002 was $152,557 compared to a net loss of $53,021 for the year ended September 30, 2001. During years ended September 30, 2002 and 2001, we paid our officers and directors an aggregate of $125,000 and $125,000 respectively in salary and related compensation. We have never paid any dividends on our shares of common stock and anticipate that all future earnings, if any, will be retained for use in our business. 11 Liquidity and Capital Resources - ------------------------------- Cash used in Operations for the Fiscal Year Ended September 30, 2002 as compared to the Fiscal Year Ended September 30, 2001 - -------------------------------------------------------------------------------- Net cash provided by operating activities was $170,673 for the year ended September 30, 2002 compared to net cash used in operating activities of $103,055 for the year ended September 30, 2001. The net cash provided by operating activities in the year ended September 30, 2002 was primarily due to the net profit of $152,557, depreciation and amortization of $33,033 and a decrease in accounts receivable of $123,484 partially offset by a decrease in accounts payable of $42,929 and a $95,422 increase in inventory. The net cash used in operating activities in the year ended September 30, 2001 was primarily due to a net loss of $53,021 and an increase in accounts receivable of of $241,080, partially offset by an increase in accounts payable of $173,197. Net cash used in investing activities was $150,000 for the year ended September 30, 2002 for the acquisition of distribution rights to a line of pollution monitoring devices compared to net cash used in investing activities of $-0- for the year ended September 30, 2001. Net cash provided from financing activities was $139,312 for the year ended September 30, 2002. This consisted primarily of an acquisition note payable of $50,000 and $95,404 in notes payable; compared to net cash provided by financing activities of $164,311 for the year ended September 30, 2001. This was primarily due to an increase in note payable of $173,358 and a decrease in capital leases of $9,047. At September 30, 2002 and 2001, we had cash and cash equivalents of $252,811 and $92,827, respectively. The amount of cash is a direct result of the levels of account receivable collected and accounts payables carried. We believe that our existing cash, cash equivalents and short-term investments and any cash generated from operations will be sufficient to fund our operating activities, capital expenditures and other obligations for the foreseeable future. We anticipate that the stock purchase agreement with Nexgen Holdings will be sufficient to meet our cash needs. However, there can be no assurance that we will be able to obtain the needed additional equity financing in the future. In addition, the Nexgen Holding stock purchase agreement can only be utilized by us upon the effectiveness of this registration statement with the SEC, and then only if certain conditions are met and certain conditions precedent exist. It is possible due to market conditions that the amount of funding available under the Nexgen Holdings financing agreement may be limited and not necessarily cover funding for capital requirements and bonding needed for larger scale projects. In such an event, we may raise additional operating capital through private placements of equity and/or debt securities. However there can be no assurances that we will be successful in its endeavors. BUSINESS Introduction We design, engineer, manufacture and sell advanced and custom engineered environmental control and flue gas emissions measurement systems to the chemical, pulp and paper, steel, textile, mining, fertilizer, food, power, coal and petrochemical industries, as well as municipalities, hospitals, and state and federal governments. Our air pollution equipment is used to control toxic fumes, sulfur dioxide, hydrogen chloride, hydrogen sulfide, nitrous oxides and particulates from gaseous streams. Our incineration equipment is used to dispose hospital waste and municipal sludge. We also supply instrumentation that allows our clients to monitor the concentrations of pollutants in flue gases and control their process. 12 Systems - ------- We offer a range of systems, incorporating diverse technologies, to address industrial processing, air pollution control and other environmental management needs. We provide single source process design, engineering, manufacturing and construction services on a variety of industrial, utility and energy - related projects. Our systems include: o wet scrubbers, o electrostatic precipitators, o cyclone collectors, o fabric filters, o activated carbon absorbers, o selective catalytic reduction nitrogen oxide systems o flue gas desulfurization systems, o incinerators and o continuous emission and opacity monitors. Customers - --------- Classifications --------------- Our principal customers are engaged in refining, power, chemical, mining and metallurgical processing. Some of our customers, primarily located outside of the United States, are engaged in the incineration of sewage sludge and solid, infectious medical and hazardous waste. Historically, most of our customers have purchased individual systems which, in many instances, operate in conjunction with systems supplied by others. For several years, we have marketed integrated custom engineered air pollution control and environmental management solutions. Our Responsibilities -------------------- By contract, we are responsible to our customers for all phases of the design, fabrication and, if included, field installation of our products and systems. We perform all process engineering. The successful consummation of our contractual obligation is generally determined by performance tests conducted either by our customers or by independent testing agencies chosen by our customers. Suppliers and Subcontractors - ---------------------------- We do not manufacture or fabricate our own systems. Rather, we engage subcontractors who fabricate and manufacture products based on our design, engineering and specifications. We also enter into subcontracts for field construction, which we supervise; and we manage all technical, physical and commercial aspects of the performance of our contracts. To date, we have not experienced difficulties either in obtaining fabricated components and other materials and parts or in obtaining qualified subcontractors for installation work. 13 Parts, Repair and Refurbishment Services - ---------------------------------------- We provide replacement and spare parts and repair and refurbishment services for our industrial processing and air pollution control systems following the expiration of our warranties which generally range from 12 to 18 months. We have experienced only minimal costs from our warranties. Our standard contract terms disclaim any liability for consequential or indirect losses or damages stemming from any failure of our products or systems or any component thereof. We seek contractual indemnification from our subcontractors for any loss, damage or claim arising from the subcontractors' failure to perform. Technology - ---------- We have developed a broad technological base. Our air pollution control systems are used to control emissions in a variety of industrial, chemical utility, and municipal applications and include flue gas desulfurization systems, designed to control gaseous sulfur oxide emissions, a major cause of acid rain. Our air pollution control equipment can achieve 99.99% removal efficiencies and are capable of meeting and exceeding all current federal and local emission standards. Our waste incineration equipment is used in hospitals to burn waste and in industry to safety dispose off by-products and waste materials. Our high efficiency systems are specifically used to: (i) clean noxious and acid gases such as sulfur dioxide, hydrogen chloride, hydrogen sulfide, chlorides, fluorides, blue smoke, organics and nitrogen oxide from exhaust and power plant stacks prior to discharging to the atmosphere; (ii) remove corrosive fumes, mists, hydrocarbons, volatile organic compounds, submicron particles and particulate from industrial exhausts and boilers; (iii) control odorous emission such as hydrogen sulfides, mercaptans, aromatic hydrocarbons and fatty acids from industrial exhausts and waste water treatment plants; (iv) control emissions of coal, dust, sawdust, phosphates, flyash, cement, carbon black, soda ash, silica and other materials; and (v) recover catalysts in refineries and achieve over 99.99% removal efficiencies. Other applications of our air pollution control systems are used by industrial, commercial, and utility companies engaged in certain processing of chemicals, metals, petroleum, textiles, paper and pulp, which result in emissions of gases, vapors, solvents, fumes, smoke, particulate matter and in some cases, odors. The facilities where the equipment and systems are installed include oil production facilities, pulp and paper mills, power plants, food and cereal plants, fertilizer plants, mining operations, boilers, waste water treatment plants, coating operations, cement plants, lime plants, asphalt plants, refineries, foundries, steel mills, nonferrous metal producing plants and incinerators burning refuse, and hospital waste. 14 We bought the rights to distribute laser emissions monitors from KVB-Eneretc, Hatfield, PA which had been selling this product in North America for ten years. The product is a laser based monitor used to measure opacity and dust concentrations in the stack flue gases from power plants, refineries, cement plants and glass furnaces. The Environmental Protection Agency requires that operators of such facilities measure the opacity in the flue gases being discharged into the atmosphere on a continuous basis. The monitors are manufactured by MIP Oy, Finland; and there is an installed base of approximately 500 monitors in North America. We are the exclusive distributor of this product in North America. The same customers who buy our pollution control equipment also buy this product because they must also measure what they are discharging into the atmosphere. Marketing and Sales - ------------------- We rely on manufacturing representatives, distributors, direct salespersons, magazine advertisements, trade shows, trade directories and catalogue listings to market our products and services. We use more than fifteen manufacturing sales representatives in the United States backed by our senior management and technical professionals, Our arrangements with independent sales representatives accord each a defined territory within which to sell some or all of our products and systems, provide for the payment of agreed-upon sales commissions and are terminable at will. Sales representatives do not have authority to execute contracts on the our behalf. A significant portion of our domestic sales are made through the recommendation of architectural and engineering firms, which play a significant role in the design and manufacture of air pollution control systems and in customers' selection of the vendors of such systems. Our sales representatives also serve as ongoing liaison function between us and our customers during the installation phase of our products and systems and address customers' questions or concerns arising thereafter. We select representatives based upon industry reputation, prior sales performance including number of prospective leads generated and sales closure rates, and the breadth of territorial coverage, among other criteria. Technical inquiries received from potential customers are referred to our engineering personnel. Thereafter, our sales and engineering personnel jointly prepare either a budget for future planning, a proposal or a final bid. The period between initial customer contact and issuance of an order is generally between two and twelve months. None of our customers represent more than 5% of our annual revenues. Intellectual Property - --------------------- Patents which were granted to us since our inception have expired. We have improved the formerly patented technologies and treat the improvements as proprietary. Thus, we now rely on a combination of trade secrets and know-how to protect our intellectual property. However, we cannot prevent competitors from independently developing or copying our technology and using it in their projects or in competitive bids. 15 Bonding and Insurance - --------------------- While only very few our existing contracts require us to procure bid and performance bonds, such requirements are prevalent for large projects or projects partially or fully funded by federal, state or local governments, such as power plant flue gas desulfurization and waste incineration projects. A bid bond guarantees that a bidder will execute a contract if it is awarded the job and a performance bond guarantees performance of the contract. We do not presently have a bank credit line to back bid or performance bonds. Thus, we cannot bid on many large scale projects. In certain cases, we are able to secure large contracts by accepting progress payments in lieu of bonds. We currently maintain different types of insurance, including general liability and property coverage. We do not maintain professional liability or product liability insurance with respect to our engineering and other professional services. Government Regulation - --------------------- Significant environmental laws, particularly the Federal Clean Air Act, have been enacted in response to public concern about the environment. We believe that compliance with and enforcement of these laws and regulations drive the demand for our products and largely determine the level of expenditures that customers will make to limit emissions from their facilities. The Federal Clean Air Act, initially adopted in 1970 and extensively amended in 1990, requires compliance with ambient air quality standards and empowers the EPA to establish and enforce limits on the emission of various pollutants from specific types of industrial facilities. States have primary responsibility for implementing these standards, and, in some cases, have adopted more stringent standards. The 1990 amendments to the Federal Clean Air Act require, among other matters, reductions in the emission of sulfur oxides, believed to be the cause of "acid rain," in the emission of 189 identified hazardous air pollutants and toxic substances and the installation of equipment and systems which will contain certain named toxic substances used in industrial processes in the event of sudden, accidental, high-volume releases. Such amendments also extend regulatory coverage to many facilities previously exempt due to their small size and require the EPA to identify those industries which will be required to install the mandated control technology for the industry to reduce the emission of hazardous air pollutants from their respective plants and facilities. The Montreal Protocol, adopted in 1987, as well as EPA regulations issued in 1992, call for the phase-out of Chlorofluorocarbons (known as CFCs). In addition, regulations promulgated by the EPA in 1993 further limit the concentration of pollutants, such as hydrogen chloride, sulfur dioxide, chlorine, heavy metals and hazardous solid substances in the form of extremely fine dust, from sewage sludge incinerators. Sewage sludge facilities are required to comply with these regulations. Competition ----------- We face substantial competition in each of our principal markets. Most of our competitors are larger and have greater financial resources than we do; several are divisions of multi-national companies. We compete on the basis of price, engineering and technological expertise, know-how and the quality of our products, systems and services. Additionally, our management believes that the successful performance of our installed products and systems is a key factor in gaining business as customers typically prefer to make significant purchases from a company with a solid performance history. 16 We obtain virtually all our contracts through competitive bidding. Although price is an important factor and may in some cases be the governing factor, it is not always determinative; and contracts are often awarded on the basis of the efficiency or reliability of products and the engineering and technical expertise of the bidder. Employees --------- We employ fifteen full time employees, consisting of two executive officers, seven engineers, two salespersons, two clerical persons and two administrative support persons. None of our employees are represented by a labor union. In addition, we use utilize commission sales personnel and contract design engineers, on an as-needed basis. Properties ---------- We lease approximately 10,000 square feet of office and warehouse/shop space in Farmingdale, New York in a single story commercial structure for a term of five years with a renewal option for an additional five years. Monthly rental is $8,000.00 with annual cost of living increases, not to exceed 5% per year, based on the Consumer Price Index. MANAGEMENT Executive Officers and Directors - -------------------------------- The following table sets forth certain information regarding our executive officers and directors: Name Age Position Since - ------------------------- --- --------------------------- --------- Aron Govil* 47 President, Chief Executive 11/2001 19 Engineers Lane Officer, Treasurer and Chairman Farmingdale, New York 11735 of the Board of Directors Vandana Govil* 42 Vice-President-Marketing, 11/2001 19 Engineers Lane Secretary, and Farmingdale, New York 11735 a Director Aron Govil has been the our President since 2001 and President of Texxar, Inc. the company we purchased, since 1997. From 1991 to 1997, Mr. Govil was Managing Director of Zelcron Industries, Inc. From 1991 through 1985, Mr. Govil served as President of Texcel International Inc., a company engaged in the manufacture of environmental and process industrial equipment. Prior to 1985, Mr. Govil worked at various management and technical positions in the environmental industry. Mr. Govil earned his B. E. degree in Chemical Engineering 1975 and his M.B.A. in Finance in 1978. He is also a licensed Professional Engineer in New York State and New Jersey. Vandana Govil has served as Vice President of Marketing of Texxar since 1997. Ms. Govil earned her B.S. in accounting and economics from State University of New York at Old Westbury in 2000. From 1987 to 1995, Ms. Govil served as a financial analyst for Zelcron Industries Inc. - --------------------------- * Aron Govil and Vandana Govil are husband and wife. 17 Director Compensation - --------------------- Our directors do not receive cash compensation for their services as directors but are reimbursed for their reasonable expenses for attending board and board committee meetings Executive Compensation - ---------------------- The following table sets forth for the fiscal years ended September 30 and 2001, the compensation we paid to our Chief Executive Officer(s) and any other executive officers who earned in excess of $100,000 based on salary and bonus. Summary Compensation Table
Long Term Compensation Annual Compensation Awards ============================================================================================ Other Annual Securities Name and Principal Compensation Underlying Position Year Salary ($) Bonus ($) ($) Options/SARs (#) ============================================================================================ Aron Govil 2002 125,000 -0- 25,000 -0- Chief Executive Officer 2001 125,000 -0- 25,000 -0-
Option Grants for the fiscal years ended September 30, 2002 and 2001 - -------------------------------------------------------------------- The following table sets forth information concerning the grant of stock options to the named executive officer during the fiscal years ended 2002 and 2001.
Individual Grants =============================================================================================== Potential Realizable Value at Assumed Number of % of Total Annual Rates of Shares Options Stock Price Underlying Granted to Exercise Appreciation Options Employees Price Per Expiration for Option Term Name Granted in Year Share Date 5% 10% =============================================================================================== Aron Govil -0- -0- -0- -0- -0- -0-
18 Aggregated Option Exercise for the fiscal years Ended May 31, 2002 and 2001 and Fiscal Year-End Option Values The following table sets forth information concerning the exercise of stock options during the fiscal years ended May 31, 2002 and 2001 by the named executive officer, and his options outstanding at the end of the transition period.
===================================================================================================== Aggregate Option/SAR Exercises in Transition Period and TP-End Option/SAR Values ===================================================================================================== Number of Securities Underlying Unexercised Options/SARs at TPY-End Value of Unexercised In- Shares (#) the Money Options/SARs Acquired on Value =========================== at TP-End ($) Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable ======================================================================================================== Aron Govil -0- -0- -0- -0- -0- -0- ========================================================================================================
Indemnification of directors and executive officers and limitation of liability - ------------------------------------------------------------------------------- Section 145 of the Delaware General Corporation Law authorizes a court to award, or a corporation's board of directors to grant, indemnity to directors and officers in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities (including reimbursement for expenses incurred) arising under the Securities Act. As permitted by the Delaware General Corporation Law, our amended certificate of incorporation includes a provision that eliminates the personal liability of our directors for monetary damages for breach of fiduciary duty as a director, except for liability (1) for any breach of the director's duty of loyalty to our company or our stockholders, (2) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (3) under section 174 of the Delaware General Corporation Law (regarding unlawful dividends and stock purchases) or (4) for any transaction from which the director derived an improper personal benefit. As permitted by the Delaware General Corporation Law, our Bylaws provide that we are required to indemnify our directors and officers, consultants and employees to the fullest extent permitted by the Delaware General Corporation Law. Subject to certain very limited exceptions, we are required to advance expenses, as incurred, in connection with a legal proceeding to the fullest extent permitted by the Delaware General Corporation Law, subject to certain very limited exceptions. The rights conferred in our Bylaws are not exclusive. We have not obtained directors' and officers' liability insurance. 19 CERTAIN RELATED PARTY TRANSACTIONS We were formed under the laws of Delaware on October 27, 1998, as World Wide Yacht Delivery, Inc. In September 2001, we merged with Texxar, Inc. and were the surviving company. in consideration for 22,000,000 shares of which 20,200,000 shares were issued to Aron Govil, President/Treasurer, 660,000 shares to Vandana Govil, Secretary and 660,000 shares to First Commercial Assets Management, Inc. Aron Govil and Vandana Govil are husband and wife. The beneficial owner of First Commercial Assets Management, J.D. Jharevi, is the father of Vandana Govil. After the merger, we changed our name to Texxar, Inc. PRINCIPAL STOCKHOLDERS The following table sets forth certain information with respect to beneficial ownership of our common stock as of December 31, 2002 by each stockholder known by us to be the beneficial owner of more than 5% of our common stock, each of our directors and executive officers and all executive officers and directors as a group. Shares of Common Stock Beneficially Owned(1) -------------------------------------------- Name Title Number Percent - ---------------------- ---------- -------------- ------- Aron Govil(2) President, Treasurer 20,200,000 78.6% Vandana Govil (2) Secretary 2,660,000 10.4% A.L. Gupta (3) 1,140,000 4.4% Directors and officers (2 persons) 22,860,000 89.0% - ------------------ (1) Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Unless otherwise indicated below, the persons and entity named in the table have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. We have no issued and outstanding warrants or options. (2) Aron Govil and Vantana Govil are husband and wife. Each disclaims ownership of the other's shares of our common stock. (3) 480,000 shares are owned by A. L. Gupta and 660,000 are owned by First Commercial Assets Management, Inc., which is beneficially owned by A. L. Gupta. Mr. Gupta is the father of Vandana Govil, our Secretary and a director. Each disclaims ownership of the other's shares of our common stock. DESCRIPTION OF SECURITIES Common Stock - ------------ We are authorized to issue 50,000,000 shares of common stock, $.001 par value per share, of which 23,591,400 shares are issued and outstanding as of the date of the prospectus. Each outstanding share of common stock is entitled to one vote, either in person or by proxy, on all matters that may be voted upon by their holders at meetings of the stockholders. Holders of our common stock (i) have equal ratable rights to dividends from funds legally available therefor, if declared by our board of directors; (ii) are entitled to share ratably in all of our assets available for distribution to holders of common stock upon our liquidation, dissolution or winding up; (iii) do not have preemptive, subscription or conversion rights, or redemption or sinking fund provisions; and (iv) are entitled to one non-cumulative vote per share on all matters on which stockholders may vote at all meetings of our stockholders. Cumulative voting for the election of directors is not provided for in our amended certificate of incorporation, which means that the holders of a majority of the shares voted can elect all of the directors then standing for election. 20 Subject to preferences that may apply to shares of preferred stock outstanding at the time, the holders of outstanding shares of our common stock are entitled to receive dividends out of legally available funds at such times and in such amounts as our board of directors may from time to time determine. Each stockholder is entitled to one vote for each share of our common stock held on all matters submitted to a vote of stockholders. Our common stock is not entitled to preemptive rights and is not subject to conversion or redemption. Upon a liquidation, dissolution or winding-up, the assets legally available for distribution to stockholders are distributable ratably among the holders of our common stock and any participating preferred stock outstanding at that time after payment of liquidation preferences, if any, on any outstanding preferred stock and payment of other claims of creditors. Preferred Stock - --------------- We may, subject to limitations prescribed by Delaware law, provide for the issuance of up to 5,000,000 shares of our preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series, to fix the rights, preferences and privileges of the shares of each wholly unissued series and any qualifications, limitations or restrictions thereon, and to increase or decrease the number of shares of any such series (but not below the number of shares of such series then outstanding) without any further vote or action by the stockholders. Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in control and may adversely affect the market price of the common stock and the voting and other rights of the holders of common stock. We have no current plans to issue any shares of preferred stock. Reports to Stockholders - ----------------------- We intend to furnish our stockholders with annual reports containing audited financial statements as soon as practicable after the end of each fiscal year. Our fiscal year ends on September 30th. Transfer Agent - -------------- We have appointed Olde Monmouth Stock Transfer Company, Inc., Atlantic Highlands, New Jersey as transfer agent for our shares of common stock. SELLING STOCKHOLDERS 1,496,300 of the shares offered under this prospectus may be sold by holders who have previously acquired their shares. We will not receive any of the proceeds from sales of shares offered under the prospectus. All costs, expenses and fees in connection with the registration of the selling stockholdrs' shares will be borne by us. All brokerage commissions, if any, attributable to the sale of shares by selling stockholders will be borne by selling stockholders. 21 The selling stockholders are offering a total of 2,531,800 shares of our common stock. The following table sets forth: o the name of each person who is a selling stockholder; o the title of each person who is one of our officers or directors; o the number of securities owned by each such person at the date of the prospectus; and o the number of shares of common stock such person will own after the offering. The column "Shares Owned After the Offering" gives effect to the sale of all the shares of common stock being offered by the prospectus.
Shares Owned Prior to Shares Owned After Nuumber of to the Offering the Offering Shares --------------------- ------------------ Selling Stockholders Title Offered Number Percent Number Percent - -------------------- ------ ----------- --------- ------- ------ ------- Albright, Matt 200 200 -0- -0- -0- Berger, Bradley 100 100 -0- -0- -0- Berger, Bradley c/f Amanda Berger (2) 100 100 -0- -0- -0- Berger, Bradley c/f Bennat Berger (2) 100 100 -0- -0- -0- Budin, Phil 100 100 -0- -0- -0-- Burton, Raymond 5,000 5,000 -0- -0- -0- Carnicelli, Debra 100 100 -0- -0- -0- Cassin, Constance 100 100 -0- -0- -0- Clissold, Lane 5,000 5,000 -0- -0- -0- Columbo, Britt 100 100 -0- -0- -0- Connors, Chris 100 100 -0- -0- -0- Demeri, Laura (3) 1,000 1,000 -0- -0- -0- Demeri, Theresa (3) 100 100 -0- -0- -0- Falcon Crest Capital, Inc. (4) 500,000 500,000 1.9% -0- -0- Graham, Sharie 10,000 10,000 -0- -0- -0- Hines, James 100 100 -0- -0- -0- Karam, Jake 100 100 -0- -0- -0- Kenny, Denis 100 100 -0- -0- -0- Luksich, Marco (5) 800 800 -0- -0- -0- Luksich, Sam (5) 200 200 -0- -0- -0- Mecurio, Marc 200 200 -0- -0- -0- Mitchell, Robert 100 100 -0- -0- -0- Munz, Russell 100 100 -0- -0- -0- Naivar, Bud 2,500 2,500 -0- -0- -0- Nickisch, Candace 2,100 2,100 -0- -0- -0- O'Brien, Kevin 5,000 5,000 -0- -0- -0- Palmietto, Richard 500 500 -0- -0- -0- Pensley, Joel 200,000 200,000 -0- -0- -0- Rymniak, Jay 1,000 1,000 -0- -0- -0- Shargel, Terry 5,000 5,000 -0- -0- -0- Shirley, Dale (5) 750,000 750,000 2.9% -0- -0- Sivori, Bob 5,100 5,100 -0- -0- -0- Sheperger, Denis 100 100 -0- -0- -0- Volpe, Mark 100 100 -0- -0- -0- Walton, Tracy 1,000 1,000 -0- -0- -0- Zuzic, Stan 100 100 -0- -0- -0-
22 - ----------------- 1. Gregory Aurre is the father of Amerika Aurre and Gregory Aurre III, adult children. He disclaims beneficial ownership of those shares. 2. Bradley Berger controls the shares in the names of Amanda Berger and Bennat Berger. 3. Laura Demeri is the beneficial owner of shares in the name of Theresa Demeri. 4. Dale Shirley is the beneficial owner of Falcon Crest Capital, Inc. 5. Sam Luksich claims beneficial ownership of the shares in the name of Marco Luksich. Common stock registered for resale constitutes approximately 9.3% of our issued and outstanding common shares as of the date of the prospectus. PLAN OF DISTRIBUTION OF SHARES OF EXISTING STOCKHOLDERS The shares covered by this prospectus may be offered and sold from time to time by the selling stockholders. The term "selling stockholders" includes donees, pledgees, transferees or other successors-in-interest selling shares received after the date of the prospectus from a selling stockholder as a gift, pledge, partnership distribution or other non-sale related transfer. Selling stockholders will act independently of us in making decisions with respect to the timing, manner and size of each sale. Sales may be made on one or more exchanges or in the over-the-counter market or otherwise, at prices and under terms then prevailing or at prices related to the then current market price or in negotiated transactions. Selling stockholders may sell their shares by one or more of, or a combination of, the following methods: o purchases by a broker-dealer as principal and resale by such broker-dealer for its own account pursuant to the prospectus; o ordinary brokerage transactions and transactions in which the broker solicits purchasers; o block trades in which the broker-dealer so engaged will attempt to sell the shares as agent; and o in privately negotiated transactions. In addition, any shares that qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to the prospectus. 23 To the extent required, the prospectus may be amended or supplemented from time to time to describe a specific plan of distribution. In connection with distributions of the shares or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions. In connection with such transactions, broker-dealers or other financial institutions may engage in short sales of the common stock in the course of hedging the positions they assume with the selling stockholders. The selling stockholders may also sell their common stock short and redeliver the shares to close out such short positions. Selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to the prospectus (as supplemented or amended to reflect such transaction). Selling stockholders may also pledge shares to a broker-dealer or other financial institution, and, upon a default, such broker-dealer or other financial institution, may effect sales of the pledged shares pursuant to this prospectus (as supplemented or amended to reflect such transaction). In effecting sales, broker-dealers or agents engaged by selling stockholders may arrange for other broker-dealers to participate. Broker-dealers or agents may receive commissions, discounts or concessions from the selling stockholders in amount to be negotiated immediately prior to the sale. In offering the shares covered by the prospectus, selling stockholders and any broker-dealers who execute sales for the selling stockholders may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. Any profits realized by selling stockholders and the compensation of any broker-dealer may be deemed to be underwriting discounts and commissions. In order to comply with the securities laws of certain states, shares must be sold in such jurisdictions only through registered or licensed brokers or dealers. In addition, in certain states, shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with. We have advised the selling stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling stockholders and their affiliates. In addition, we will make copies of this prospectus available to the selling stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. Selling stockholders may indemnify any broker-dealer participating in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act. At the time a particular offer of shares is made, if required, a prospectus supplement will be distributed that will set forth the number of shares being offered and the terms of the offering, including the name of any underwriter, dealer or agent, the purchase price paid by any underwriter, any discount, commission and other item constituting compensation, any discount, commission or concession allowed or reallowed or paid to any dealer, and the proposed selling price to the public. We have agreed to indemnify the selling stockholders against certain liabilities, including certain liabilities under the Securities Act. 24 We have agreed with the selling stockholders to keep the registration statement of which this prospectus constitutes a part effective until the earlier of: o such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with the Registration Statement or o two years from the effective date of the registration statement. STOCK PURCHASE AGREEMENT The following table sets forth certain information as of the date of the prospectus, with respect to Nexgen Holdings for whom we are registering the resale of the shares we may sell to Nexgen Holdings in the stock purchase agreement. Nexgen Holdings proposes selling all of its shares, in which case it would beneficially own no shares after the offering. Nexgen Holdings is not currently an affiliate of ours, has not had a material relationship with us during the past three years, and is not affiliated with a registered broker-dealer.
Name Shares Owned Prior Shares to be Sold Shares to be Owned % Owned After to the Offering in the Offering After the Offering the Offering (1) - --------------------- ------------------ ----------------- ------------------ ---------------- Nexgen Holdings, Inc. 4,000,000 (2)(3) 4,000,000 (2) -0- -0-% ------------------ ----------------- ------------------ ---------------- Totals 4,000,000 4,000,000 -0- -0-%
(1) Based on 23,591,400 shares of our common stock issued and outstanding as of the date of the prospectus. (2) Represents up to 4,000,000 shares of our common stock that we may sell to Nexgen Holdings pursuant to the stock purchase agreement. Nexgen Holdings may not purchase our shares pursuant to the stock purchase agreement if, as a result of such purchase, it would own in excess of 9.9% of our issued and outstanding shares of common stock; and it will not own beneficially more than 9.9% of our outstanding common stock at any time. The President of Nexgen Holdings is Guy Cohen. (3) The number of shares sold to Nexgen Holdings at any time may not exceed that number of our shares the average closing bid price of which for the five days preceding our notice that we are selling shares is greater than $50,000 and that when added to the current number of shares acquired by Nexgen Holdings during the 61 days preceding the put date or when added to our shares owned by Nexgen Holdings, would exceed 9.9% of the total number of shares of our common stock outstanding. (4) Nexgen Holdings does not own any shares of our common stock. It is obligated to purchase common stock under the stock purchase agreement; it has no other commitments or arrangements to purchase or sell any of our securities and will receive no commissions, fees or warrants from us. 25 On December 16, 2002, we entered into a stock purchase agreement with Nexgen Holdings. The stock purchase agreement entitles us to issue and sell up to $2 million of our common stock to Nexgen Holdings following the commencement of trading of our common stock, in tranches not less than $25,000 not to exceed $50,000. We may start selling our common stock after the date our common stock commences to trade and continue for a two year period. For us to sell stock to Nexgen Holdings, there must be an effective registration statement on file with the SEC covering the resale to the public by Nexgen Holdings of any shares that it acquires under the stock purchase agreement. Also, we must give Nexgen Holdings a one trading day advance notice of the date on which we intend to exercise a particular put. The notice must indicate the number of shares of common stock we intend to sell to Nexgen Holdings and the aggregate price of the shares we are selling. We cannot issue additional shares to Nexgen Holdings that, when added to the shares Nexgen Holdings owns will result in Nexgen Holdings holding over 9.9% of our outstanding shares upon completion of the put. Nexgen Holdings will pay us 70% of the market price for each share of our common stock. Market price is defined as the average closing bid price of our common stock during the five trading days preceding the date of the notice. Limitations and conditions to our rights to sell stock - ------------------------------------------------------- Our ability to sell shares of our common stock, and Nexgen Holdings' obligation to purchase the shares, is subject to the satisfaction of certain conditions. These conditions, among others, include: o we have satisfied all obligations under the stock purchase agreement; o our common stock is quoted and traded on the O.T.C. Bulletin Board, or listed on Nasdaq or an exchange; o our representations and warranties in the stock purchase agreement are accurate as of the date of each sale of our stock; o we have reserved for issuance a sufficient number of shares of our common stock to satisfy our obligations to issue our shares; o the registration statement for the shares we will be issuing to Nexgen Holdings is effective as of the each date on which we sell shares and no stop order with respect to the registration statement is in effect; o a minimum of seven trading days has passed from the date of the prior sale before engaging a subsequent sale; and o our trading volume averages at least 25,000 shares per day during the five trading days preceding each notice to sell our shares. 26 Nexgen Holdings is not required to acquire and pay for any additional shares of our common stock once it has acquired $2 million worth of our shares. Additionally, Nexgen Holdings is not required to acquire and pay for any shares of common stock with respect to any particular sale for which, between the date we give advance notice of an intended sale and the date the particular sale closes: o we announce or implement a stock split or combination of our common stock; o we pay a dividend on our common stock; o we make a distribution of all or any portion of our assets or evidences of indebtedness to the holders of our common stock; or o we consummate a major transaction, such as a sale of all or substantially all of our assets or a merger or tender or exchange offer that results in a change in control. We may not require Nexgen Holdings to purchase any shares if: o we, or any of our directors or executive officers, have engaged in a transaction or conduct related to us that resulted in: o an SEC enforcement action, administrative proceeding or civil lawsuit; or o a civil judgment or criminal conviction or for any other offense that, if prosecuted criminally, would constitute a felony under applicable law; o we file for bankruptcy or any other proceeding for the relief of debtors; or o we breach covenants contained in the stock purchase agreement. Termination - ----------- We may terminate our right to initiate further sales of our stock or terminate the stock purchase agreement at any time by providing Nexgen Holdings a written notice of our intention to terminate. However, termination will not affect any other rights or obligations we have concerning the stock purchase agreement. Right of Indemnification - ------------------------ We have agreed to indemnify Nexgen Holdings from all liability and losses resulting from any misrepresentations or breaches we make in connection with the stock purchase agreement or the registration statement. 27 Effect on our Outstanding Common Stock - -------------------------------------- The issuance of common stock under the stock purchase agreement will not affect the rights or privileges of existing holders of common stock except that the issuance of shares will dilute the economic and voting interests of each shareholder. We cannot determine the exact number of shares of our common stock issuable under the stock purchase agreement and the resulting dilution to our existing shareholders, which will vary with the extent to which we utilize the stock purchase agreement and the market price of our common stock. The potential effects of any dilution on our existing shareholders include the significant dilution of the current shareholders' economic and voting interests in us. NEXGEN HOLDINGS' PLAN OF DISTRIBUTION Nexgen Holdings is free to offer and sell its shares of our common stock at such times, in such manner and at such prices as it may determine on a best efforts basis. The types of transactions in which the shares of our common stock are sold may include transactions in the over-the-counter market (including block transactions), negotiated transactions, or a combination of such methods of sale. The sales will be at market prices prevailing at the time of sale or at negotiated prices. Such transactions may or may not involve brokers or dealers. Nexgen Holdings has advised us that it has not entered into any agreement, understanding or arrangement with any broker-dealers regarding the sale of its shares, and does not have a coordinating broker acting in connection with the proposed sale of our common stock. Nexgen Holdings may sell its shares directly to purchasers or to or through broker-dealers, which may act as agents. These broker-dealers may receive compensation in the form of discounts, concessions or commissions from the selling shareholders. They may also receive compensation from the purchasers of our common stock for whom such broker-dealers may act as agents. Nexgen Holdings is an "underwriter" within the meaning of Section 2(a)(11) of the Securities Act. Any commissions received by broker-dealers and any profit on the resale of the shares of our common stock sold by them might be deemed to be underwriting discounts or commissions. Nexgen Holdings may agree to indemnify broker-dealers for transactions involving sales of our common stock against certain liabilities, including liabilities arising under the Securities Act. Because Nexgen Holdings is an underwriter within the meaning of Section 2(a)(11) of the Securities Act, it will be subject to prospectus delivery requirements. We have informed Nexgen Holdings that the anti-manipulation rules of the SEC, including Regulation M promulgated under the Securities Exchange Act of 1934, will apply to its sales in the market, and have provided them with a copy of such rules and regulations. 28 Regulation M may limit the timing of purchases and sales of any of the shares of our common stock by Nexgen Holdings and any other person distributing our common stock. The anti-manipulation rules under the Securities Exchange Act may apply to sales of shares of our common stock in the market and to the activities of Nexgen Holdings and its affiliates. Furthermore, Regulation M of the Securities Exchange Act may restrict the ability of any person engaged in the distribution of shares of our common stock to engage in market-making activities with respect to the particular shares of common stock being distributed for a period of up to five business days prior to the commencement of such distribution. All of the foregoing may affect the marketability of our common stock and the ability of any person or entity to engage in market-making activities with respect to our common stock. Rules 101 and 102 of Regulation M under the Securities Exchange Act, among other things, generally prohibit certain participants in a distribution from bidding for or purchasing for an account in which the participant has a beneficial interest, any of the securities that are the subject of the distribution. Rule 104 of Regulation M provides that no person, directly or indirectly, may stabilize, effect any syndicate covering transaction, or impose a penalty bid in connection with an offering of any security in contravention of the rule's provisions. Nexgen Holdings may not rely upon Rule 144 for the sale of our common shares in the open market since it is an underwriter within the meaning of Section 2(a)(11) of the Securities Act and the safe-harbor provided by Rule 144 is not available to underwriters of our common stock. We will pay all expenses in connection with the registration and sale of the common stock by the selling security holders. Nexgen Holdings will pay all commissions, transfer taxes and other expenses associated with their sales. The shares offered hereby are being registered pursuant to our contractual obligations, and we have agreed to pay the expenses of the preparation of this prospectus. We have agreed to indemnify and reimburse Nexgen Holdings against any losses, claims, damages or liabilities to which they may become subject under the Securities Act of 1933, the Securities Exchange Act of 1934, or any other federal or state law, insofar as such losses arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in a registration statement, or (ii) the omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading. We believe that the securities purchase agreement complies with the guidelines contained in the SEC's interpretative discussion on equity line financings of April, 2001. SHARES ELIGIBLE FOR FUTURE SALE Upon the effectiveness of the registration statement, 1,496,300 shares of our common stock presently held by stockholders will be freely tradable without restriction under the Securities Act. None of these shares are held by our affiliates as that term is defined in Rule 144 under the Securities Act. In addition, up to 4,000,000 shares of our common stock pursuant to the stock acquisition agreement will be freely tradable. 29 Shares held by affiliates will be eligible for sale in the public market, subject to certain volume limitations and the expiration of applicable holding periods under Rule 144 under the Securities Act. In general, under Rule 144 as currently in effect, a person (or persons whose shares are aggregated) who has beneficially owned restricted shares for at least one year (including the holding period of any prior owner except an affiliate) would be entitled to sell within any three-month period a number of shares that does not exceed the greater of (1) 1% of the number of shares of common stock then outstanding (which will equal approximately 275,914 shares assuming all the shares underlying the stock purchase agreement are issued) or (2) the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a Form 144 with respect to such sale. Sales under Rule 144 are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us. Under Rule 144(k), a person who is not deemed to have been an affiliate of us at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years (including the holding period of any prior owner except an affiliate), is entitled to sell such shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144. We can offer no assurance that an active public market in our shares or warrants will develop initially on the OTCBB. Future sales of substantial amounts of our shares (including shares issued upon exercise of outstanding options) in the public market could adversely affect market prices prevailing from time to time and could impair our ability to raise capital through the sale of our equity securities. WHERE YOU CAN FIND MORE INFORMATION We have not previously been required to comply with the reporting requirements of the Securities Exchange Act. We have filed with the SEC a registration statement on Form SB-2 to register the securities offered by the prospectus. The prospectus is part of the registration statement, and, as permitted by the SEC's rules, does not contain all of the information in the registration statement. For further information about us and the securities offered under the prospectus, you may refer to the registration statement and to the exhibits and schedules filed as a part of the registration statement. You can review the registration statement and its exhibits at the public reference facility maintained by the SEC at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 Please call the SEC at 1-800-SEC-0330 for further information on the public reference facility. The SEC maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, such as our company, that file electronically with the SEC. LEGAL PROCEEDINGS We are not a party to nor are we aware of any material existing, pending or threatened lawsuits or other legal actions. 30 LEGAL MATTERS Certain legal matters, including the legality of the issuance of the shares of common stock offered herein, are being passed upon for us by our counsel, Joel Pensley, Esq., 211 Schoolhouse Road, Norfolk, Connecticut 06058. Mr. Pensley owns 200,000 shares of our common stock. EXPERTS Our financial statements as of September 30 2002 and 2001 have been included herein and in the registration statement in reliance upon the report of Baum and Company, P.A., independent certified public accountants, appearing elsewhere herein, and upon the authority of Baum and Company, P.A. as experts in accounting and auditing. 31 TEXXAR, INC. AND ITS WHOLLY-OWNED SUBSIDIARY (Formerly World Wide Yacht Deliveries, Inc.) Financial Statements September 30, 2002 and 2001 TABLE OF CONTENTS Page ---- Independent Accountants' report F-2 Consolidated Balance Sheets F-3-4 Consolidated Statements of Operations and Retained Earnings F-5 Consolidated Statement of Cash Flows F-6 Consolidated Statement of Stockholders' Equity F-7 Notes to Financial Statements F-8-11 F-1 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of Texxar Inc. and Subsidiary Farmingdale, N.Y. We have audited the accompanying consolidated balance sheets of Texxar, Inc. (formerly World Wide Yacht Deliveries, Inc.) as of September 30, 2002 and 2001 and the related consolidated statements of operations, stockholders' equity and cash flows for the years then. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements present fairly in all material respects, the financial position of Texxar, Inc. (formerly World Wide Yacht Deliveries), as of September 30, 2002 and 2001 and the related consolidated statements of operations, stockholders' equity and cash flows for the years ended September 30, 2002 and 2001 in conformity with accounting principles generally accepted in the United States of America. Coral Springs, Florida November 1, 2002 F-2 TEXXAR, INC. AND ITS WHOLLY-OWNED SUBSIDIAIRIES (Formerly World Wide Yacht Deliveries, Inc.) CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2002 AND 2001 2002 2001 ---------- --------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 252,811 $ 92,827 Accounts receivable (net 416,359 539,793 of allowance for doubtful accounts of $ 50,000). --------- --------- Inventory 102,873 7,450 --------- --------- Total current assets 772,043 640,070 --------- --------- PROPERTY AND EQUIPMENT (Net of accumulated 94,786 114,219 depreciation of $125,603 and $ 98,164 as of September 31, 2002 and 2001, respectively) --------- --------- Total property and equipment 94,786 114,219 --------- --------- OTHER ASSETS Goodwill 396,461 296,461 --------- --------- Deposits & Other Assets 39,615 3,215 --------- --------- Total other assets 436,076 299,676 Total Assets $1,302,905 $1,053,965 ---------- ---------- F-3 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and $ 842,208 $ 885,137 accrued expenses Note Payable 50,000 0 ---------- ---------- Capitalized Leases Payable 0 6,392 ---------- ---------- Note payable - related party 327,238 231,534 ---------- ---------- Total current liabilities 1,219,446 1,123,063 ---------- ---------- Total Liabilities 1,219,446 1,123,063 ---------- ---------- STOCKHOLDERS' EQUITY Common stock, $0.001 par 22,991 991 value, 40,000,000 shares authorized; 22,991,400 and 991,440 shares issued and outstanding, September 30, 2002 and 2001, respectively. Additional Paid in Capital 77,009 99,009 Accumulated Deficit (16,541) (169,098) ---------- ---------- Total Stockholders' Equity 83,459 (69,098) ========== ========== Total Liabilities and $1,302,905 $1,053,965 Stockholders' Equity =========== =========== The accompanying notes are an integral part of the financial statements. F-4 TEXXAR, INC. AND ITS WHOLLY-OWNED SUBSIDIARY (Formerly World Wide Yacht Deliveries, Inc.) CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED SEPTEMBER 30, 2002 AND 2001 2002 2001 ------- ------ REVENUES $3,790,496 $4,270,282 COST OF GOOD SOLD 2,379,733 3,111,744 ----------- ----------- Gross profit 1,410,763 1,158,538 OPERATING EXPENSES 1,234,830 1,151,484 ----------- ----------- Net income (loss) before other income (expense) and provision for income taxes 175,933 7,054 ----------- ----------- provision for income taxes OTHER INCOME (EXPENSE) Interest (Expense) (23,376) (60,075) ----------- ----------- Total Other Income (Expense) (23,376) (60,075) ----------- ----------- Net income (loss) before provision for income taxes 152,557 (53,021) ----------- ----------- Provision for income taxes (benefit) 0 0 =========== =========== Net income (loss) $ 152,557 $ 53,021 =========== =========== Per Share Net income (loss) $0.01 $0.00 =========== =========== Average Shares Outstanding 18,134,257 991,400 =========== =========== The accompanying notes are an integral part of the financial statements. F-5 TEXXAR, INC. AND ITS WHOLLY-OWNED SUBSIDIARY (Formerly World Wide Yacht Deliveries, Inc.) CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY YEARS ENDED SEPTEMBER 30, 2002 AND 2001
Total Number of Common Additional Accumulated Stockholders' Shares Stock Paid-in Deficit Equity Capital --------- --------- ---------- ----------- -------------- BALANCE, September 30, 2000 991,400 $ 991 $ 99,009 $116,077 $ 16,077 Net (Loss)Year Ended September 30, 2001 0 0 0 (53,021) (68,194) --------- --------- -------- --------- --------- BALANCE, September 30, 2001 991,400 991 99,009 (169,098) (69,098) Acquisition of Shell 22,000,000 22,000 (22,000) - 0 - ---------- --------- --------- --------- --------- Net Income Year Ended September 30, 2002 0 0 0 152,557 152,557 ---------- --------- --------- --------- --------- ========== ========= ========= ========= ========= BALANCE, September 30, 2002 22,991,400 $ 22,991 $ 77,009 $ 16,541 $ 83,459 ========== ========= ========= ========= =========
The accompanying notes are an integral part of the financial statements. F-6 TEXXAR, INC. AND ITS WHOLLY-OWNED SUBSIDIARY (Formerly World Wide Yacht Deliveries, Inc.) CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED SEPTEMBER 30, 2002 AND 2001 2002 2001 ------ ------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $152,557 $ 53,021 Adjustments to reconcile net income (loss) to net cash used for operations: Depreciation & Amortization 33,033 26,594 Change in operating assets and liabilities: (Increase) Decrease in accounts receivable 123,434 (241,080) (Increase) decrease in inventory (95,422) (745) (Increase) Decrease in other current assets Increase (Decrease) in accounts payable (42,929) 173,197 --------- ---------- Increase (Decrease) in income taxes payable 0 (8,000) --------- ---------- Net cash used by operating activities 170,673 (103,055) --------- ---------- CASH FLOW FROM INVESTING ACTIVITIES: Acquisition of assets (150,000) 0 --------- ---------- Net cash used by investing activities (150,000) 0 --------- ---------- CASH FLOW FROM FINANCING ACTIVITIES: Increase (decrease) in capitalized lease payable (6,392) (9,047) Issuance of note payable for acquisition 50,000 0 --------- ---------- Increase (decrease) in note payable related party (net)- 95,704 173,358 --------- ---------- Net cash provided by financing activities 139,312 164,311 Net increase (decrease) in cash 159,985 61,256 --------- ---------- CASH, beginning of period 92,827 31,571 CASH, end of period $252,812 $ 92,827 ======== ======== The accompanying notes are an integral part of the financial statements. F-7 TEXXAR, INC.AND ITS WHOLLY-OWNED SUBSIDIARY (Formerly World Wide Yacht Deliveries, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2002 AND 2001 NOTE 1 SIGNIFICANT ACCOUNTING POLICIES Organization and Operations The Company was organized under the laws of the State of Delaware. The Company is engaged in the sales and design of air pollution control and measurement devices. History The company in November 2001 (under the name World Wide Yacht Deliveries, Inc). enacted a reverse merger with Texxar, Inc. and changed its name to Texxar Inc. Basis of Accounting The Company's policy is to prepare its financial statements using the accrual basis of accounting in accordance with generally accepted accounting principles. Inventory Inventory, consisting of small parts, is stated at the lower of cost or market value. Organization and start-up costs In accordance with Statement of Position 98-5, the organization and start-up costs have been expensed in the period incurred. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. F-8 TEXXAR, INC. AND ITS WHOLLY-OWNED SUBSIDIARY (Formerly World Wide Yacht Deliveries, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2002 AND 2001 NOTE 1 SIGNIFICANT ACCOUNTING POLICIES (continued) Principles of consolidation The consolidated financial statements include the accounts of Texxar Inc. and its wholly-owned subsidiary, Ducon Technologies Inc. All inter company transactions have been eliminated. Revenue Recognition The Company's revenue is derived primarily from the sale of its products to its customers upon shipment of product, upon the providing of services or upon recognizing progress payments earned. Fair value of financial instruments The following methods and assumptions were used to estimate the fair value of each class of financial instruments: Cash, accounts receivable and accounts payable. The carrying amounts approximated fair value because of the demand nature of these instruments. NOTE 2 PROPERTY AND EQUIPMENT Property and equipment consists of the following: 2002 2001 ---- ---- Furniture Fixtures & Equipment $184,199 $176,193 Capitalized Leases 36,190 36,190 -------- -------- 220,389 212,383 Less Accumulated Depreciation 125,603 98,164 -------- -------- Net property & Equipment $ 94,786 $114,219 ======== ======== F-9 TEXXAR, INC. AND ITS WHOLLY-OWNED SUBSIDIARY (Formerly World Wide Yacht Deliveries, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2002 AND 2001 NOTE 3 NOTE PAYABLE - RELATED PARTY On March 26, 1999, the Company entered into a line of credit. The maximum limit of the credit line is $500,000. The outstanding balance bears interest at 8% per annum and is secured by the Company's accounts receivable and is personally guaranteed by a shareholder of the Company. The owner of the entity granting the credit line is an affiliated party. NOTE 4 COMMITMENTS AND CONTINGENCIES On November 28, 1998, the Company entered into a five year lease for its office and warehouse facilities. Annual rent consists of $96,000 and various operating expenses. Future annual rent for years through 2003 is approximately $100,000 per year. NOTE 5 NEW ACCOUNTING STANDARDS In July 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible Assets, ("SFAS 142") which is effective for fiscal years beginning after December 15, 2001. SFAS 142, requires, among other things, the discontinuance of goodwill amortization. In addition, the standard includes provisions upon adoption for the reclassification of certain existing recognized intangibles, reclassification of certain intangibles out of previously reported goodwill and the testing of impairment of existing goodwill and other intangible. The company believes that the adoption of SFAS 142 will not have a material impact on the Company's financial position and results of operations." In August 2001, the FASB issued SFAS 143, "Accounting for Asset retirement Obligations". SFAS 143 relates to accounting and reporting for obligations associated with the retirement of tangible long lived assets and the related retirement costs. The company believes that the adoption of SFAS 143 will not have a material impact on the Company's financial position and results of operations." F-10 TEXXAR, INC. AND ITS WHOLLY-OWNED SUBSIDIARY (Formerly World Wide Yacht Deliveries, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2002 AND 2001 In October 2001, the FASB issued SFAS No. 144-Accounting for the Impairment or Disposal of Long Lived Assets, (effective December 15, 2002) which replaces SFAS No 12. Accounting for the Impairment of Long Lived Assets and for Long Lived Assets to be Disposed Of. SFAS No. 144 corrects previous issues and broadens reporting of discontinued operations. Management does not believe that the adoption of this standard will have a material effect on the company's results of operations or financial position. NOTE 6 SEGMENT REPORTING Air pollution control products and systems is the only operating segment of the company. NOTE 7 CONCENTRATION OF RISK The company places its cash in high credit quality financial institutions. Management does not believe that there is any concentration risk At September 30, 2002, the company has a receivables from four customers representing 54%, 18%, 11% and 11%, respectively, of total gross receivables. NOTE 8 ASSET PURCHASE FOR CASH AND NOTE In November 2001, the company acquired for $100,000 cash and a $50,000 non interest bearing note, the MIP OY Opacity Monitor Product line from Enertec Inc. The various assets included: $50,000 of equipment and spare parts, contracts, bills of materials, and $100,000 of goodwill. The $50,000 note payable was due April 1, 2002 and is in default. NOTE 9 SUBSEQUENT EVENTS The company is in process of filing a registration statement with the Securities and Exchange Commission for 5,591,400 shares of common stock. In conjunction with this, in November 2002, 600,000 of common stock were issued for $15,000 of financial and legal services. On November 27, 2002, the Company increased the authorized $ .001 par value common shares to 50,000,000 shares and authorized 5,000,000 shares $ .001 par value preferred shares. F-11 TEXXAR, INC. AND ITS WHOLLY-OWNED SUBSIDIARY (Formerly World Wide Yacht Deliveries, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2002 AND 2001 NOTE 10 INCOME TAXES In accordance with FASB 109, deferred income taxes and benefits are provided for the results of operations of the Company. The principle temporary differences that will result in deferred tax assets and liabilities are certain expenses and losses accrued for financial reporting purposes not deductible for tax purposes until paid. The differences between Federal income tax rate and the effective income tax rate as reflected in the accompanying co consolidated statement of operations. 2002 2001 ---- ---- Statutory Federal income tax rate (benefit) 34% -34% State income taxes 8% -8% ------- ----- Deferred losses recognized (benefit) -34% 34% ======= ===== Effective tax rate 0% 0% ======= ===== At September 30, 2002, the company had approximately $2.5 million of deferred loss carry forwards F-12 TEXXAR, INC. AND ITS WHOLLY-OWNED SUBSIDIARY ( Formerly World Wide Yacht Deliveries, Inc. ) Financial Statements December 31, 2002 and 2001 F-13 TABLE OF CONTENTS Page ---- Consolidated Balance Sheets F-15-16 Consolidated Statements of Operations and Retained Earnings F-17 Consolidated Statement of Cash Flows F-18 Consolidated Statement of Stockholders' Equity F-19 Notes to Financial Statements F-20-23 F-14 TEXXAR, INC. AND ITS WHOLLY-OWNED SUBSIDIAIRIES (Formerly World Wide Yacht Deliveries, Inc.) CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2002 AND SEPTEMBER 30 2002 December 31 September 30, 2002 2002 (audited) ------------- ------------------ ASSETS CURRENT ASSETS Cash and cash equivalents $ 68,099 $ 252,811 Accounts receivable (net 620,647 416,359 of allowance for doubtful accounts of $50,000) ----------- ----------- Inventory 96,350 102,873 ----------- ----------- Total current assets 785,096 772,043 PROPERTY AND EQUIPMENT (Net of accumulated 87,887 94,786 depreciation of $132,502 and $ 125,603 as of December 31, 2002 and September 30 2002, respectively) Total property 87,887 94,786 and equipment OTHER ASSETS Goodwill 396,461 396,461 ----------- ----------- Deposits & Other Assets 39,365 39,615 ----------- ----------- Total other assets 435,826 436,076 ----------- ----------- Total Assets $ 1,308,809 $ 1,302,905 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and $ 712,328 $ 842,208 accrued expenses Note payable 50,000 50,000 ----------- ----------- Note payable-related party 392,438 327,238 ----------- ----------- Total current liabilities 1,154,766 1,219,446 ----------- ----------- Total Liabilities 1,154,766 1,219,446 ----------- ----------- F-15 STOCKHOLDERS' EQUITY Common stock, $0.001 par value, 50,000,000 shares 23,591 22,991 authorized; 23,591,400, and 22,991,400 shares issued and outstanding, December 30, 2002 and September 30, 2002, respectively. Additional Paid in Capital 91,409 77,009 Retained Earnings (deficit) 39,043 (16,541) ----------- ------------ Total 154,043 83,459 Stockholders' Equity =========== =========== Total Liabilities and $ 1,308,809 $ 1,302,905 Stockholders' Equity =========== =========== The accompanying notes are an integral part of the financial statements. F-16 TEXXAR, INC.AND ITS WHOLLY-OWNED SUBSIDIARY (Formerly World Wide Yacht Deliveries, Inc.) CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED DECEMBER 31, 2002 AND 2001 December 31, December 31, 2002 2001 ------------- ------------- REVENUES $ 1,062,485 $ 1,028,398 COST OF GOOD SOLD 562,029 812,312 ----------- ----------- Gross profit 500,456 216,086 OPERATING EXPENSES 423,527 277,692 ----------- ----------- Net income (loss) before other income (expense) and provision for income taxes 76,929 (61,606) ----------- ----------- OTHER INCOME (EXPENSE) Interest (Expense) (21,345) (40,470) ------------ ----------- Total Other Income (Expense) (21,345) (40,470) ------------ ----------- Net income (loss) before provision for income taxes 55,584 (102,076) ----------- ----------- Provision for income taxes (benefit) 0 0 =========== =========== Net income (loss) $ 55,584 $ 102,076 =========== ============ Per Share Net income (loss) $0.00 $0.01 =========== ============= Average Shares Outstanding 23,591,400 12,991,400 =========== ============= The accompanying notes are an integral part of the financial statements. F-17 TEXXAR, INC.AND ITS WHOLLY-OWNED SUBSIDIARY (Formerly World Wide Yacht Deliveries, Inc.) CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY YEARS ENDED SEPTEMBER 30, 2002 AND 2001 AND THREE MONTHS ENDED DECEMBER 31, 2002
Common Preferred Common Stock Stock Stock Par Total Number Number of Value Additional Retained Stockholders' of Shares $.001 Paid-in Earnings Equity Shares Capital /Deficit --------- ---------- ------- ---------- ----------- -------------- BALANCE, September 30, 2000 0 991,400 $ 991 $ 99,009 $ 116,077 $ 16,077 Net (Loss)Year Ended September 30, 2001 0 0 0 (53,021) (68,194) --------- -------- -------- --------- ---------- ---------- BALANCE, September 30, 2001 0 991,400 991 99,009 (169,098) (69,098) Acquisition of Shell 22,000,000 22,000 (22,000) 0 --------- ---------- -------- --------- ---------- ---------- Net Income Year Ended September 30, 2002 0 0 0 152,557 152,557 --------- ---------- -------- --------- ---------- ---------- BALANCE, September 30, 2002 0 22,991,400 $22,991 $ 77,009 $ 16,541 $83,459 --------- ---------- -------- --------- ---------- ---------- Issuance of Stock for Services 600,000 $ 600 $ 14,400 $15,000 --------- ---------- -------- --------- ---------- ---------- Net Income three months ended 55,584 55,584 ========= ======== ======== ========= ========== ========== December 31, 2002 BALANCE, December 31, 2002 0 23,591,400 $23,591 $16,541 $39,043 $154,043 ========= ========== ======== ========= ========== ==========
The accompanying notes are an integral part of the financial statements. F-18 TEXXAR, INC. AND ITS WHOLLY-OWNED SUBSIDIARY (Formerly World Wide Yacht Deliveries, Inc.) CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED DECEMBER 31, 2002 AND 2001 December 31 December 31 2002 2001 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 55,584 $ 102,076 Adjustments to reconcile net income (loss) to net cash used for operations: Depreciation & Amortization 9,149 6,648 Stock Issued for Services 15,000 0 Change in operating assets and liabilities: (Increase) Decrease in accounts receivable (204,288) (152,949) (Increase) decrease in inventory 6,522 (91,731) (Increase) Decrease in other assets (2,000) Increase (Decrease) in accounts payable (129,880) 397,441 ----------- ----------- Increase (Decrease) in income taxes payable 0 0 ----------- ----------- Net cash used by operating activities (249,913) 57,333 ----------- ----------- CASH FLOW FROM INVESTING ACTIVITIES: Acquisition of assets 0 (150,000) ----------- ----------- Net cash used by investing activities 0 (150,000) ----------- ----------- CASH FLOW FROM FINANCING ACTIVITIES: Increase (decrease) in capitalized lease payable 0 (1,599) Issuance of note payable for acquisition 0 50,000 ----------- ----------- Increase (decrease) in note payable related party (net) 65,200 79,506 Net cash provided by financing activities 65,200 127,907 Net increase (decrease) in cash (184,713) 35,240 CASH, beginning of period 252,812 92,827 ----------- ----------- CASH, end of period $ 68,099 $ 128,067 =========== =========== The accompanying notes are an integral part of the financial statements. F-19 TEXXAR, INC.AND ITS WHOLLY-OWNED SUBSIDIARY (Formerly World Wide Yacht Deliveries, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 NOTE 1 SIGNIFICANT ACCOUNTING POLICIES Organization and Operations The Company was organized under the laws of the State of Delaware. The Company is engaged in the sales and design of air pollution control and measurement devices. History The company in November 2001 (under the name World Wide Yacht Deliveries, Inc). enacted a reverse merger with Texxar, Inc. and changed its name to Texxar Inc. Basis of Accounting The Company's policy is to prepare its financial statements using the accrual basis of accounting in accordance with generally accepted accounting principles. Inventory Inventory, consisting of small parts, is stated at the lower of cost or market value. Organization and start-up costs In accordance with Statement of Position 98-5, the organization and start-up costs have been expensed in the period incurred. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. F-20 TEXXAR, INC. AND ITS WHOLLY-OWNED SUBSIDIARY (Formerly World Wide Yacht Deliveries, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 Principles of consolidation The consolidated financial statements include the accounts of Texxar Inc. and its wholly-owned subsidiary, Ducon Technologies Inc. All inter company transactions have been eliminated. Revenue Recognition The Company's revenue is derived primarily from the sale of its products to its customers upon shipment of product, upon the providing of services or upon recognizing progress payments earned. Fair value of financial instruments The following methods and assumptions were used to estimate the fair value of each class of financial instruments: Cash, accounts receivable and accounts payable. The carrying amounts approximated fair value because of the demand nature of these instruments. NOTE 2 PROPERTY AND EQUIPMENT Property and equipment consists of the following: Dec. 31 Sept. 30 2002 2002 -------- --------- Furniture Fixtures & Equipment $184,199 $176,193 Capitalized Leases 36,190 36,190 -------- -------- 220,389 212,383 Less Accumulated Depreciation 132,502 98,164 ======== ======== Net property & Equipment $ 87,887 $114,219 ======== ======== F-21 TEXXAR, INC. AND ITS WHOLLY-OWNED SUBSIDIARY (Formerly World Wide Yacht Deliveries, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 NOT3 3 NOTE PAYABLE - RELATED PARTY On March 26, 1999, the company entered into a Line of Credit. The maximum limit of the credit line is $ 500,000. The outstanding balance bears interest at 8% per annum and is secured by the Company's accounts receivable and is personally guaranteed by a shareholder of the Company. The owner of the entity granting the Credit Line is a affiliated party. NOTE 4 COMMITMENTS AND CONTINGENCIES On November 28, 1998, the Company entered into a five year lease for its office and warehouse facilities. Annual rent consists of $ 96,000 and various operating expenses. Future annual rent for years through 2003 is approximately $ 100,000 per year. NOTE 5 SEGMENT REPORTING Air pollution control products and systems is the only operating segment of the company. NOTE 6 CONCENTRATION OF RISK The Company places its cash in high credit quality financial institutions. Management does not believe that there is any concentration risk At September 30, 2002, the Company has a receivables from four customers representing 54%, 18%, 11% and 11%, respectively, of total gross receivables. At December 31, 2002, the Company had receivables from 2 customers representing 23 % and 16 % of total receivables. NOTE 7 CAPITAL STOCK ACTIVITY In November 2002, 600,000 of common stock were issued for $15,000 of financial and legal services. The Company also authorized an increase in its shares of common stock, $ .001 par value each, to 50,000,000 shares and a new preferred Stock Series (of $.001 par value) of 5,000,000 shares F-22 TEXXAR, INC. AND ITS WHOLLY-OWNED SUBSIDIARY (Formerly World Wide Yacht Deliveries, Inc.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2002 NOTE 8 INCOME TAXES In accordance with FASB 109, deferred income taxes and benefits are provided for the results of operations of the Company. The principle temporary differences that will result in deferred tax assets and liabilities are certain expenses and losses accrued for financial reporting purposes not deductible for tax purposes until paid. The differences between Federal income tax rate and the effective income tax rate as reflected in the accompanying consolidated statement of operations. Benefits from deferred losses are not recognized until the utilization can be assured. At December 31, 2002, the Company had approximately $2.5 million of deferred loss carry forwards NOTE 9 ASSET PURCHASE FOR CASH AND NOTE In November 2001, the Company acquired for $100,000 cash and a $50,000 non interest bearing note, distribution of the MIP OY Opactiy Monitor Product line from Enertec Inc. The various assets included:$50,000 of equipment and spare parts, contracts, bills of materials, and $100,000 of goodwill. The $50,000 note payable was due April 1, 2002 and is in default. F-23 WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS. THE SELLING STOCKHOLDERS LISTED IN THIS PROSPECTUS ARE OFFERING TO SELL, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. Until --------, 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. TEXXAE, INC. 1,496,300 SHARES OF COMMON STOCK UP TO 4,000,000 SHARES OF COMMON STOCK ____________________ PROSPECTUS ____________________ -------- ----, 2003 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Delaware General Corporation Law provides for the indemnification of the officers, directors and corporate employees and agents of Texxar, Inc. (the "Registrant") under certain circumstances as follows: INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS; INSURANCE. (a) A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. (b) A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstance of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such court shall deem proper. (c) To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorney's fees) actually and reasonably incurred by him in connection therewith. II-1 (d) Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made (1) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders. (e) Expenses incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation as authorized in this section. Such expenses including attorneys' fees incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate. (f) The indemnification and advancement expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement expenses may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. (g) A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under this section. (h) For purposes of this Section, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation as he would have with respect to such constituent corporation if its separate existence had continued. II-2 (i) For purposes of this section, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the corporation" shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this section. (j) The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors, and administrators of such person. Articles Eighth and Ninth of the Registrant's certificate of incorporation provide as follows: EIGHTH The personal liability of the directors of the Corporation is hereby eliminated to the fullest extent permitted by the provisions of paragraph (7) of subsection (b) of Section 102 of the Delaware General Corporation Law, as the same may be amended and supplemented. NINTH The Corporation shall, to the fullest extent permitted by the provisions of Section 145 of the Delaware General Corporation Law, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities or other matters referred to in or covered by said section, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action In another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. The foregoing right of indemnification shall in no way be exclusive of any other rights of indemnification to which such person may be entitled under any by-law, agreement, vote of stockholders or disinterested directors, or otherwise. Article XII of the Registrant's by-laws provides as follows: ARTICLE XII--INDEMNIFICATION OF DIRECTORS AND OFFICERS 1. Indemnification. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, trustee, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines II-3 and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, by itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interest of the corporation, and with respect to any criminal action or proceeding, had reasonable cause to believe that such person's conduct was lawful. 2. Derivative Action. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in the corporation's favor by reason of the fact that such person is or was a director, trustee, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee or agent of any other corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation; provided, however, that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for gross negligence or willful misconduct in the performance of such person's duty to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as such court shall deem proper. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, by itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interest of the corporation. 3. Successful Defense. To the extent that a director, trustee, officer, employee or agent of the corporation has been successful, on the merits or otherwise, in whole or in part, in defense of any action, suit or proceeding referred to in paragraphs 1 and 2 above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith. 4. Authorization. Any indemnification under paragraph 1 and 2 above (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, trustee, officer, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in paragraph 1 and 2 above. Such determination shall be made (a) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, (b) by independent legal counsel (selected by one or more of the directors, whether or not a quorum and whether or not disinterested) in a written opinion, or (c) by the stockholders. Anyone making such a determination under this paragraph 4 may determine that a person has met the standards therein set forth as to some claims, issues or matters but not as to others, and may reasonably prorate amounts to be paid as indemnification. II-4 5. Advances. Expenses incurred in defending civil or criminal actions, suits or proceedings shall be paid by the corporation, at any time or from time to time in advance of the final disposition of such action, suit or proceeding as authorized in the manner provided in paragraph 4 above upon receipt of an undertaking by or on behalf of the director, trustee, officer, employee or agent to repay such amount unless it shall ultimately be determined by the corporation that the payment of expenses is authorized in this Section. 6. Nonexclusivity. The indemnification provided in this Section shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any law, by-law, agreement, vote of stockholders or disinterested director or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, trustee, officer, employee or agent and shall insure to the benefit of the heirs, executors, and administrators of such a person. 7. Insurance. The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, trustee, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee or agent of any corporation, partnership, joint venture, trust or other enterprise, against any liability assessed against such person in any such capacity or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability. 8. "Corporation" Defined. For purpose of this action, references to the "corporation" shall include, in addition to the corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had the power and authority to indemnify its directors, trustees, officers, employees or agents, so that any person who is or was a director, trustee, officer, employee or agent of such of constituent corporation will be considered as if such person was a director, trustee, officer, employee or agent of the corporation. ITEM 25. EXPENSES OF ISSUANCE AND DISTRIBUTION. The other expenses payable by the Registrant in connection with the issuance and distribution of the securities being registered are estimated as follows: Securities and Exchange Commission Registration Fee............. $ 400 Legal Fees...................................................... 10,000* Accounting Fees................................................. 15,000 Printing and Engraving.......................................... 500 Blue Sky Qualification Fees and Expenses........................ 500 Transfer Agent Fee.............................................. 500 Miscellaneous................................................... 600 ----------- Total.................................................... $ 32,500 * Counsel was issued 200,000 shares of common stock valued at $.025 each as well as $5,000 for legal services in connection with the registration statement. =========== II-5 ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES. We were formed, as World Wide Yacht Deliveries, Inc., under the laws of Delaware on October 27, 1998. Reverse Merger, Inc., conducted a yacht delivery business heading by a licensed United States Coast Guard Captain. Reverse Merger transfered the yacht delivery business to us, as World Wide Yacht Deliveries, Inc., in consideration for 991,400 shares of our common stock. Reverse Merger distributed these 991,400 of our shares pro rata to its shareholders in October, 1998. On November 15, 2001, Texxar, Inc. merged with us and we, as World Wide Yacht Deliveries, Inc., were the surviving company. Pursuant to the terms of the merger, we issued 22,000,000 shares of our common stock ratably to the stockholders of Texxar, Inc. In November, 2002, we issued 500,000 shares for financial advisory services to Falcon Crest Capital, Inc. and 100,000 shares for legal services to Joel Pensley, Attorney at Law, valued at $12,500 and $2,500 respectively. On April 4, 2003, we issued 2,000,000 shares to Vandana Govil, a director and our Secretary, for services valued at par or an aggregate of $50,000, and 100,000 shares to Joel Pensley, Esq. for legal services, valued at $2,500. These securities were distributed and/or sold under the exemption from registration provided by Rule 504 under Regulation D pursuant to Section 4(2) of the Securities Act. Neither the Registrant nor any person acting on its behalf offered or sold the securities by means of any form of general solicitation or general advertising. All purchasers represented in writing that they acquired the securities for their own accounts. A legend was placed on the stock certificates stating that the securities have not been registered under the Securities Act and cannot be sold or otherwise transferred without an effective registration or an exemption therefrom. ITEM 28. UNDERTAKINGS. The Registrant undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement (the "Registration Statement"): (i) To include any prospectus required by Section 10 (a) (3) of the Securities Act of 1933 (the "Securities Act"); (ii) To reflect in the prospectus any facts or events arising after the Effective Date of the Registration Statement (or the 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; (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 this registration statement, including (but not limited to) the addition of an underwriter. (iv) To supplement the prospectus, after the end of the subscription period, to include the results of the put. If the selling stockholders make any public offering of the securities on terms different from those on the cover page of the prospectus, to file a post-effective amendment to state the terms of such offering. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be treated as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. II-6 Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to any provisions contained in its Certificate of Incorporation, or by-laws, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities 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 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 controlling precedent, submit to a court of appropriate jurisdiction the question whether indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-7 SIGNATURES In accordance with the requirements of the Securities Act of 1933, the registrant certified that it has reasonable grounds to believe that it meets all of the requirements of the filing on Form SB-2 and authorized the registration statement to be signed on its behalf by the undersigned, in Farmingdale, New York on April 8, 2003. TEXXAR CORP. By: /s/ Aron Govil ----------------------------- Aron Govil Chief Executive Officer Chief Financial Officer Chief Accounting Officer By: /s/ Vandana Govil ----------------------------- Vandana Govil In accordance with the requirements of the Securities Act of 1933, the registration statement was signed by the following persons in the capacities and on the dates stated. SIGNATURE TITLE DATED - ---------------------- ------------------------------ --------------- /s/ Aron Govil - ---------------------- Aron Govil President, Chief Executive April 8, 2003 Officer, Treasurer and Chairman of the Board of Directors /s/ Vandana Govil - ---------------------- Vandana Govil Vice-President-Marketing, April 8, 2003 Secretary, Treasurer and a Director II-8 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION ------- ----------- 2.1 Merger Agreement and Plan of Reorganization between World Wide Yacht Deliveries, Inc. Texxar, Inc. 3.1 Certificate of Incorporation of World Wide Yacht Delivery, Inc. 3.2 Certificate of Amendment of World Wide Yacht Delivery, Inc. 3.3 Certificate of Amendment of World Wide Yacht Delivery, Inc. 3.4 Certificate of Amendment of Texxar, Inc. 3.5 Certificate of Amendment of Texxar, Inc. 3.6 By-Laws 4.1 Specimen Certificate of Common Stock 5.1 Opinion of Counsel 10.1 Stock Purchase Agreement with Nexgen Holdings, Inc. 23.1 Auditor's Consent to Use Opinion 23.2 Counsel's Consent to Use Opinion - ------------------ II-9 EX-2 3 acquisition.txt ACQUISITION AGREEMENT OF TEXXAR MERGER AGREEMENT AND PLAN OF REORGANIZATION Dated as of November 15, 2001 By and Among World Wide Yacht Deliveries, Inc. Texxar Corp. AGREEMENT AND PLAN OF REORGANIZATION. This Agreement made as of the 15th day of November, 2001, by and among World wide Yacht Deliveries, Inc., a Delaware Corporation ("World"), and Texxar Corp., a Delaware corporation ("Texxar" or the "Company"). WHEREAS, World desires to acquire Texxar, and Texxar desires to be acquired by World, through the merger of Texxar with and into World pursuant to the terms hereinafter set forth (the "Merger") with World being the surviving corporation; and WHEREAS, World and Texxar each intend, for Federal income tax purposes, that the Merger contemplated thereby constitutes a reorganization pursuant to Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and WHEREAS, the Board of Directors of World deems it advisable and in the best interest of World that Texxar be merged with and into World upon the terms and conditions hereinafter specified; and WHEREAS, the Board of Directors of Texxar deems it advisable and in the best interest of Texxar that Texxar be merged with and into World upon the terms and conditions hereinafter specified; and WHEREAS, World has an authorized capital stock consisting of 20,000,000 shares of common stock, $.001 par value per share (the "World Common Stock"), of which 991,400 shares are currently issued and outstanding; and WHEREAS, Texxar has an authorized capital stock consisting of 200 shares of common stock, $.001 par value per share (the "Texxar Common Stock"), of which shares 200 shares are currently issued and outstanding. NOW, THEREFORE, in consideration of the agreements hereinafter contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows: ARTICLE I THE TRANSACTION 1.1 The Merger. At the Effective Time (as defined in Section 8.1), Texxar shall be merged with and into World. World shall be the Surviving Corporation to the Merger (the "Surviving Corporation"), and World shall continue, and be deemed to continue, for all purposes after the Merger. The existence of Texxar shall cease at the Effective Time as a consequence of the Merger. 1.2 Stockholder approval. This Agreement shall be submitted to the stockholders of Texxar and world for approval as soon as practicable after the execution of this Agreement. "Effective Date"). 1.3 Surviving Corporation. Following the Merger, World shall continue to exist under, and be governed by, the laws of the State of Delaware, and the Certificate of Incorporation and the By-Laws of World will be the constituent documents of the Surviving Corporation. 1.4 Directors and Officers. The director and officers of the Surviving Corporation immediately following the Merger shall be as follows: Name Positions -------------- ---------------------------------- Aron Govil President, Chief Executive Officer and Chairman Vandana Govil Secretary Such directors and officers shall continue to hold office until the next annual meetings of the stockholders and directors of the Surviving Corporation or until their successors shall have been duly elected and shall have qualified. 1.5 Plan of Merger. The method of effecting the Merger and the basis for exchanging and converting the outstanding Texxar Common Stock into shares of Common Stock of World, shall be as follows: (a) Each issued and outstanding share of Texxar Common Stock shall, at the Effective Time, by virtue of the Merger and without further action, be deemed canceled and cease to exist and, upon presentation for surrender of a certificate representing such share by each stockholder of Texxar shall be converted into 110,000 shares of World Common Stock, fully paid, nonassessable, free of all liens and encumbrances, all of which shall be duly authorized, validly issued in compliance with all applicable state and federal laws. World shall issue to Company shareholders the aggregate of 22,000,000 shares of World Common stock (the `World Stock"), such shares representing 95.7% of the total issued and outstanding shares of capital stock of World, in the names and denominations as set forth on Schedule 1.2 hereto. All such issued shares will be deemed "restricted stock" as that term is defined in the regulations of the Securities and Exchange Commission, promulgated under the Securities Act of 1933, as amended. 1.6 Restrictions on Sale. Texxar shareholders represent and warrant that the World Stock to be acquired by them pursuant to the terms of Section 1.2 hereof is being acquired for their own account, with no intention of assigning any participation or interest therein, and without a view to the distribution of any portion thereof, except in accordance with the Securities Act of 1933, as amended (the "Act"). Texxar shareholders will not sell, assign, transfer or encumber any of such shares unless (i) a registration statement under the Act with respect thereto is in effect and the prospectus included therein meets the requirements of Section 10 of the Act, or (ii) a no-action letter is obtained from the staff of the Securities and Exchange Commission (the "Commission") in respect of such proposed sale, assignment, transfer or encumbering, or (iii) World has received a written opinion of counsel reasonably satisfactory to it that, after an investigation of the relevant facts, such counsel is of the opinion that such proposed sale, assignment, transfer or encumbering does not require registration under the Act. Texxar shareholders understand that the World Stock is not being registered under the Act and must be held indefinitely unless it is subsequently registered thereunder or an exemption from such registration is available. Texxar shareholders understand that the World Stock is not being registered under the Act in part on the ground that the issuance thereof is exempt under Section 4(2) of the Act as a transaction by an issuer not involving any public offering; that World's reliance on such exemption is predicated in part on the foregoing representation and warranty of such Texxar shareholders and that in the view of the Securities and Exchange Commission, the statutory basis for the exemption claimed would not be present if, notwithstanding such representation and warranty, such Texxar shareholders contemplate acquiring any of the World Stock for sale upon the occurrence or non-occurrence of some predetermined event. 1.4 Restrictive Legend. Texxar shareholderss understand that in connection with the shares issued pursuant to paragraph 1.2, above, World will have an appropriate stop order placed on its stock records indicating the existence of the terms of this Agreement, and that the certificates representing the World common Stock shall bear a legend in substantially the following form: "THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE SOLD, TRANSFERRED OR ENCUMBERED ONLY PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, PURSUANT TO A NO-ACTION LETTER FROM THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION OR PURSUANT TO AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS UNNECESSARY. ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrant to World the following, each of which shall be deemed material (and World, in executing, delivering and consummating this Agreement, has relied and will rely upon the correctness and completeness of each of such representations and warranties): 2.1 Valid Corporate Existence; Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has the corporate power to carry on its business as now conducted and to own its assets. The Company is not qualified to conduct business in any other jurisdiction, there being no jurisdiction in which failure to qualify would have a material adverse effect on the Company, and its assets, properties or business, and there has not been any claim by any other jurisdiction to the effect that the Company is required to qualify or otherwise be authorized to do business as a foreign corporation therein. A copy of the Company's Certificate of Incorporation (certified by the appropriate official of the State of Delaware) and By-Laws (certified by the Company's Secretary), as amended to date, which will be delivered to World at or prior to the Closing, if requested, are true and complete copies of those documents as now in effect. The minute books of the Company contain accurate records of all meetings of its Board of Directors, and stockholders since its incorporation, and accurately reflect all transactions referred to therein. 2.2 Capitalization. The authorized capital stock of the Company consists of 200 shares of Common Stock, .001 par value of which 200 shares of Common Stock are issued and outstanding. All of such shares of Common Stock are duly authorized and validly issued and outstanding, fully paid and nonassessable. There are no subscriptions, options, warrants, rights or calls or other commitments or agreements to which the Company is a party or by which it is bound, calling for the issuance, transfer, sale or other disposition of any class of securities of the Company There are no outstanding securities of the Company convertible or exchangeable, actually or contingently, into shares of Common Stock or any other securities of the Company 2.3 Subsidiaries. The Company has no subsidiaries. 2.4 Consents. There are no consents of governmental and other regulatory agencies, foreign or domestic, and of other parties required to be received by or on the part of the Company, to enable them to enter into and carry out this Agreement in all material respects. 2.5 Corporate Authority; Binding Nature of Agreement; Title to the Company Stock, etc. The Company have the power to enter into this Agreement and to carry out its, his or her obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by the Board of Directors of the Company and no other corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. This Agreement constitutes the valid and binding obligation of each of the Company and and is enforceable in accordance with its terms. Texxar shareholders individually represent and warrant to World that he or she is, and at the Closing will be the sole record and beneficial owners of the respective shares of the Company Stock held by them, free and clear of all liens, charges, encumbrances and claims. Texxar shareholders further represent and warrant to World that he or she has, and at the Closing will have, good and marketable title to his shares of the Company Stock and subject to pertinent federal and state rules and regulations, pertaining to the sale of unregistered securities, the absolute and unqualified right to sell, transfer and deliver the Company Stock to World. The delivery of the Company Stock to World at the Closing pursuant to the provisions of this Agreement will transfer valid title thereto, free and clear of all manner of liens, pledges, encumbrances, charges and claims. 2.6 Financial Statements, etc. The audited balance sheet for the twelve months ended March 31, 1999, and Unaudited Balance sheet dated March 31, 2000 of the Company, copies of which have been delivered to World, fairly present the financial position of the Company as of said date, and, except as set forth therein, were prepared in conformity with generally accepted accounting principles consistently applied throughout the period covered thereby. 2.7 Liabilities. As at March 31, 2000 (the "the Company Balance Sheet Date") and as of the date hereof, the Company had no material debts, liabilities or obligations, contingent or absolute, other than those debts, liabilities and obligations reflected or reserved against in the Company's Balance Sheet at the Company Balance Sheet Date, except those arising in the ordinary and usual course of its business. 2.8 Actions Since the Company Balance Sheet Date. Except as otherwise expressly provided or set forth in, or required by, this Agreement, since the Company Balance Sheet Date, the Company has not: (i) issued or sold, or agreed to issue or sell any of its capital stock or options, warrants, rights or calls to purchase such stock, any securities convertible or exchangeable into such capital stock or other corporate securities, or effected any subdivision or other recapitalization affecting its capital stock; (ii) incurred any material obligation or liability, absolute or contingent, except those arising in the ordinary and usual course of its business; (iii) discharged or satisfied any lien or encumbrance, except in the ordinary and usual course of business, or paid or satisfied any liability, absolute or contingent, other than liabilities as at the Company Balance Sheet Date and current liabilities incurred since the Company Balance Sheet Date in the ordinary and usual course of business; (iv) made any wage or salary increases or granted any bonuses other than wage and salary increases and bonuses granted in accordance with its normal salary increase and bonus policies; (v) mortgaged, pledged or subjected to any lien, pledge, charge or other encumbrance any of its properties or assets, or permitted any of its property or assets to be subjected to any lien or other encumbrance, except in the ordinary and usual course of business; (vi) sold, assigned or transferred any of its properties or assets, except in the ordinary and usual course of business; (vii) entered into any transaction or course of conduct not in the ordinary and usual course of business; (viii) waived any rights of substantial value, or canceled, modified or waived any indebtedness for borrowed money held by it, except in the ordinary and usual course of business; (ix) declared, paid or set aside any dividends or other distributions or payments on its capital stock, or redeemed or repurchased, or agreed to redeem or repurchase, any shares of its capital stock; (x) made any loans or advances to any person, or assumed, guaranteed, endorsed or otherwise became responsible for the obligations of any person; or (xi) incurred any indebtedness for borrowed money (except for endorsement, for collection or deposit of negotiable instruments received in the ordinary and usual course of business). 2.9 Adverse Developments. Since the Company Balance Sheet Date, there have been no material adverse changes in the assets, properties, operations or financial condition of the Company, and no event has occurred other than in the ordinary and usual course of business which could be reasonably expected to have a materially adverse effect upon the business of the Company and Texxar shareholderss, after reasonable inquiry, do not know of any development of a nature that is, or which could be reasonably expected to have a materially adverse effect upon the respective business of the Company or upon any of its assets, properties, operations or financial condition, including, without limitation, the loss of any licenses or permits, suppliers, customers or employees, which loss would be of a materially adverse nature. 2.10 Taxes. A true and complete copy of the Federal income tax return on Form 1120 for the Company as filed with the Internal Revenue Service for the fiscal year ending December 31, 2000, will be delivered to World if requested. Said return was prepared in conformity with information contained in the books and records of the Company and contains no untrue statement of a material fact or omits to state any fact required to make any such return not materially misleading. All taxes, including, without limitation, income, property, sales, use, franchise, capital stock, excise, added value, employees' income withholding, social security and unemployment taxes imposed by the United States, any state or any foreign country, or by any other taxing authority, which have or may become due or payable by the Company and all interest and penalties thereon, whether disputed or not, have been paid in full or adequately provided for by reserves shown in its books of account; all deposits required by law to be made by the Company or with respect to estimated income, franchise and employees' withholding taxes have been duly made; and all tax returns, including estimated tax returns, required to be filed have been duly filed. No extension of time for the assessment of deficiencies for any year is in effect. No deficiency is proposed or to the knowledge of the Company and Texxar shareholderss, after reasonable inquiry, threatened against the Company Except as set forth in Exhibit 2.10, the federal and state income tax returns of the Company have not been audited. 2.11 Ownership of Assets; Trademarks, etc. Schedule 2.11 is a true and complete list of all of all of the United States and foreign material patents, patents pending, patent applications, trademarks, tradenames, service marks and rights (the "Intellectual Property") used by Texxar in the conduct of its business. Except as set forth in Exhibit 2.11, the Company owns outright, and has good and marketable title to all of its assets, properties and businesses (including all assets reflected in the Company Balance Sheets, except as the same may have been disposed of in the ordinary course of business since the Company Balance Sheet Date), free and clear of all liens, mortgages, pledges, conditional sales agreements, restrictions on transfer or other encumbrances or changes. 2.12 Insurance. Schedule 2.12 sets forth a list and brief description of all polices of fire, liability and other forms of insurance held by the Company. Such polices are valid, outstanding and enforceable policies, as to which premiums have been paid currently, are with reputable insurers believed by the Company, after reasonable inquiry, to be financially sound and are consistent with the practices of similar concerns engaged in substantially similar operations as are those currently conducted by the Company. The Company, after reasonable inquiry, does not knows of any state of acts, or the occurrence of any event which might reasonably (i) form the basis for any claim against the Company not fully covered by insurance for liability on account of any express or implied warranty or tortious omission or commission, or (ii) result in material increase in insurance premiums of the Company. 2.13 Litigation; Compliance with Law. There are no actions, suits, proceedings or governmental investigations relating to the Company or its properties, assets or business pending or, to the knowledge of the Company and after reasonable inquiry, threatened, or any order, injunction, award or decree outstanding, against the Company or against or relating to its properties, assets or business; and neither the Company, nor after reasonable inquiry, knows of any basis for any such actions, suits or proceedings within the past two (2) years or any such governmental investigations, orders, injunctions or decrees at any time in the past. To the best of the Company's knowledge, as it relates to compliance with laws, it is not in violation of any law, regulation, ordinance, order, injunction, decree, award, or other requirement of any governmental body, court or arbitrator relating to its properties, assets or business, the violation of which would have a material adverse effect on the Company. 2.14 Real Property. Schedule 2.14 sets forth a list of all real property owned by the Company. Except as set forth in Schedule 2.14, the Company has good and marketable title in said property, free and clear of any lien. 2.15 Agreements and Obligations; Performance. Schedule 2.15 sets forth a list of agreements to which the Company is a party. (the "Listed Agreements"). Other than the Listed Agreements, the Company is not party to, or bound by any: (i) written or oral agreement or other contractual commitment, understanding or obligation which involved aggregate payments or receipts in excess of $25,000 (except for open purchase and sales orders in the ordinary course of business); (ii) contract, arrangement, commitment or understanding which involves aggregate payments or receipts in excess of $25,000 that cannot be canceled on thirty (30) days or less notice without penalty or premium or any continuing obligation or liability (except for open purchase and sales orders in the ordinary course of business); (iii) contractual obligation or contractual liability of any kind to; (iv) contract, arrangement, commitment or understanding with its customers or any officer, employee, stockholder, director, representative or agent thereof for the repurchase of products, sharing of fees, the rebating of charges to such customers, bribes, kickbacks from such customers or other similar arrangements; (v) contract for the purchase or sale of any materials, products or supplies which contain, or which commits or will commit it for a fixed term; (vi) contract of employment with any officer or employee not terminable at will without penalty or premium or any continuing obligation or liability; (vii) deferred compensation, bonus or incentive plan or agreement not cancelable at will without penalty or premium or any continuing obligation or liability; (viii) management or consulting agreement not terminable at will without penalty or premium or any continuing obligation or liability; (ix) lease for real or personal property (including borrowings thereon), license or royalty agreement; (x) union or other collective bargaining agreement; (xi) agreement, commitment or understanding relating to indebtedness for borrowed money; (xii) contract which, by its terms, requires the consent of any party thereto to the consummation of the transactions contemplated hereby; (xiii) contract containing covenants limiting the freedom of the Company to engage or compete in any line or business or with any person in any geographical area; (xiv) contract or option relating to the acquisition or sale of any business; (xv) voting trust agreement or similar stockholders' agreement; (xvi) option for the purchase of any asset, tangible or intangible; or (xvii) other contract, agreement, commitment or understanding which materially affects any of its properties, assets or business, whether directly or indirectly, or which was entered into other than in the ordinary course of business. A true and correct copy of each of the written Listed Agreements has been delivered to World. The Company has in all material respects performed all obligations required to be performed by it to date under all of the Listed Agreements, is not in default in any material respect under any of the Listed Agreements and has received no notice of any default or alleged default thereunder which has not heretofore been cured or which notice has not heretofore been withdrawn. Neither the Company, after reasonable inquiry, knows of any material default under any of the Listed Agreements by any other party thereto or by any other person, firm or corporation bound thereunder. 2.16 Condition of Assets. Except for normal breakdowns and servicing requirements, all machinery and equipment regularly used by the Company in the conduct of its business are in good operating condition and repair, ordinary wear and tear excepted. 2.17 Accounts Receivable. To the knowledge of the Company and, after reasonable inquiry, all of the accounts receivable reflected in the books of account of the Company in the ordinary course of its business (net of reserves for bad debts, if any) are from the sale of services or goods, and neither the Company after reasonable inquiry, knows or has reason to know, of any valid defense or right of set-off to the rights of the Company to collect such accounts receivable in the full amounts shown on such books of account. The inventories of the Company are and will be substantially in usable and saleable condition. 2.18 Permits and Licenses. The Company and the, to the best of their knowledge, believe that the Company has all permits, licenses, orders and approvals of all federal, state, local and foreign governmental or regulatory bodies required of it to carry on its business as presently conducted; all such other permits, licenses, orders, franchises and approvals are in full force and effect, and, after reasonable inquiry, no suspension or cancellation of any of such other permits, licenses, etc. is threatened; and the Company is in compliance in all material respects with all requirements, standards and procedures of the federal, state, local and foreign governmental bodies which have issued such permits, licenses, orders, franchises and approvals. 2.19 Banking Arrangements. Schedule 2.19 sets forth the name of each bank in or with which the Company has an account, credit line or safety deposit box, and a brief description of each such account, credit line or safety deposit box, including the names of all persons currently authorized to draw thereon or having access thereto; and the names of all persons, if any, now holding powers of attorney from the Company and a summary statement of the terms thereof. 2.20 Interest in Assets. Neither nor any affiliate thereof owns any property or rights, tangible or intangible, used in or related, directly or indirectly, to the business of the Company 2.21 Salary Information. Schedule 2.21 contains a list of the names and current salary rates of and bonus commitments to all present officers of the Company, and the names and current annual salary rates of all other persons employed by the Company whose annual salaries exceed $50,000. 2.22 Employee Benefit Plans. the Company does not maintain or make any employer contributions under any "pension" or "welfare" benefit plans, as such term is defined by the Employee Retirement Income Security Act of 1974, as amended. 2.23 No Breach. Neither the execution and delivery of this Agreement nor compliance by the Company with any of the provisions hereof, nor the consummation of the transactions contemplated hereby, will: (a) violate or conflict with any provision of the Certificate of Incorporation or By-laws of the Company; (b) violate or, alone or with notice or the passage of time, result in the material breach or termination of, or otherwise give any contracting party the right to terminate, or declare a default under, the terms of any agreement or other document or undertaking, oral or written to which the Company or any of is a party or by which any of them or any of their respective properties or assets may be bound (except for such violations, conflicts, breaches or defaults as to which required waivers or consents by other parties have been, or will, prior to the Closing, be obtained); (c) result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company pursuant to the terms of any such agreement or instrument; (d) violate any judgement, order, injunction, decree or award against, or binding upon, the Company, or upon their respective properties or assets; or (e) violate any law or regulation of any jurisdiction relating to the Company, its securities, assets or properties. 2.24 Brokers. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried on directly with World and by the Company and Texxar shareholders, without the intervention of any broker, finder, investment banker or other third party. The Company has not engaged, consented to, or authorized any broker, finder, investment banker or other third party to act on its behalf, directly or indirectly, as a broker or finder in connection with the transactions contemplated by this Agreement, and the Company and agree to indemnify World against, and to hold it harmless from any claim for brokerage or similar commissions or other compensation which may be made against World by any third party in connection with any of the transactions contemplated hereby which claim is based upon any action by the Company. 2.25 Untrue or Omitted Facts. No representation, warranty or statement by the Company in this Agreement contains any untrue statement of a material fact, or omits or will omit to state a fact necessary in order to make such representations, warranties or statements not materially misleading. Without limitation of the foregoing, there is no fact known to the Company, after reasonable inquiry, that has had, or which may be reasonably expected to have, a materially adverse effect on the Company or any of its assets, properties, operations or businesses that has not been disclosed in writing to World. ARTICLE III REPRESENTATION AND WARRANTIES OF WORLD World makes the following representations and warranties to the Company and, each of which shall be deemed material (and the Company and Texxar shareholders, in executing, delivering and consummating this Agreement, have relied and will rely upon the correctness and completeness of each of such representations and warranties): 3.1 Valid Corporate Existence; Qualification. World is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. World has the corporate power to carry on its business as now conducted and to own its assets. World is not qualified to conduct business as a foreign corporation in any jurisdiction, there being no jurisdiction in which failure to qualify would have a material adverse effect on World and its assets, properties or business, and there has not been any claim by any jurisdiction to the effect World is required to qualify or otherwise be authorized to do business as a foreign corporation therein. The copies of the Certificate of Incorporation (as certified by the Secretary of the State of Delaware) and By-Laws (as certified by the Secretary of World, as the case may be) of World, as amended to date, which will be delivered to World at or prior to the Closing, if requested, are true and complete copies of those documents as now in effect. 3.2 Consents. No consents of governmental and other regulatory agencies, foreign or domestic, and of other third parties is required to be received by or on the part of World to enable it to enter into and carry out this Agreement in all material respects. World has full corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The delivery of this Agreement and the consummation of the transaction contemplated hereby have been duly and validly approved by the Board of Directors of World. No other corporate proceedings on the part of World are necessary to approve this Agreement. Neither the execution and delivery of this Agreement will violate any provision of the Certificate of Incorporation or Bylaws of World, or violate any statue, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to World. 3.3 Capitalization. The authorized capital stock of World consists of 20,000,000 shares of Common Stock, no par value, of which 991,400 shares of Common Stock are issued and outstanding. The schedule 1.5 hereof sets forth the shareholders names, addresses and the number of shares owned by each shareholder. All of such shares of Common Stock are duly authorized and validly issued and outstanding, fully paid and nonassessable. . They are free of all liens and encumbrances and were issued in compliance with all applicable state and federal laws concerning the issuance of securities. There are no subscriptions, options, warrants, rights or calls or other commitments or agreements to which World is a party or by which it is bound, calling for the issuance, transfer, sale or other disposition of any class of securities of World. There are no outstanding securities of World convertible or exchangeable, actually or contingently, into shares of Common Stock or any other securities of World. World has not declared, authorized, paid or promised to pay any dividends or made any distribution upon or with respect to any class of its capital stock. 3.4 Corporate Authority; Binding Nature of Agreement; etc. World has the corporate power to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by the Board of Directors of World prior to the Closing. No other corporate proceedings on the part of World are necessary to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. This Agreement constitutes the valid and binding obligation of each of World and is enforceable in accordance with its terms. 3.5 Taxes. A true and complete copy of the Federal income tax return on Form 1120 for the World as filed with the Internal Revenue Service for the latest fiscal year ended , will be delivered to Seller. Said return was prepared in conformity with information contained in the books and records of the Company and contains no untrue statement of a material fact or omits to state any fact required to make any such return not materially misleading. All taxes, including, without limitation, income, property, sales, use, franchise, capital stock, excise, added value, employees' income withholding, social security and unemployment taxes imposed by the United States, any state or any foreign country, or by any other taxing authority, which have or may become due or payable by the World and all interest and penalties thereon, whether disputed or not, have been paid in full or adequately provided for by reserves shown in its books of account; all deposits required by law to be made by the Company or with respect to estimated income, franchise and employees' withholding taxes have been duly made; and all tax returns, including estimated tax returns, required to be filed have been duly filed. No extension of time for the assessment of deficiencies for any year is in effect. No deficiency is proposed or to the knowledge of the Company and Sellers, after reasonable inquiry, threatened against the World Except as set forth in Exhibit 3.10, the federal and state income tax returns of the Company have not been audited. 3.6 Agreements. There are no agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees ro which World is a party or to its knowledge by which it is bound which may involve obligations (contingent or otherwise) of any payments of any kind. There are no obligations of World to its officers, directors, stockholders, present or past employees, or agents of any salaries for services rendered, payroll taxes, benefits, reimbursement of expenses incurred on behalf of World. 3.7 No Breach. Neither the execution and delivery of this Agreement nor compliance by World with any of the provisions hereof nor the consummation of the transactions contemplated hereby, will: (a) violate or conflict with any provision of the Articles of Incorporation or By-laws of World; (b) violate or, alone or with notice or the passage of time, result in the material breach or termination of, or otherwise give any contracting party the right to terminate, or declare a default under, the terms of any agreement or other document or undertaking, oral or written to which World or any of World stockholders is a party or by which any of them or any of their respective properties or assets may be bound (except for such violations, conflicts, breaches or defaults as to which required waivers or consents by other parties have been, or will, prior to the Closing, be obtained); (c) result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of World pursuant to the terms of any such agreement or instrument; (d) violate any judgement, order, injunction, decree or award against, or binding upon, World or upon their respective properties or assets; or (e) violate any law or regulation of any jurisdiction relating to World, its securities, assets or properties. 3.8 Brokers. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried on directly by World with the Company and Texxar shareholders, without the intervention of any broker, finder, investment banker or other third party. World has not engaged, consented to, or authorized any broker, finder, investment banker or other third party to act on its behalf, directly or indirectly, as a broker or finder in connection with the merger and the transactions contemplated by this Agreement, and World agrees to indemnify and to hold harmless the Company from and against any claim for brokerage or similar commission or other compensation which may be made against the Company by any third party in connection with any of the transactions contemplated hereby, which claim is based upon any action by World. 3.9 Untrue or Omitted Facts. To the knowledge of World, after reasonable inquiry, no representation, warranty or statement by World in this Agreement or in any filings made with the United States Securities and Exchange Commission contains any untrue statement of a material fact, or omits or will omit to state a fact necessary in order to make such representations, warranties or statements not materially misleading. Nothing has come to the attention of World that would indicate that any filings with the SEC were not timely made as of their respective filing dates. Without limitation of the foregoing, there is no fact known to World, after reasonable inquiry, that has occurred since World's last filing with the SEC that had, or which may be reasonably expected to have, a materially adverse effect on World or any of its assets, properties, operations or businesses and that has not been disclosed in writing to the Company. Neither this Agreement, nor any other document, certificate or written statement prepared by World and furnished to Sellers in connection herewith, contain any untrue statement of material fact or omits to state a material fact known to World necessary in order to make the statements contained herein and therein not misleading as of the date thereof or hereof. There is no fact known to World which adversely affects the business or financial condition or operation of World which has not been set forth in this Agreement. ARTICLE IV POST CLOSING EVENTS 4.1 World and the Shareholders hereby agree that on the closing of this transaction, (i) the existing directors and officers of the World shall all resign at closing, (ii) the directors and officers of Texxar shall become the directors and officers of the World until their respective successors are duly elected or appointed and qualified, (iii) Aron Govil, current President, Chief Executive Officer and Chairman of Texxar shall be the President, Chief Executive Officer and Chairman of the World until such time as a annual meeting of the shareholders of World can be held, and (iv) World will change its name to Texxar. 4.2 Piggyback Registration Rights. Annexed as Schedule 4.2 is a list of certain current shareholders of World. If at any time or from time to time following the closing of this Agreement as set forth below, World shall determine to register any of its securities, either for its own account or the account of a security holder or holders other than a registration relating solely to employee benefit plans, or a registration relating solely to employee benefit plans, then World shall: (1) Promptly give written notice of such proposed Registration to all of the shareholders listed on Schedule 4.2, which shall offer such holders the right to request inclusion of any of the shares held by said shareholders in the proposed Registration.; (2) Each of the shareholders listed on Schedule 4.2 shall have ten (10) days or such longer period as shall be set forth in the notice from the receipt of the notice to deliver to World a written request specifying the number of shares each such shareholder intends to sell; (3) If the registration of which the World gives notice is for a registered public offering involving an underwriting, World shall so advise each shareholder listed on Schedule 4.2 as a part of the written notice given pursuant to Section 4.2(b). In such event, the right of the shareholder to registration pursuant to this Agreement shall be conditioned upon such shareholder's participation in such underwriting and the inclusion of their securities on the same terms and conditions as the shares of common stock, if any, otherwise being sold through underwriters under such registration. 4.3 Demand Registration Rights. If the shareholders listed on Schedule 4.2 have not been offered the opportunity to have their shares registered pursuant to paragraph 4.2, above, within six (6) months of the closing of this Agreement, then World, if requested by such shareholders listed on Schedule 4.2 as represent a majority of the shares listed on said schedule to effect the registration of said shares, shall promptly give written notice of such proposed Registration to all of the shareholders listed on Schedule 4.2, and thereupon World shall promptly use its best efforts to effect the Registration of the shares listed on Schedule 4.2 on SEC Form S-1, Form SB-1, Form S-2, Form SB-2 or Form S-3, whichever is applicable, provided, however, that: (a) World shall not be required to file and cause to become effective more that one Registration Statement pursuant to this provision; (b) World may include in such Registration requested pursuant to this provision, any authorized but unissued shares of World common stock for sale by World, or any issued and outstanding shares of World common stock for sale by others, provided that the inclusion of any of these shares shall not effect the ability of the shareholders listed on Schedule 4.2 from registering the entire amount of their shares. 4.4 Registration Procedures. In the case of each registration pursuant to paragraphs 4.2 and 4.3 above, World will: (a) Prepare and file with the Securities and Exchange Commission a registration statement with respect to such securities on Form S-1, Form SB-1, Form S-2, Form SB-2 or Form S-3, whichever is applicable, and use its best efforts to cause such registration statement to become and remain effective for at least one hundred eighty (180) days or until the distribution described in the registration statement has been completed. (b) Furnish to the shareholders listed on Schedule 4.2 participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities; (c) Use its best efforts to register and qualify the securities covered by the registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the shareholders listed on Schedule 4.2 participating in such registration, provided that World shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to services of process in any such states or jurisdictions; (d) In the event of any underwritten public offering, enter into and perform all its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each shareholders listed on Schedule 4.2 participating in such underwriting shall also enter into and perform its obligations under such an agreement. 4.5 Expenses. All expenses incurred in connection with World's performance of or compliance with the terms of paragraphs 4.2, 4.3 and 4.4 of this Agreement shall be borne by World. ARTICLE V PRE-CLOSING COVENANTS 5.1 The Company Covenants. The Company, hereby covenants that, from and after the date hereof and until the Closing or earlier termination of this Agreement (the "Pre-Closing Period"): (a) Access. The Company shall afford to the officers, attorneys, accountants and other authorized representatives of World free and full access, during regular business hours and upon reasonable notice, to all of its books, records, personnel and properties so that World, at its own expense, may have full opportunity to make such review, examination and investigation as World may desire of the Company's business and affairs. The Company will cause its employees, accountants and attorneys to cooperate fully with said review, examination and investigation and to make full disclosure to World of all material facts affecting its financial condition and business operations. (b) Liabilities. The Company shall not incur any obligation or liability, absolute or contingent, except for those incurred in the ordinary and usual course of its business. (c) Preservation of Business. The Company will use its best efforts to preserve its business organization intact, to keep available the services of its present officers, employees and consultants and to preserve its good will. (d) No Breach. The Company will (i) use its best efforts to assure that all of its representations and warranties contained herein are true in all material respects as of the closing as if repeated at and as of such time, and that no material breach or default shall occur with respect to any of its covenants, representations or warranties contained herein that has not been cured by the Closing; (ii) not voluntarily take any action or do anything which will cause a breach of or default respecting such covenants, representations or warranties; and (iii) promptly notify World of any event or fact which represents or is likely to cause such a breach or default. (e) No Negotiations. For so long as this Agreement shall remain in effect, neither the Company nor any of its officers or directors nor any of their respective affiliates, employees, agents or representatives shall enter into or conduct negotiations, or enter into any agreement or understanding, for the sale or possible sale of any of the Company's securities or business or all or substantially all of its assets with anyone other than World. 5.2 World Covenants. World, hereby covenants that, during the Pre-Closing Period: (a) Access. World shall afford to the officers, attorneys, accountants and other authorized representatives of the Company free and full access, during regular business hours and upon reasonable notice, to all of its books, records, personnel and properties so that any of such persons, at their own expense, may have full opportunity to make such review, examination and investigation as any of them may desire of the business and affairs of World. World will cause its employees, accountants and attorneys to cooperate fully with said review, examination and investigation and to make full disclosure to each of the Company and Texxar shareholders of all material facts affecting their respective financial conditions and business operations. (b) Conduct of Business. World shall conduct its business only in the ordinary and usual course and make no material change in any of its business practices and policies without the prior written consent of the Company, which shall not be unreasonably withheld or delayed. (c) No Breach. World will (i) use its best efforts to assure that all of its representations and warranties contained herein are true in all material respects as of the closing as if repeated at and as of such time, and that no material breach or default shall occur with respect to any of its covenants, representations or warranties contained herein that has not been cured by the Closing; (ii) not voluntarily take any action or do anything which will cause a breach of or default respecting such covenants, representations or warranties; and (iii) promptly notify World of any event or fact which represents or is likely to cause such a breach or default. 5.3 Legal Fees. The Company, Texxar shareholders and World shall each bear their own costs and expenses if this transaction is abandoned at any time. ARTICLE VI CONDITIONS PRECEDENT TO THE OBLIGATION OF WORLD TO CLOSE The obligation of World to enter into and complete the Closing is subject to the fulfillment, prior to or on the Closing Date, of each of the following conditions, any one or more of which may be waived by World (except when the fulfillment of such condition is a requirement of law). 6.1 Representations and Warranties. All representations and warranties of the Company contained in this Agreement and in any written statement (except financial statements), exhibit, certificate, schedule or other document delivered pursuant hereto or in connection with the transactions contemplated hereby shall be true and correct in all material respects as at the Closing Date, as if made at the Closing and as of the Closing Date. 6.2 Covenants. The Company shall have performed and complied in all material respects with all covenants and agreements required by this Agreement to be performed or complied with by each of them prior to or at the Closing. 6.3 No Actions. No action, suit, proceeding or investigation shall have been instituted, and be continuing before a court or before or by a governmental body or agency, or shall have been threatened and be unresolved, to restrain or to prevent or to obtain damages in respect of, the carrying out of the transactions contemplated hereby, or which might materially affect the right of World to own the Company Stock or to operate or control the assets, properties and business of the Company after the Closing Date, or which might have a materially adverse effect thereon. 6.4 Consents; Licenses and Permits. The Company, World, shall have each obtained all consents, licenses and permits of third parties necessary for the performance by each of them of all of their respective obligations under this Agreement. 6.5 Certificate. World shall have received a certificate dated the Closing Date, signed by the President and Secretary of the Company as to the satisfaction of the conditions contained in Sections 6.1 and 6.2. 6.6 Additional Documents. The Company and World shall have delivered all such other certificates and documents as World or its counsel may have reasonably requested, including a certificate of the secretary of World certifying resolutions of the Board of Directors and majority stockholders authorizing the execution, delivery and performance of this Agreement.. 6.7 Approval of Counsel. All actions, proceedings, instruments and documents required to carry out this Agreement, or incidental thereto, and all other related legal matters shall have been approved as to the form and substance by counsel to World, which approval shall not be unreasonably withheld or delayed. ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY AND TEXXAR SHAREHOLDERSS TO CLOSE The obligation of the Company to enter into and complete the Closing is subject to the fulfillment, prior to or on the closing Date, of each of the following conditions, any one or more of which may be waived by the Company (except when the fulfillment of such condition is a requirement of law). 7.1 Representations and Warranties. All representations and warranties of World and contained in this Agreement and in any written statement, schedule or other document delivered pursuant hereto or in connection with the transactions contemplated hereby shall be true and correct in all material respects as at the Closing Date, as if made at the Closing and as of the Closing Date. 7.2 Covenants. World shall have performed and complied in all material respects with all covenants and agreements required by this Agreement to be performed or complied with by each of them prior to or at the Closing. 7.3 No Actions. No action, suit, proceeding, or investigation shall have been instituted, and be continuing, before a court or before or by a governmental body or agency, or have been threatened, and be unresolved, by any governmental body or agency to restrain or prevent, or obtain damages in respect of, the carrying out of the transactions contemplated hereby. 7.4 Certificate. the Company and shall have received a certificate dated the Closing Date, signed by the President and Secretary of World as to the satisfaction of the conditions contained in Sections 7.1 and 7.2. 7.5 Additional Documents. World shall have delivered all such certified resolutions, certificates and documents with respect to World as the Company, Texxar shareholders or their counsel may have reasonably requested, including a certificate of the secretary of the Company certifying resolutions of the Board of Directors authorizing the execution, delivery and performance of this Agreement. 7.6 Approval of Counsel. All actions, proceedings, instruments and documents required to carry out this Agreement or incidental thereto, and all other related legal matters, shall have been approved as to form and substance by counsel to the Company, which approval shall not be unreasonably withheld or delayed. ARTICLE VIII CLOSING 8.1 Location. The Closing provided for herein shall take place at the offices of NexGen Ventures, 53 West 36th Street, New York, New York 10016, at 10:00 a.m. on November 1, 2001, or at such other time and place as may be mutually agreed to by the parties hereto. Such date is referred to in this Agreement as the "Closing Date." 8.2 Items to be Delivered by the Company. At the Closing, the Company will deliver or cause to be delivered to World: (a) Certificates representing the Company Stock in accordance with Section 1.1 hereof, accompanied by all instruments and documents as in the opinion of World's counsel shall be necessary to effect the transfer of and to vest title in and to the Company Stock in World, free and clear of all liens, pledges, encumbrances, charges and claims thereon; (b) The certificates required by Section 7.5; and (c) Such other certified resolutions, documents and certificates as are required to be delivered by the Company and Texxar shareholders pursuant to the provisions of the Agreement. 8.3 Items to be Delivered by World. At the Closing, World will deliver or cause to be delivered to Texxar shareholders such certified resolutions, documents and stock certificates as are required to be delivered by World pursuant to the provisions of this Agreement. ARTICLE IX SURVIVAL OF REPRESENTATIONS 9.1 Survival. The parties hereto agree that their respective representations, warranties, covenants and agreements contained in this Agreement, including the rights provided for in Article IV, shall survive the Closing for a term of twenty-four (24) months with the exception of those regarding taxes set forth in Sections 2.10 and 3.10 which shall survive until the expiration of the respective periods within which such taxes may be assessed. 9.2 Rights Without Prejudice. The rights of the parties under this Article IX are without prejudice to any other rights or remedies that it may have by reason of this Agreement or as otherwise provided by law. ARTICLE X TERMINATION AND WAIVER 10.1 Termination. Anything herein or elsewhere to the contrary notwithstanding, this Agreement may be terminated and the transactions provided for herein abandoned at any time prior to the Closing Date: (a) By mutual consent of the Board of Directors of World and the Company; (b) By World if any of the conditions set forth in Article VI hereof shall not have been fulfilled on or prior to January 31, 2002, or shall become incapable of fulfillment, and shall not have been waived; (c) By the Company or the Shareholders if any of the conditions set forth in Article VII hereof shall not have been fulfilled on or prior to January 31, 2002, or shall become incapable of fulfillment, and shall not have been waived. In the event that this Agreement is terminated as described above, this Agreement shall be void and of no force and effect, without any liability or obligation on the part of any of the parties hereto. 10.2 Waiver. Any condition to the performance of the Company, or World, which legally may be waived on or prior to the Closing Date, may be waived at any time by the party entitled to the benefit thereof by action taken or authorized by an instrument in writing executed by the relevant party or parties. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right of such party as a later time to enforce the same. No waiver by any party of the breach of any term, covenant, representation or warranty contained in this Agreement as a condition to such party's obligations hereunder shall release or affect any liability resulting from such breach, and no waiver of any nature, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or of any breach of any other term, covenant, representation or warranty of this Agreement. ARTICLE XI MISCELLANEOUS PROVISIONS 11.1 Expenses. Each of the parties hereto shall bear his or its own expenses in connection herewith. 11.2 Confidential Information. Each party agrees that such party and its representatives will hold in strict confidence all information and documents received from the other parties and, if the transactions herein contemplated shall not be consummated, each party will continue to hold such information and documents in strict confidence and will return to such other parties all such documents (including the exhibits attached to this Agreement) then in such receiving party's possession without retaining copies thereof; provided, however, that each party's obligations under the Section 11.2 to maintain such confidentiality shall not apply to any information or documents that are in the public domain at the time furnished by the others or that become in the public domain thereafter through any means other than as a result of any act of the receiving party or of its agents, officers, directors or stockholders which constitutes a breach of this Agreement, or that are required by applicable law to be disclosed. The parties agree that the remedy at law for any breach of this Section 11.2 will be inadequate and a non-breaching party will be entitled to injunctive relief to compel the breaching party to perform or refrain from action required or prohibited hereunder. 11.3 Modification, Termination or Waiver. This Agreement may be amended, modified, superseded or terminated, and any of the terms, covenants, representations, warranties or conditions hereof may be waived, but only by a written instrument executed by the party waiving compliance. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right of such party at a later time to enforce the same. 11.4 Publicity. The parties agree that no publicity, release or other public announcement concerning the transactions contemplated by this Agreement shall be issued by either party without the advance approval of both the form and substance of the same by the other party and its counsel, which approval, in the case of any publicity, release or other public announcement required by applicable law, shall not be unreasonably withheld or delayed. 11.5 Notices. Any notice or other communication required or which may be given hereunder shall be in writing and either be delivered personally or be mailed, certified or registered mail, postage prepaid, and shall be deemed given when so delivered personally, or if mailed, two days after the date of mailing, as follows: If to World, to: 53 West 36 Street Suite 606 New York, New York 10018 and if to the Company and/or the Shareholders, to: Texxar, Inc. 19 Engineers Lane Farmingdale, NY 11735 The parties may change the persons and addresses to which the notices or other communications are to be sent by giving written notice of any such change in the manner provided herein for giving notice. 11.6 Binding Effect and Assignment. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto; provided, however, that no assignment of any rights or delegation of any obligations provided for herein may be made by any party without the express written consent of the other parties. 11.7 Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof. 11.8 Exhibits. All exhibits annexed hereto and the documents and instruments referred to herein or required to be delivered simultaneously herewith or at the Closing are expressly made a part of this Agreement as fully as though completely set forth herein, and all references to this Agreement herein or in any of such exhibits, documents, or instruments shall be deemed to refer to and include all such exhibits, documents and instruments. 11.9 Governing Law. This Agreement shall be governed by, and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within that State, excluding the choice of law rules thereof. 11.10 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but which together shall constitute one and the same instrument. 11.11 Section Headings. The section headings contained in this Agreement are inserted for conveniences of reference only and shall not affect the meaning or interpretation of this Agreement. WITNESS the execution of this Agreement as of the date first above written. WORLD WIDE YACHT DELIVERIES , INC. By: /s/Guy Cohen TEXXAR CORP. By: /s/ Aron Govil EX-3 4 yachtcert102798.txt WORLDWIDE YACH CERTIFICATE OF INCORPORATION STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 09:00 AM 10/27/1998 981413082 - 2957660 CERTIFICATE OF INCORPORATION OF WORLD WIDE YACHT DELIVERIES, INC. FIRST. The name of this corporation shall be: WORLD WIDE YACHT DELIVERIES, INC. SECOND. Its registered office in the State of Delaware is to be located at 1013 Centre Road, in the City of Wilmington, County of New Castle, 19805, and its registered agent at such address is THE COMPANY CORPORATION. THIRD. The purpose or purposes of the corporation shall be: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH. The total number of shares of stock which this corporation is authorized to issue is: Ten Million (10,000,000) shares with a par value of one tenth of one cent (One Mil) ($0.001) per share, amounting to Ten Thousand Dollars ($10,000.00). FIFTH. The name and mailing address of the incorporator is as follows: Chennell Mowbray The Company Corporation 1013 Centre Road Wilmington, DE 19805 SIXTH. The Board of Directors shall have the power to adopt, amend or repeal the by-laws. IN WITNESS WHEREOF, The undersigned, being the incorporator hereinafter named, has executed, signed and acknowledged this certificate of incorporation this twenty-seventh day of October, A.D. 1998. /s/Chennell Mowbray Chennell Mowbray Incorporator EX-3.(I) 5 yachtamend020801.txt FIRST AMENDMENT TO YACHT CERTIFCATE STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 09:00 AM 02/08/2001 010064980 - 2957660 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION World Wide Yacht Deliveries, Inc. a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify: FIRST: That at a meeting of the Board of Directors of World Wide Yacht Deliveries, Inc. resolutions were duly adopted setting forth a proposed amendment of the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and calling a meeting of the stockholders of said corporation for consideration thereof. The resolution setting forth the proposed amendment is as follows: RESOLVED, that the Certificate of Incorporation of this corporation be amended by changing the Article thereof numbered "FOURTH" so that, as amended said Article shall be and read as follows: The total number of shares of stock which this corporation is authorized to issue is: Twenty Million (20,000,000) shares with a par value of One tenth of One Cent (One Mil) ($0.001) per share, amounting to Twenty Thousand Dollars ($20,000.00). SECOND: That thereafter, pursuant to resolution of its Board of Directors, a special meeting of the Stockholders of said corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of share as required by statue were voted in favor of the amendment. THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. FOURTH: That the capital of said corporation shall not be reduced under or by reason of said amendment. IN WITNESS THEREOF, said Gregory Aurre has caused its corporate seal to be hereunto affixed and this certificate to be signed by Gregory Aurre, its President and Gregory Aurre III, its secretary this 7th day of February 2001 By: /s/Gregory Aurre President By: /s/Gregory Aurre III Secretary EX-3.(I) 6 ytotexxar112901.txt CHANGE OF NAME STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 09:00 AM 11/29/2001 010807221 - 2957660 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION WORLD WIDE YACHT DELIVERIES, INC. a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware. DOES HEREBY CERTIFY FIRST: That at a meeting of the Board of Directors of World Wide Yacht Deliveries, Inc. resolutions were duly adopted setting forth a proposed amendment of the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and calling a meeting of the stockholders of said corporation for consideration thereof. The resolution setting forth the proposed amendment is as follows: RESOLVED, that the Certificate of Incorporation of this corporation be amended by changing the Articles thereof numbered "FIRST" so that, as amended said Article shall be and read as follows: The name of this corporation is: Texxar Inc. SECOND: That thereafter, pursuant to resolution of its Board of Directors, a special meeting of the Stockholders of said corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of share as required by statue were voted in favor of the amendment. THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. FOURTH: That the capital of said corporation shall not be reduced under or by reason of said amendment. IN WITNESS THEREOF, said Karin R. Slacum has caused this certificate to be signed by Karin R. Slacum, its secretary this 16th day of November 2001. By: /s/Karin R. Slacum EX-3.(I) 7 texamend091202.txt TEXXAR AMENDMENT DATED 091202 CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF TEXXAR INC. Texxar Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That at a Company Meeting of the Board of Directors of Texxar Inc., resolutions were duly adopted setting forth a proposed amendment of the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and calling a meeting of the stockholders of said corporation for consideration thereof. The resolution setting forth the proposed amendment is as follows: RESOLVED, that the Certificate of Incorporation of this Corporation be amended by changing the Article thereof numbered "4" so that, as amended said Article shall be read as follows: "4": "The total number of shares of stock which this corporation is authorized to issue is: Forty Million (40,000,000) shares of Common Stock with a par value of One hundredth of One Cent ($0.0001) per share, amounting to Four Thousand Dollars ($4,000.00)." SECOND: That said amendment was duly adopted with the provision of section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said Texxar Inc. has caused its corporate seal to be affixed and this certificate to be signed by Aron Govil, its President, and Vandana Govil, its secretary, this 12th day of September, 2002. By: /s/Aron Govil President (Corporate Seal) By: /s/Vandana Govil Secretary STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 11:44 AM 09/12/2002 080570283 - 2957660 EX-3.(I) 8 finalcert112702.txt LAST AMENDMENT TEXXAR STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 01:54 PM 11/27/2002 020734214 - 2957660 CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION OF TEXXAR INC. Texxar Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: First: that Article FOURTH is hereby amended to read as follows: This corporation shall have the authority to issue two classes of capital stock the total of which shall be 55,000,000 shares. The classification and par value of 50,000,000 shares shall be common voting stock having a par value of $.001 per share, and each share shall be entitled to the same dividend, liquidation, and voting rights; the classification and par value of 5,000,000 shares shall be preferred stock having a par value of $.001 per share. Said preferred stock may be issued from time to time in one or more classes or series with such dividend rates, voting rights, rights of conversion, rights upon dissolution or liquidation, and with such designations or restrictions thereof as shall be determined by resolution adopted by the Board of Directors at the time such stock is issued without further approval of the shareholders. A new Article SEVENTH is hereby adopted to read as follows: Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under the provisions of Section 291 of Delaware General Corporation Law or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of Section 279 of Delaware General Corporation Law order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement of the Corporation as consequence and to any reorganization of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation. A new Article EIGHTH is hereby adopted to read as follows: The personal liability of the directors of the Corporation is hereby eliminated to the fullest extent permitted by the provisions of paragraph (7) of subsection (b) of Section 102 of the Delaware General Corporation Law, as the same may be amended and supplemented. A new Article NINTH is hereby adopted to read as follows: The Corporation shall, to the fullest extent permitted by the provisions of Section 145 of the Delaware General Corporation Law, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said section from and against any and all of the expenses, liabilities or other matters referred to in or covered by said section, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action In another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. The foregoing right of indemnification shall in no way be exclusive of any other rights of indemnification to which such person may be entitled under any by-law, agreement, vote of stockholders or disinterested directors, or otherwise. Second: that the necessary number of shares as required by statute consented in writing on January 8th, 2003, to the amendment pursuant to Section 228 of the General Corporation Law of the State of Delaware. Third: that said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. Fourth: That the capital of said corporation shall not be reduced under or by reason of said amendment. IN WITNESS WHEREOF, said Texxar Inc. has caused its corporate seal to be affixed and this certificate to be signed by Aron Govil, its President, and Vandana Govil, its secretary, this 9th day of January, 2003. By: /s/Aron Govil President ` By: /s/Vandana Govil Secretary EX-3.(II) 9 bylaws.txt TEXXAR BYLAWS TEXXAR, INC. A Delaware Corporation BY-LAWS ARTICLE I Principal Executive Office The Corporation may have offices at such other places within or without the State of Delaware as the board of directors shall from time to time determine. ARTICLE II Stockholders SECTION 1. Place of Meetings. All annual and special meetings of the stockholders shall be held at the principal executive office or at such other place within or without the State of Delaware as the board of directors may determine and as designated in the notice of such meeting. SECTION 2. Annual Meeting. A meeting of the stockholders for the election of directors and for the transaction of any other business shall be held annually at such date and time as the board of directors may determine. SECTION 3. Special Meetings. Special meeting of the stockholders for any purpose or purposes may be called at any time by the board of directors, or by a committee of the board of directors which as been duly designated by the board of directors and whose powers and authorities, as provided in a resolution of the board of directors or in these by-laws, include the power and authority to call such meetings, or by stockholders owning at least twenty-five percent (25%) of the entire voting power of the corporation's capital stock but such special meetings may not be called by any other person or persons. SECTION 4. Conduct of Meetings. Annual and special meetings shall be conducted in accordance with these by-laws or as otherwise prescribed by the board of directors. The chairman or the chief executive officer shall preside at such meetings. SECTION 5. Notice of Meeting. Written notice stating the place, day and time of the meeting and the purpose or purposes for which the meeting is called shall be mailed by the secretary or the officer performing his duties, not less than ten days nor more than fifty days before the meeting to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the stockholder at his address as it appears on the stock transfer books or records as of the record date prescribed in Section 6, with postage thereon prepaid. If a stockholder be present at a meeting, or in writing waive notice thereof before or after the meeting, notice of the meeting to such stockholder shall be unnecessary. When any stockholders' meeting, either annual or special, is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. It shall not be necessary to give any notice of the time and place of any meeting adjourned for less than thirty days or of the business to be transacted at such adourned meeting, other than an announcement at the meeting at which such adjournment is taken. 1 SECTION 6. Fixing of Record Date. For the purpose of determining stockholders entitled to notice of or to vote at any stockholders' meeting, or any adjournment thereof, or stockholders entitled to receive payment of any dividend, or in order to make a determination of stockholders for any other proper purpose, the board of directors shall fix in advance a date as the record date for any such determination of stockholders. Such date in any case shall be not more than sixty days, and in case of a stockholders' meeting, not less than ten days prior to the date on which the particular action, requiring such determination of stockholders, is to be taken. When a determination of stockholders entitled to vote at any stockholders' meeting has been made as provided in this section, such determination shall apply to any adjournment thereof. SECTION 7. Voting Lists. The officer or agent having charge of the stock transfer books for shares shall make, at least ten days before each stockholders' meeting, a complete record of the stockholders entitled to vote at such meeting or any adjournment thereof, with the address of and the number of shares held by each. The record, for a period of ten days before such meeting, shall be kept on file at the principal executive office, whether within or outside the State of Delaware, and shall be subject to inspection by any stockholder for any purpose germane to the meeting at any time during usual business hours. Such record shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any stockholder for any purpose germane to the meeting during the whole time of the meeting. The original stock transfer books shall be prima facie evidence as to the stockholders entitled to examine such record or transfer books or to vote at any stockholders' meeting. SECTION 8. Quorum. One-fourth of the outstanding shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a stockholders' meeting. If less than one-fourth of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. SECTION 9. Proxies. At all stockholders' meetings, a stockholder may vote by proxy executed in writing by such stockholder or by his duly authorized attorney in fact. Proxies solicited on behalf of the management shall be voted as directed by such stockholder or, in the absence of such direction, as determined by a majority of the board of directors. No proxy shall be valid after eleven months from the date of its execution unless otherwise provided in the proxy. SECTION 10. Voting. At each election for directors every stockholder entitled to vote at such election shall be entitled to one vote for each share of stock held. Unless otherwise provided by the certificate of incorporation, by statute, or by these by-laws, a majority of votes of the shares present in person or by proxy at a lawful meeting and entitled to vote on the election of directors shall be sufficient to pass on a transaction or matter, except in the election of directors, which election shall be determined by a plurality of the votes of the shares present in person or by proxy at the meeting and entitled to vote on the election of directors. 2 SECTION 11. Voting of Shares in the Name of Two or More Persons. When ownership of stock stands in the name of two or more persons, in the absence of written directions to the Corporation to the contrary, at any stockholders' meeting any one or more of such stockholders may cast, in person or by proxy, all votes to which such ownership is entitled. In the event an attempt is made to cast conflicting votes, in person or by proxy, by the several persons in whose name shares of stock stand, the vote or votes to which these persons are entitled shall be cast as directed by a majority of those holding such stock and present in person or by proxy at such meeting, but no votes shall be cast for such stock without the direction of such a majority. SECTION 12. Voting of Shares by Certain Holders. Shares of capital stock standing in the name of another corporation may be voted by any officer, agent or proxy as these by-laws of such corporation may prescribe, or, in the absence of such provision, 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 a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name. 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 the transfer thereof into his name if authority to do so is contained in an appropriate order of the court or other public authority by which such receiver was appointed. A stockholder whose shares are pledged shall be entitled to vote such shares at any stockholders' meeting until such shares have been transferred into the name of the pledgee and thereafter such pledgee shall be entitled to vote the shares so transferred. Neither treasury shares of its own stock held by the Corporation, nor shares held by another corporation, if a majority of the shares entitled to vote for the election of directors of such other corporation are held by the Corporation, shall be voted at any stockholders' meeting or counted in determining the total number of outstanding shares at any given time for purposes of any meeting. SECTION 13. Inspectors of Election. In advance of any stockholders' meeting, the chairman of the board or the board of directors may appoint any persons, other than nominees for office, as inspectors of election to act at such meeting or any adjournment thereof. The number of inspectors shall be either one or three. If the board of directors appoints either one or three inspectors, that appointment shall not be altered at the meeting. If inspectors of election are not so appointed, the chairman of the board of directors may make an appointment at the meeting. In case any person appointed as inspector fails to appear or fails or refuses to act, the vacancy may be filled by appointment in advance of the meeting or at the meeting by the chairman of the board of directors or the president of the Corporation. Unless otherwise prescribed by applicable law, the duties of such inspectors shall include: determining the number of shares of stock and the voting power of each share, the shares of stock represented at the meeting, the existence of a quorum, the authenticity, validity and effect of proxies; receiving votes, ballots or consents; hearing and determining all challenges and questions in any way arising in connection with the right to vote; counting and tabulating all votes or consents; determining the result; and such acts as may be proper to conduct the election or vote with fairness to all stockholders. 3 SECTION 14. Nominating Committee. The board of directors or a committee appointed by the board of directors shall act as nominating committee for selecting the management nominees for election as directors. Except in the case of a nominee substituted as a result of the death or other incapacity of a management nominee, the nominating committee shall deliver written nominations to the secretary at least twenty days prior to the date of the annual meeting. Provided such committee makes such nominations, no nominations for directors except those made by the nominating committee shall be voted upon at the annual meeting unless other nominations by stockholders are made in writing and delivered to the secretary in accordance with the provisions of the Corporation's certificate of incorporation. SECTION 15. New Business. Any new business to be taken up at the annual meeting shall be stated in writing and filed with the secretary in accordance with the provisions of the Corporation's certificate of incorporation. This provision shall not prevent the consideration and approval or disapproval at the annual meeting of reports of officers, directors and committees, but in connection with such reports no new business shall be acted upon at such annual meeting unless stated and filed as provided in the Corporation's certificate of incorporation. ARTICLE III Board of Directors SECTION 1. General Powers. The business and affairs of the Corporation shall be under the direction of the board of directors. The chairman shall preside at all meetings of the board of directors. SECTION 2. Number, Term and Election. The number of directors shall be such number, not less than one nor more than seven (exclusive of directors, if any, to be elected by holders of preferred stock), as shall be provided from time to time in a resolution adopted by the board of directors, provided that no decrease in the number of directors shall have the effect of shortening the term of any incumbent director, and provided further that no action shall be taken to decrease or increase the number of directors from time to time unless at least two-thirds of the directors then in office shall concur in said action. Exclusive of directors, if any, elected by holders of preferred stock, vacancies in the board of directors, however caused, and newly created directorships shall be filled by a vote of two-thirds of the directors then in office, whether or not a quorum, and any director so chosen shall hold office for a term expiring at the annual stockholders' meeting at which the term of the class to which the director has been chosen expires and when the director's successor is elected and qualified. The board of directors shall be classified in accordance with the provisions of Section 3 of this Article III. SECTION 3. Regular Meetings. A regular meeting of the board of directors shall be held at such time and place as shall be determined by resolution of the board of directors without other notice than such resolution. SECTION 4. Special Meetings. Special meetings of the board of directors may be called by or at the request of the chairman, the chief executive officer or one-third of the directors. The person calling the special meetings of the board of directors may fix any place as the place for holding any special meeting of the board of directors called by such persons. 4 Members of the board of the directors may participate in special meetings by means of telephone conference or similar communications equipment by which all persons participating in the meeting can hear each other. Such participation shall constitute presence in person. SECTION 5. Notice. Written notice of any special meeting shall be given to each director at least two days previous thereto delivered personally or by telegram or at least seven days previous thereto delivered by mail at the address at which the director is most likely to be reached. Such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid if mailed or when delivered to the telegraph company if sent by telegram. Any director may waive notice of any meeting by a writing filed with the secretary. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of the board of directors need be specified in the notice or waiver of notice of such meeting. SECTION 6. Quorum. A majority of the number of directors fixed by Section 2 shall constitute a quorum for the transaction of business at any meeting of the board of directors, but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time. Notice of any adjourned meeting shall be given in the same manner as prescribed by Section 5 of this Article III. SECTION 7. Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors, unless a greater number is prescribed by these by-laws, the certificate of incorporation, or the General Corporation Law of the State of Delaware. SECTION 8. Action Without a Meeting. Any action required or permitted to be taken by the board of directors at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors. SECTION 9. Resignation. Any director may resign at any time by sending a written notice of such resignation to the home office addressed to the chairman. Unless otherwise specified therein such resignation shall take effect upon receipt thereof by the chairman. SECTION 10. Vacancies. Any vacancy occurring on the board of directors shall be filled in accordance with the provisions of the Corporation's certificate of incorporation. Any directorship to be filled by reason of an increase in the number of directors may be filled by the affirmative vote of two-thirds of the directors then in office or by election at an annual meeting or at a special meeting of the stockholders held for that purpose. The term of such director shall be in accordance with the provisions of the Corporation's certificate of incorporation. SECTION 11. Removal of Directors. Any director or the entire board of directors may be removed only in accordance with the provisions of the Corporation's certificate of incorporation. 5 SECTION 12. Compensation. Directors, as such, may receive compensation for service on the board of directors. Members of either standing or special committees may be allowed such compensation as the board of directors may determine. SECTION 13. Age Limitation. No person 72 years or more of age shall be eligible for election, reelection, appointment or reappointment to the board. No director shall serve as such beyond the annual meeting immediately following the director becoming 72 years of age. This age limitation does not apply to an advisory director. ARTICLE IV Committees of the Board of Directors The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, as they may determine to be necessary or appropriate for the conduct of the business, and may prescribe the duties, constitution and procedures thereof. Each committee shall consist of one or more directors appointed by the chairman. The chairman may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. The chairman shall have power at any time to change the members of, to fill vacancies in, and to discharge any committee of the board. Any member of any such committee may resign at any time by giving notice to the Corporation; provided, however, that notice to the board, the chairman of the board, the chief executive officer, the chairman of such committee, or the secretary shall be deemed to constitute notice to the Corporation. Such resignation shall take effect upon receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, acceptance of such resignation shall not be necessary to make it effective. Any member of any such committee may be removed at any time, either with or without cause, by the affirmative vote of a majority of the authorized number of directors at any meeting of the board called for that purpose. ARTICLE V Officers SECTION 1. Positions. The officers shall be a chairman, a president, one or more vice presidents, a secretary and a treasurer, each of whom shall be elected by the board of directors. The board of directors may designate one or more vice presidents as executive vice president or senior vice president. The board of directors may also elect or authorize the appointment of such other officers as the business may require. The officers shall have such authority and perform such duties as the board of directors may from time to time authorize or determine. In the absence of action by the board of directors, the officers shall have such powers and duties as generally pertain to their respective offices. 6 SECTION 2. Election and Term of Office. The officers shall be elected annually by the board of directors at the first meeting of the board of directors held after each annual meeting of the stockholders. If the election of officers is not held at such meeting, such election shall be held as soon thereafter as possible. Each officer shall hold office until his successor shall have been duly elected and qualified, until his death or until he shall resign or shall have been removed in the manner hereinafter provided. Election or appointment of an officer, employee or agent shall not of itself create contract rights. The board of directors may authorize the Corporation to enter into an employment contract with any officer in accordance with state law; but no such contract shall impair the right of the board of directors to remove any officer at any time in accordance with Section 3 of this Article V. SECTION 3. Removal. Any officer may be removed by vote of two-thirds of the board of directors whenever, in its judgment, the best interests will be served thereby, but such removal, other than for cause, shall be without prejudice to the contract rights, if any, of the person so removed. SECTION 4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the board of directors for the unexpired portion of the term. SECTION 5. Remuneration. The remuneration of the officers shall be fixed from time to time by the board of directors, and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director. ARTICLE VI Contracts, Loans, Checks and Deposits SECTION 1. Contracts. To the extent permitted by applicable law, and except as otherwise prescribed by the Corporation's certificate of incorporation or these by-laws with respect to certificates for shares, the board of directors or the executive committee may authorize any officer, employee, or agent to enter into any contract or execute and deliver any instrument in the name of and on behalf. Such authority may be general or confined to specific instances. SECTION 2. Loans. No loans shall be contracted on behalf and no evidence of indebtedness shall be issued in its name unless authorized by the board of directors. Such authority may be general or confined to specific instances. SECTION 3. Checks, Drafts, Etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name shall be signed by one or more officers, employees or agents in such manner, including in facsimile form, as shall from time to time be determined by resolution of the board of directors. SECTION 4. Deposits. All funds not otherwise employed shall be deposited from time to time to the credit in any of its duly authorized depositories as the board of directors may select. 7 ARTICLE VII Certificates for Shares and Their Transfer SECTION 1. Certificates for Shares. The shares of capital stock shall be represented by certificates signed by the chairman of the board of directors or the president or a vice president and by the treasurer or an assistant treasurer or the secretary or an assistant secretary, and may be sealed with the seal or a facsimile thereof. Any or all of the signatures upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the Corporation itself or an employee. If any officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer before the certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of its issue. SECTION 2. Form of Share Certificates. All certificates representing shares of capital stock shall set forth upon the face or back that the Corporation will furnish to any stockholder upon request and without charge a full statement of the designations, preferences, limitations, and relative rights of the shares of each class authorized to be issued, the variations in the relative rights and preferences between the shares of each such series so far as the same have been fixed and determined, and the authority of the board of directors to fix and determine the relative rights and preferences of subsequent series. Each certificate representing shares shall state upon the face thereof: that the Corporation is organized under the laws of the State of Delaware; the name of the person to whom issued; the number and class of shares, the designation of the series, if any, which such certificate represents; the par value of each share represented by such certificate, or a statement that the shares are without par value. Other matters in regard to the form of the certificates shall be determined by the board of directors. SECTION 3. Payment for Shares. No certificate shall be issued for any share of capital stock until such share is fully paid. SECTION 4. Form of Payment for Shares. The consideration for the issuance of shares of capital stock shall be paid in accordance with the provisions of the certificate of incorporation. SECTION 5. Transfer of Shares. Transfer of shares of capital stock shall be made only on the stock transfer books of the Corporation. Authority for such transfer shall be given only to the holder of record thereof or by his legal representative, who shall furnish proper evidence of such authority, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Corporation. Such transfer shall be made only on surrender for cancellation of the certificate for such shares. The person in whose name shares of capital stock stand on the books shall be deemed by the Corporation to be the owner thereof for all purposes. 8 SECTION 6. Lost Certificates. The board of directors may direct a new certificate to be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen, or destroyed. When authorizing such issue of a new certificate, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen, or destroyed certificate, or his legal representative, to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen, or destroyed. ARTICLE VIII Fiscal Year; Annual Audit The fiscal year shall end on the last day of December of each year. The Corporation shall be subject to an annual audit as of the end of its fiscal year by independent public accountants appointed by and responsible to the board of directors. ARTICLE IX Dividends Dividends upon the capital stock, subject to the provisions of the certificate of incorporation, if any, may be declared by the board of directors at any regular or special directors' meeting, pursuant to law. Dividends may be paid in cash, in property or in stock. ARTICLE X Corporation Seal The corporate seal shall be in such form as the board of directors shall prescribe. ARTICLE XI Amendments Pursuant to the certificate of incorporation, these by-laws may be repealed, altered, amended or rescinded by the stockholders only by vote of not less than three-quarters of the voting power of the outstanding shares of capital stock entitled to vote generally in the election of directors (considered for this purpose as one class) cast at a stockholders' meeting called for that purpose (provided that notice of such proposed repeal, alteration, amendment or rescission is included in the notice of such meeting). In addition, the board of directors may repeal, alter, amend or rescind these by-laws by vote of two-thirds of the board of directors at a legal meeting held in accordance with the provisions of these by-laws. 9 ARTICLE XII Indemnification of Directors and Officers 1. INDEMNIFICATION. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, trustee, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, by itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interest of the corporation, and with respect to any criminal action or proceeding, had reasonable cause to believe that such person's conduct was lawful. 2. DERIVATIVE ACTION. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in the corporation's favor by reason of the fact that such person is or was a director, trustee, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee or agent of any other corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation; provided, however, that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for gross negligence or willful misconduct in the performance of such person's duty to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as such court shall deem proper. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, by itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interest of the corporation. 10 3. SUCCESSFUL DEFENSE. To the extent that a director, trustee, officer, employee or agent of the corporation has been successful, on the merits or otherwise, in whole or in part, in defense of any action, suit or proceeding referred to in paragraphs 1 and 2 above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith. 4. AUTHORIZATION. Any indemnification under paragraph 1 and 2 above (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, trustee, officer, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in paragraph 1 and 2 above. Such determination shall be made (a) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, (b) by independent legal counsel (selected by one or more of the directors, whether or not a quorum and whether or not disinterested) in a written opinion, or (c) by the stockholders. Anyone making such a determination under this paragraph 4 may determine that a person has met the standards therein set forth as to some claims, issues or matters but not as to others, and may reasonably prorate amounts to be paid as indemnification. 5. ADVANCES. Expenses incurred in defending civil or criminal actions, suits or proceedings shall be paid by the corporation, at any time or from time to time in advance of the final disposition of such action, suit or proceeding as authorized in the manner provided in paragraph 4 above upon receipt of an undertaking by or on behalf of the director, trustee, officer, employee or agent to repay such amount unless it shall ultimately be determined by the corporation that the payment of expenses is authorized in this Section. 6. NONEXCLUSIVITY. The indemnification provided in this Section shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any law, by-law, agreement, vote of stockholders or disinterested director or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, trustee, officer, employee or agent and shall insure to the benefit of the heirs, executors, and administrators of such a person. 7. INSURANCE. The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, trustee, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, trustee, officer, employee or agent of any corporation, partnership, joint venture, trust or other enterprise, against any liability assessed against such person in any such capacity or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability. 11 8. "CORPORATION" DEFINED. For purpose of this action, references to the "corporation" shall include, in addition to the corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had the power and authority to indemnify its directors, trustees, officers, employees or agents, so that any person who is or was a director, trustee, officer, employee or agent of such of constituent corporation will be considered as if such person was a director, trustee, officer, employee or agent of the corporation. 12 EX-4 10 stockcert.txt STOCK CERTIFICATE TEXXAR, INC. (INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE) This certifies that ---------- is the registered owner of ---------------- fully paid and non-assessable shares of common stock, $.001 par value each of TEXXAR, INC. Transferable on the books of the Corporation in person or by attorney upon surrender of this Certificate duly endorsed or assigned. This Certificate and the shares represented hereby are subject to the laws of the State of Delaware, and to the Certificate of Incorporation and By-laws of the Corporation, as now or hereafter amended. This Certificate is not valid unless countersigned by the Transfer Agent WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated: ---------------- TEXXAR, INC. /s/Vandana Govil CORPORATE SEAL /s/Aron Govil - ---------------- 1998 -------------------- Secretary DELAWARE President Countersigned: Olde Monmouth Stock Transfer Co., Inc. 77 Memorial Parkway Atlantic Highlands, New Jersey 07716 Transfer Agent AUTHORIZED SIGNATURE The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common and not as community property UNIFORM GIFTS TO MINORS ACT ( Custodian) (Minor) under the Uniform Gifts of Minors Act of the State of ------------------ FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto: Please insert social security or other identifying number: ----------------- (Insert name and address, including zip code): - ---------------------------------------------------- - ---------------------------------------------------- - --------------------------------------------- shares of the Common Stock represented by the within Certificate and do hereby irrevocably constitute and appoint - ---------------------------------------------------- to transfer the said shares on the books of the within named Corporation with full power of substitution in the premises. DATED: ------------- --------------------------------------- NOTICE: The signature to this assignment must correspond with the name as it is written upon the face of the Certificate in every particular without alteration or enlargement or any change whatever. SIGNATURE GUARANTEE: EX-5 11 opinioncounsel.txt OPINION OF COUNSEL JOEL PENSLEY Attorney at law 211 Schoolhouse Road Norfork, Connecticut 06058 April 8, 2003 United States Securities and Exchange Commission 450 Fifth Street, N. W. Washington, D.C. 20549 Re: Texxar, Inc. To Whom It May Concern: Texxar, Inc. (the "Company") is a corporation duly incorporated and validly existing and in good standing under the laws of the State of Delaware. The Company has full corporate powers to own its property and conduct its business as such business is described in the prospectus which is a part of a registration statement on Form SB-2. The Company is a holding company which operates through a wholly-owned operating subsidiary. This opinion is given in connection with the registration with the Securities and Exchange Commission of 1,496,300 shares of common stock of the Company ("Shares"), presently owned by stockholders and the registration for resale of 4,000,000 shares of common stock to be issued pursuant to the Stock Purchase Agreement between the Company and Nexgen Holdings, Inc. I have acted as counsel to the Company in connection with the preparation of the Registration Statement on Form SB-2, pursuant to which the Shares of common stock are being registered and upon Delaware law including but not limited to the General Corporation Law, the Delaware Constitution and reported judicial decisions interpreting Delaware statutory and constitutional provisions, and, in so acting, I have examined the originals and copies of the corporate instruments, certificates and other documents of the Company and interviewed representatives of the Company to the extent I deemed it necessary in order to form the basis for the opinion hereafter set forth. In such examination, I have assumed the genuineness of all signatures and authenticity of all documents submitted to me as certified or photostatic copies. As to all questions of fact material to this opinion which have not been independently established, I have relied upon statements or certificates of officers or representatives of the Company. In my opinion, the 1,496,300 Shares owned by present stockholders which are being registered herein are duly authorized and legally issued, fully paid and non-assessable. The issuance of 4,000,000 Shares pursuant to the Stock Purchase Agreement the resale of which are being registered herein were authorized by the board of directors of the Company. The shares will be issued to the investor for consideration. I am of the opinion that the the 4,000,000 Shares pursuant to the Stock Purchase Agreement will be fully-paid and non-assessable when issued will be legally issued, fully paid and non-assessable; and there will be no personal liability to the investor. /s/Joel Pensley ----------------- Joel Pensley EX-10 12 stockpuragr.txt EQUITY LINE STOCK PURCHASE AGREEMENT BETWEEN TEXXAR, INC. AND NEXGEN HOLDINGS, INC. STOCK PURCHASE AGREEMENT dated as of Nov. 29, 2002. (this "Agreement"), between Nexgen Holdings, Inc. (the "Investor"), and Texxar, Inc., a Delaware corporation (the "Company"). (The parties to this Agreement are individually referred to as a "Party" and collectively as the "Parties.") WHEREAS, the Parties desire to enter into an agreement pursuant to which, subject to the conditions contained therein, the Company could issue and sell to the Investor from time to time as provided therein, shares of its common stock; and NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor agree as follows: ARTICLE I Certain Definitions "Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls or is controlled by or under common control with such Person. For the purposes of this definition, "control," when used with respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms of "affiliated," "controlling" and "controlled" have meanings correlative to the foregoing. "BBX" means the Bulletin Board Exchange. "Bid Price" means the closing bid price of the Common Stock for such day's regular session trading as reported on the Principal Market on the date in question, or if there is no such price on such date, then the closing bid price as reported on the date nearest preceding such date. "Business Day" means any day (other than a day which is a Saturday, Sunday or legal holiday in the State of New York) on which banks are open for business in New York City. "Closing" means the closing of the purchase by the Investor of Put Shares following a Put. "Commitment Period" means the period commencing on the Effective Date and expiring on the earliest to occur of (x) the date on which the Investor shall have paid an aggregate of $2,000,000 in Purchase Price for Put Shares pursuant to this Agreement, (y) the date this Agreement is terminated in accordance with the terms hereof, or (z) the date occurring two years from the Effective Date. "Common Stock" means the Company's common stock, par value $.001 per share, or such securities into which such stock shall hereafter be reclassified. "Common Stock Equivalents" means any rights, warrants, options and other equity or equity equivalent securities that are, at any time over the life thereof, convertible into or exchangeable for, or that permit the holder thereof to otherwise receive shares of Common Stock or other Common Stock Equivalents. "Condition Satisfaction Date" means each date on which the Company's representations and warrants must be accurate. "Disclosure Documents" means such registration statements, exhibits and other documents the Company files with the SEC. "Effective Date" means the date on which the SEC first declares effective the Registration Statement and registering the sale by the Company and resale by the Investor of the Registrable Securities. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Market Price" on any date means the average closing Bid Price during the Valuation Period relating to such date, subject to equitable adjustment in the event of a Valuation Event during such Valuation Period. "Maximum Aggregate Purchase Price" means the total amount of the puts and shall equal $2,000,000. "Maximum Put Amount" means $50,000. "Minimum Put Amount" means $25,000. "Outstanding" when used with reference to shares of Common Stock, means, at any date as of which the number of such shares is to be determined, all issued and outstanding shares of Common Stock, and shall include all such shares issuable in respect of outstanding scrip or any certificates representing fractional interests in such shares; provided, that "Outstanding" shall not mean any shares of Common Stock directly or indirectly owned or held by or for the account of the Company. "Person" means an individual, a corporation, a partnership, a limited liability company, an association, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Principal Market" means the principal trading exchange, market or quotation system for the Common Stock. "Purchase Price" means with respect to Put Shares, an amount equal to 70% of the Market Price for the Valuation Period for a Put. "Put Date" means the date a Put Notice is considered received. "Put" means the exercise by the Company of its right to require the Investor to purchase Put Shares pursuant to the terms of this Agreement. "Put Notice" means the notice from the Company to the Investor indicating its intention to put shares to the Investor. "Put Shares" means the number of shares of common stock set forth in the Put Notice. "Registrable Securities" means the Put Shares which are being registered in the Registration Statement prior to being purchased by the Investor 2 "Registration Statement" means the registration statement to be filed with the SEC registering the Put Shares. "SEC" means the Securities and Exchange Commission. "Securities" means the Put Shares. "Securities Act" means the Securities Act of 1933, as amended. "Trading Day" means (a) a day on which the Common Stock is traded on the Principal Market on which the Common Stock is then listed or quoted. "Valuation Event" means an action by the Company during the Commitment Period to: (a) subdivide or combine the Common Stock; (b) pay a dividend on its Common Stock or Common Stock Equivalents or make any other distribution of such securities; (c) issue any additional shares of Common Stock or Common Stock Equivalents ("Additional Capital Shares") at a price per share less than, or that provide a holder thereof with the right to receive or subscribe for at any time over the life thereof shares of Common Stock at a price per share less than, the Bid Price in effect immediately prior to such issuance, or without consideration (other than pursuant to this Agreement) (including through conversions, exchanges or resets of other adjustments to the price paid for such securities); (d) make a distribution of its assets or evidences of its indebtedness to the holders of Common Stock or Common Stock Equivalents as a dividend in liquidation or by way of return of capital (other than as a dividend payable out of earnings or surplus legally available for dividends under applicable law) or any distribution to such holders made in respect of the sale of all or substantially all of the Company's assets. "Valuation Period" means the period of five Trading Days preceding the Put Date. ARTICLE II Purchase and Sale of Common Stock Section 2.1 Investments. (a) Puts. Subject to the conditions and limitations set forth herein, the Company may make a Put by the delivery of a duly completed written Put Notice to the Investor, specifying the Investment Amount that the Company intends to sell to the Investor. The number of Put Shares shall be determined by dividing the Investment Amount specified in the Put Notice by the Purchase Price for such Put which shall be 70% of the average closing bid price of the stock during the Valuation Period. 3 (b) Limitations on Puts and Common Stock Issuable. (i) The Company may not deliver a Put Notice to the extent that, following the purchase by the Investor of Put Shares thereunder, the Investor and its affiliates would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) in excess of 9.9% of the then outstanding shares of Common Stock. (ii) The maximum purchase price for all Puts is the Maximum Aggregate Purchase Price. (iii)The Investment Amount for each Put shall be neither less than the Minimum Put Amount or greater than the Maximum Put Amount. Section 2.2 Mechanics. (a) Put Notice. Subject to the conditions and limitations herein, at any time during the Commitment Period the Company may deliver a Put Notice to the Investor. The Maximum Put Amount in any Put Notice is $50,000. (b) Date of Delivery of Put Notice or Notice to Acquire Investment Shares. A Put Notice shall be deemed delivered on the Put Date which shall be (i) the Trading Day it is received by the Investor if such notice is received prior to Noon Eastern Time, or (ii) the immediately succeeding Trading Day if it is received after Noon Eastern Time on a Trading Day or at any time on a day which is not a Trading Day. Section 2.3 Closings. (a) Subject to the satisfaction of the conditions set forth in this Agreement, the Closing shall occur on the third Business Day following the end of the Valuation Period for such Closing (or such other date as is mutually agreed to by the Company and the Investor) (a "Closing Date") at the offices of the Investor or such other place to which the Parties may agree. On the Put Notice Date, the Company shall deliver (or cause to be delivered) (1) the stock certificate covering the Put Shares (2) a writing, executed by the Investor and the Company concurring as to (x) the total number of Put Shares that are to be issued and sold at such Closing, and (y) the Investment Amount for the Put Shares issuable at such Closing, and (3) all other documents, instruments and writings required to be delivered by it in order to effect a Closing hereunder. The Investor shall deliver a certified or bank check payable to the order of the Company in the amount of the Put. Section 2.4 Termination of Investment Obligation. (a) The obligation of the Investor to purchase shares of Common Stock shall, at the Investor's option (as evidenced by a notice to such effect to the Company), terminate permanently in the event that (i) there shall occur any stop order or suspension of the effectiveness of the Registration Statement relating to the Registrable Securities for an aggregate of thirty Trading Days during the Commitment Period for any reason; (ii) the Company shall at any time breach its obligations under this Agreement. 4 (b) The obligation of the Company to sell Put Shares to the Investor following delivery of a Put Notice shall terminate if the Investor fails to honor such Put Notice within two Trading Days following the Closing Date scheduled for such Put, and the Company notifies the Investor of such termination. Notwithstanding any such termination, the Company shall maintain the Registration Statement in effect (and shall permit the Investor to use the prospectus thereunder to sell Registrable Securities) for not less than 30 Trading Days following the date of any such termination. ARTICLE III Representations and Warranties of the Investor The Investor represents and warrants to the Company as follows: Section 3.1 Intent. The Investor is entering into this Agreement and will purchase the Securities issuable to it hereunder for its own account and the Investor has no present arrangement (whether or not legally binding) at any time to sell the Common Stock to or through any person or entity; provided, however, that by making the representations herein, the Investor does not agree to hold Securities for any minimum or other specific term and reserves the right to dispose of Securities at any time in accordance with federal and state securities laws applicable to such disposition and the terms and conditions, if any, relating thereto as set forth in this Agreement. Section 3.2 Sophisticated Investor. The Investor is a sophisticated investor (as described in Rule 506(b)(2)(ii) of Regulation D) and an accredited investor (as defined in Rule 501 of Regulation D), and the Investor has such experience in business and financial matters that it has the capacity to protect its own interests in connection with this transaction and is capable of evaluating the merits and risks of an investment in the Securities. The Investor acknowledges that an investment in the Securities is speculative and involves a high degree of risk. Section 3.3 Authority. The Investor has the requisite power and authority to enter into and consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations thereunder. The execution and delivery of this Agreement has been duly authorized by the Investor and when delivered in accordance with the terms hereof will constitute valid and binding agreements of the Investor enforceable against it in accordance with their respective terms. Section 3.4 Not an Affiliate. The Investor is not an officer, director or Affiliate of the Company. Section 3.5 Organization and Standing. The Investor is a duly organized, validly existing, and in good standing under the laws of Delaware. 5 Section 3.6 Disclosure. Access to Information. The Investor has received and reviewed all documents, records, books and other publicly available information pertaining to the Investor's investment in the Company that have been requested by the Investor, including without limitation copies of all of the Company's periodic and current reports filed pursuant to the Exchange Act, and the Investor has reviewed copies of any such reports that have been requested by it. However, no inquiries or investigation by the Investor or its agents shall modify, amend or affect the Investor's right to rely on the truth, accuracy and completeness of the Disclosure Materials (as defined below) and the Company's representations and warranties. Section 3.7 Manner of Sale. At no time was the Investor presented with or solicited by or through any leaflet, public promotional meeting, television advertisement or any other form of general solicitation or advertising (as defined in Rule 501 under the Securities Act) in connection with its investment in the Securities. Section 3.8 Financial Capacity. The Investor currently has the financial capacity to meet its obligations to the Company hereunder, and the Investor has no present knowledge of any circumstances which could cause it to become unable to meet such obligations in the future. Section 3.109 Broker-Dealer Status. The Investor is not registered with the National Association of Securities Dealers as a broker or dealer. Investor is acquiring the Securities hereunder in the ordinary course of its business, and Investor does not have any agreements or understandings, directly or indirectly, with any Person with respect to the distribution of the Securities. The Company acknowledges and agrees that the Investor has not made and does not make any representations or warranties with respect to the transactions contemplated hereby other than as specifically set forth in this Article III. ARTICLE IV Representations and Warranties of the Company The Company represents and warrants to the Investor as follows: Section 4.1 Organization and Qualification. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company has no subsidiaries. The Company is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not reasonably be expected to, individually or in the aggregate, (x) adversely affect the legality, validity or enforceability of the Securities or any of this Agreement, (y) have or result in a material adverse effect on the results of operations, assets, prospects, or condition (financial or otherwise) of the Company, or (z) adversely impair the Company's ability to perform fully on a timely basis its obligations under this Agreement. 6 Section 4.2 Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations thereunder. The execution and delivery of each of the documents required by this Agreement by the Company and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary corporate action on the part of the Company. Each document has been duly executed by the Company and, when delivered (or filed, as the case may be) in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms. The Company is not in violation of any of the provisions of its respective certificate or articles of incorporation, by-laws or other organizational or charter documents. Section 4.3 Capitalization. The number of authorized, issued and outstanding capital stock of the Company is set forth in the Disclosure Documents. No shares of Common Stock are entitled to preemptive or similar rights, nor is any holder of securities of the Company entitled to preemptive or similar rights arising out of any agreement or understanding with the Company. Except as a result of the purchase and sale of the Securities and except as disclosed in the Disclosure Documents, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings, or arrangements by which the Company is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock during the duration of this Agreement. The issue and sale of the shares hereunder will not obligate the Company to issue shares of Common Stock or other securities to any Person other than to the Investor and will not result in any right of any holder of the Company's securities to adjust the exercise, conversion or reset price under such securities. Section 4.4 Issuance of the shares of Common Stock. When issued and paid for in accordance with the terms hereof, the Put Shares will be duly and validly issued, fully paid and nonassessable, free and clear of all liens, encumbrances and rights of first refusal of any kind. The Company has on the date hereof and will, at all times, maintain an adequate reserve of duly authorized shares of Common Stock, reserved for issuance to the Investor, to enable it to perform its exercise and other obligations under this Agreement. Section 4.5 Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of this Agreement, other than (i) the filing of the Registration Statement, (ii) filings as may be required under state securities laws, and (iii) in all other cases where the failure to obtain such consent, waiver, authorization or order, or to give such notice or make such filing or registration would not reasonably be expected to have or result in, individually or in the aggregate, a material adverse effect 7 Section 4.6 No Default or Violation. Except as described in the Disclosure Documents, the Company is not in default under or in violation of (and no event has occurred which has not been waived which, with notice or lapse of time or both, would result in a default by the Company under), nor has the Company received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a Party or by which it or any of its properties is bound, (ii) in violation of any order of any court, arbitrator or governmental body, or (iii) in violation of any statute, rule or regulation of any governmental authority, in each case of clauses (i), (ii) or (iii) above, except as would not reasonably be expected to, individually or in the aggregate, have or result in a material adverse effect. Section 4.7 Disclosure Documents; Financial Statements. Once the Company becomes a reporting company under the Exchange Act, it will file all reports required to be filed by it under the Exchange Act pursuant to Section 13(a) or 15(d) thereof, on a timely basis or will received a valid extension of such time of filing and has filed any such Disclosure Documents prior to the expiration of any such extension. As of their respective dates, the Disclosure Documents will comply in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC promulgated thereunder, and none of the Disclosure Documents, when filed, will contain any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. All material agreements to which the Company is a Party or to which the property or assets of the Company are subject will be filed as exhibits to the Disclosure Documents as required unless properly excused from filing by SEC regulation. The financial statements of the Company included in the Disclosure Documents will comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing. Such financial statements will be prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved ("GAAP"), except as may be otherwise specified in such financial statements or the notes thereto, and will fairly present in all material respects the financial position of the Company as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. (a) There has been no event, occurrence or development that has resulted or that would be reasonably likely to result in a material adverse effect; (b) the Company has not incurred any liabilities (contingent or otherwise) other than (x) liabilities incurred in the ordinary course of business consistent with past practice and (y) liabilities not required to be reflected in the Company's financial statements pursuant to GAAP or otherwise required to be disclosed in filings made with the SEC; (c) the Company has not altered its method of accounting or the identity of its auditors; and 8 (d) the Company has not declared or made any payment or distribution of cash or other property to its stockholders or officers or directors (other than in compliance with existing compensation agreements or Company stock option plans) with respect to its capital stock, or purchased, redeemed (or made any agreements to purchase or redeem) any shares of its capital stock. Section 4.8 Investment Company. The Company is not, and is not an Affiliate of, an "investment company" within the meaning of the Investment Company Act of 1940, as amended. Section 4.9 Certain Fees. No fees or commissions will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other similar Person with respect to the transactions contemplated by this Agreement. The Investor shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement. The Company shall indemnify and hold harmless the Investor, its employees, officers, directors, agents, and partners, and its respective Affiliates, from and against all claims, losses, damages, costs (including the costs of preparation and attorneys' fees) and expenses suffered in respect of any such claimed or existing fees, as such fees and expenses are incurred. Section 4.10 Solicitation Materials. Neither the Company nor any Person acting on the Company's behalf has solicited any offer to buy or sell the Securities by means of any form of general solicitation or advertising (as defined in Rule 501 under the Securities Act). Section 4.11 Listing and Maintenance Requirements Compliance. The Company has not received notice that is not in compliance with the listing or maintenance requirements of its public exchange or market. Section 4.12 Patents and Trademarks. The Company has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and rights which are necessary or material for use in connection with their respective business as described in the Disclosure Documents and which the failure to so have would have a material adverse effect (collectively, the "Intellectual Property Rights"). The Company has not received a written notice that the Intellectual Property Rights used by it violates or infringes upon any of the rights of any Person, to the best knowledge of the Company. All such Intellectual Property Rights are enforceable and to the best knowledge of the Company there is no existing infringement by another Person of any of the Intellectual Property Rights. Section 4.13 Registration Rights. The Company has not granted or agreed to grant to any Person any rights (including "piggy-back" registration rights) to have any securities of the Company registered with the SEC or any other governmental authority which have not been satisfied. It is understood that the obligation of the Investor to purchase shares of Common Stock pursuant to this Agreement is premised on the effectiveness of a registration statement relating to the shares of Common Stock to be purchased. 9 Section 4.14 Regulatory Permits. The Company possesses all certificates, authorizations and permits issued by the appropriate Federal, state or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Documents, except where the failure to possess such permits would not reasonably be expected to, individually or in the aggregate, have or result in a material adverse effect, and neither the Company has not received any notice of proceedings relating to the revocation or modification of any such permit. Section 4.15 Title. The Company has good and marketable title in fee simple to all real property owned by it which is material to its business of and good and marketable title in all personal property owned by them which is material to its business, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company. Any real property and facilities held under lease by the Company are held by it under valid, subsisting and enforceable leases of which, the Company is in compliance and do not interfere with the use made and proposed to be made of such property and buildings by the Company. Section 4.16 Absence of Certain Proceedings. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an "Action") which (i) adversely affects or challenges the legality, validity or enforceability of this Agreement or the Securities or (ii) would be reasonably likely to, if there were an unfavorable decision, individually or in the aggregate, have or result in a material averse effect. Within five years prior to the date of this Agreement, neither the Company nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. The Company does not have pending before the Commission any request for confidential treatment of information and the Company has no knowledge of any such expected request that would be made prior to the date the Registration Statement is declared effective by the SEC. There has not been, and to the best of the Company's knowledge there is not pending or contemplated, any investigation by the Commission involving it or any current or former director or officer. Section 4.17 Taxes. All Federal, state, local and foreign tax returns, information returns, reports and estimated Tax returns have been timely filed (which shall be deemed to mean, in the case of any such return for which extension was granted, within the period of such extension) on behalf of the Company and all Taxes shown on any such return or report have been paid on a timely basis (which shall be deemed to mean, in the case of any such return for which extension was granted, within the period of such extension). Section 4.18 Labor Relations. No material labor problem exists or, to the knowledge of the Company, is imminent with respect to any of its employees. 10 Section 4.19 Disclosure. The Company confirms that neither it nor any other Person acting on its behalf has provided the Investor or its agents or counsel with any information that constitutes or might constitute material non- public information. The Company understands and confirms that the Investor shall be relying on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to the Investor regarding the Company, its business and the transactions contemplated hereby, including the Schedules to this Agreement, furnished by or on behalf of the Company are true and correct in all material respects and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. ARTICLE V Other Agreements of the Parties Section 5.1 Listing of Common Stock. The Company shall maintain the listing of the Common Stock on a Principal Market, and as soon as practicable (but in any event at or prior to the commencement of the Commitment Period) shall list the Put Shares on such Principal Market, if required. The Company further agrees, if the Company applies to have the Common Stock traded on any other Principal Market, it will include in such application the issued and issuable Put Shares. The Company will take all action to continue the listing and trading of its Common Stock on the Principal Market and will comply in all respects with the Company's reporting, filing and other obligations under the bylaws or rules of the Principal Market and shall provide the Investor with copies of any correspondence to or from such Principal Market which questions or threatens delisting of the Common Stock, within one Trading Day of the Company's receipt thereof. Section 5.2 Exchange Act Registration. The Company will cause its Common Stock to continue to be registered under Section 12(g) or 12(b) of the Exchange Act, will use its best efforts to timely comply in all respects with its reporting and filing obligations under the Exchange Act, and will not take any action or file any document (whether or not permitted by Exchange Act or the rules thereunder) to terminate Section 5.3 Legends. The certificates evidencing the Common Stock to be sold or otherwise issued to the Investor hereunder at any time while a Registration Statement is then effective shall be issued free of restrictive legends of any kind and no instructions or "stop transfer orders," so called, "stock transfer restrictions," or other restrictions have been or shall be given to the Company's transfer agent with respect thereto. Prior to the first Closing, the Company will issue to the transfer agent for its Common Stock (and to any substitute or replacement transfer agent for its Common Stock upon the Company's appointment of any such substitute or replacement transfer agent) instructions to deliver the Put Shares without restrictive legends as required by this Section and shall cause its counsel to deliver to such transfer agent any legal opinion required in order for the transfer agent to deliver shares in such manner. Unless such instructions cover Securities issuable at future Closings, the Company must deliver new such instructions prior to each Closing. 11 Section 5.4 Notice of Certain Events Affecting Registration; Suspension of Right to Make a Put. The Company will immediately notify the Investor upon the occurrence of any of the following events in respect of a Registration Statement or related prospectus in respect of an offering of Registrable Securities: (i) receipt of any request for additional information from the SEC or any of effectiveness of the Registration Statement the response to which would require any amendments or supplements to the registration statement or related prospectus; (ii) the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt of any notification with respect to (A) the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or (B) the initiation or threatening of any proceeding for such purpose; (iv) the Company becomes aware of any event that makes any statement made in the Registration Statement or related prospectus or any document incorporated by reference untrue in any material respect or that requires the making of any changes in the Registration Statement, related prospectus or documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the related prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (v) the Company's reasonable determination that a post-effective supplement to the prospectus or a post-effective amendment to the Registration Statement, as the case may be, would be appropriate; and the Company will promptly make available to the Investor any such supplement or amendment to the related prospectus or Registration Statement. Section 5.5 Consolidation; Merger. During the period of 30 days following the any Put Notice, the Company shall not effect any merger or consolidation of the Company with or into, or a transfer of all or substantially all of its assets to, another entity without the written consent of the Investor. 12 Section 5.6 Certain Securities; Press Releases; Disclosures. The Company shall, no less than two Business Days prior to the filing of any disclosure required herein, provide a copy thereof to the Investor for review. The Company and the Investor shall consult with each other in issuing press releases or otherwise making public statements or filings and other communications with the SEC or any regulatory agency or stock market or trading facility with respect to the transactions contemplated hereby and neither party shall issue any such press release or otherwise make any such public statement, filings or other communications without the prior written consent of the other, except that if such disclosure is required by law or stock market regulation, in which such case the disclosing party shall promptly provide the other party with prior notice of such public statement, filing or other communication. Notwithstanding the foregoing, other than in the Registration Statement, the Company shall not publicly disclose the name of the Investor, or include the names of the Investor in any filing with the SEC, or any regulatory agency, trading facility or stock market without the prior written consent of the Investor, except to the extent such disclosure is required by law or stock market regulations, in which case the Company shall provide the Investor with prior notice of such disclosure. Section 5.7 Use of Proceeds. The Company shall use the net proceeds from the sale of the shares for working capital purposes. Section 5.8 Reimbursement. If the Investor, other than by reason of its gross negligence or willful misconduct, becomes involved in any capacity in any action, proceeding or investigation brought by or against any Person, including stockholders of the Company, as a result of the consummation of the transactions contemplated herein, the Company will reimburse the Investor for its reasonable legal and other expenses incurred in connection therewith, as such expenses are incurred. The reimbursement obligations of the Company under this paragraph shall be in addition to any liability which the Company may otherwise have, shall extend upon the same terms and conditions to any affiliates of the Investor actually named in such action, proceeding or investigation, and partners, directors, agents, employees and controlling persons (if any), as the case may be, of the Investor and any such affiliate, and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, the Investor and any such affiliate and any such Person. The Company also agrees that neither the Investor nor any such affiliates, partners, directors, agents, employees or controlling persons shall have any liability to the Company or any Person asserting claims on behalf of or in right of the Company in connection with or as a result of this Agreement except to the extent that any losses, claims, damages, liabilities or expenses incurred by the Company result from the gross negligence or willful misconduct of the applicable Investor, Person or entity in connection with the transactions contemplated by this Agreement. Section 5.9 Reduction of Capital The Company will not reduce the number of its outstanding shares of common stock by purchase or otherwise, if by doing so the percentage of its shares of common stock owned by the Investor as a result would exceed 9.9% of the total outstanding shares of common stock. 13 ARTICLE VI Conditions Precedent to the Right of the Company to Deliver a Put Notice and the Obligation of the Investor to Close Section 6.1 Conditions Precedent to the Right of the Company to Deliver a Put Notice and the Obligation of the Investor to Close. In addition to the specific conditions contained elsewhere in this Agreement, the right of the Company to deliver a Put Notice and the obligation of Investor hereunder to perform its obligations at any Closing hereunder is subject to the satisfaction, on both (i) the date of delivery of such Put Notice and (ii) the applicable Closing Date of each of the following conditions, or the waiver by the Investor of such conditions: (a) Representations and Warranties. The representations and warranties of the Company shall be true and correct as of the date when made and as of the applicable Condition Satisfaction Date as though first made at that time (except for representations and warranties that speak of a specific date, which need only be true and correct as of such date). (b) Performance by the Company. The Company shall have performed, satisfied and complied in all material respects with all covenants and agreements required by this Agreement to be performed, satisfied or complied with by the Company at or prior to each Condition Satisfaction Date. (c) Blue Sky. The Company shall have obtained all permits and qualifications, if any, required by any state for the offer and sale of the Securities to the Investor and by the Investor of the Registrable Securities or shall have the availability of exemptions therefrom. (d) Delivery of Shares. The Company shall have transmitted the Put Shares and the other conditions to such Closing as set forth in such Section shall have been satisfied. (e) Transfer Agent. The Investor shall have received satisfactory evidence of the Company's delivery to its transfer agent for the Common Stock of instructions and legal opinion meeting the requirements of this Agreement and acceptable to such transfer agent. (f) Registration Statement. (i) The Registration Statement shall have been declared effective by the SEC and shall at all times since the Put Date, and the prospectus thereunder shall be available to the Investor to resell all of the Registrable Securities thereunder. (ii) Neither the Company nor the Investor shall have received notice that the SEC has issued or intends to issue a stop order with respect to the Registration Statement or that the SEC otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently, or intends or has threatened to do so (unless the SEC's concerns have been addressed and the Investor is reasonably satisfied that the SEC no longer is considering or intends to take such action). 14 (iii)The Registration Statement (including the information or documents incorporated by reference therein) and any amendments or supplements thereto shall not contain any untrue statement of material fact or omit to state any material fact required to be state d therein or necessary to make the statements therein not misleading. (iv) All filings pursuant to the Exchange Act subsequent to the effectiveness of the Registration Statement to the SEC are timely and no filings are deficient whether or not a notice of a delayed filing is filed on Form NT or otherwise. (v) The Company shall have no knowledge of any event which is reasonably likely to occur within 30 Trading Days after the Put Date that would reasonably be expected to cause the Registration Statement to be suspended or otherwise ineffective or inaccurate (including the anticipated filing of quarterly or annual reports under the Exchange Act). (g) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction or by the Principal Market that prohibits, materially impairs or renders impractical the transactions contemplated by this Agreement, and, to the knowledge of the Company, no proceeding or rule making process shall have been commenced that may reasonably be expected to have such result if enacted. (h) Adverse Changes. Since the earlier to occur of (i) the date of filing of the Company's most recent SEC Document and (ii) the last Closing hereunder, no occurrence or event shall have occurred that has had or could reasonably be expected to have or result in a material adverse effect on the results of operations, assets or condition (financial or otherwise) of the Company. (i) No Suspension of Trading In or Delisting of Common Stock. The Common Stock shall be authorized for trading or quotation on the Principal Market and trading in the Common Stock shall not have been suspended by the SEC or the Principal Market at any time from the Put Date through the Closing Date. The Company shall not have received any notice threatening to delist the Common Stock from the Nasdaq SmallCap Market or the OTC Bulletin Board. (j) Principal Market Requirements; Compliance. The Company shall have received all authorizations from and made all filings required in order to issue to the Investor the Securities at such Closing and shall have caused the Put Shares to be issued at such Closing to be listed for trading on the Principal Market. The issuance of shares of with respect to the applicable Closing, if any, shall not violate the stockholder approval requirements of the Principal Market. In the event the BBX commences operations, the shares will trade on the BBX which will be the Principal Market. (k) Timing. At least seven Trading Days shall have elapsed since the immediately preceding Closing Date (l) Trading Volume. The average daily trading volume of the shares during the Valuation Period shall be 25,000 shares. 15 ARTICLE VII Due Diligence Review; Non-Disclosure of Non-Public Information. Section 7.1 Non-Disclosure of Non-Public Information. (a) The Company shall not disclose non-public information to the Investor or its advisors or representatives, if any. (b) The Company represents that it does not disseminate material non-public information to any investors who purchase stock in the Company in a public offering, to money managers or to securities analysts. Notwithstanding, the Company will immediately notify the Investor of any event or the existence of any circumstance of which it becomes aware, which, if not disclosed in the prospectus included in the Registration Statement would cause such prospectus to include a material misstatement or to omit a material fact required to be stated therein in order to make the statements, therein in light of the circumstances in which they were made, not misleading. ARTICLE VIII Miscellaneous Section 8.1 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement and related documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each Party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper. Each Party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such Party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each Party irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either Party shall commence an action or proceeding to enforce any provisions of this Agreement or a document prepared pursuant hereto, then the prevailing Party in such action or proceeding shall be reimbursed by the other Party for its attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. 16 Section 8.2 Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be: (i) personally served, or (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by reputable courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: Texxar, Inc. 19 Engineers Lane Farmingdale, New York 11735 Phone: (631)756-9116 Nexgen Holdings, Inc. 410 Park Avenue (Suite 1530) Point Pleasant, New Jersey Phone: (212) 753-3927 A Party may from time to time change its address or facsimile number for notices under this Section by giving at least ten days' prior written notice of such changed address or facsimile number to the other party hereto. Section 8.3 Reporting Entity for the Common Stock. The reporting entity relied upon for the determination of the trading price or trading volume of the Common Stock on any given Trading Day for the purposes of this Agreement shall be Bloomberg or any successor to its function of reporting share prices. The written mutual consent of both Parties shall be required to employ any other reporting entity. 17 Section 8.4 Replacement of Certificates. Upon (i) receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of a certificate representing any Securities and (ii) in the case of any such loss, theft or destruction of such certificate, upon delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company (which shall not exceed that required by the Company's transfer agent in the ordinary course) or (iii)in the case of any such mutilation, on surrender and cancellation of such certificate, the Company at its expense will execute and deliver, in lieu thereof, a new certificate. Section 8.5 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each Party and delivered to the other party, it being understood that both Parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the Party executing the same with the same force and effect as if such facsimile signature page were an original thereof. Section 8.6 Entire Agreement. This Agreement, together with the Exhibits and Schedules hereto contain the entire understanding of the Parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters. Section 8.7 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and the Investor or, in the case of a waiver, by the Party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. Section 8.8 Survival. The representations, warranties and agreements contained herein shall survive each Closing and the delivery and exercise of all Securities issuable hereunder. Section 8.9 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their successors and permitted assigns. Neither the Investor nor the Company may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Company or the Investor, as the case may be except that Investor may assign its obligations hereunder to an Affiliate. 18 Section 8.10 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Investor will be entitled to specific performance of the obligations of the Company. The Company and the Investor agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of its obligations described in the foregoing sentence and hereby agree to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. Section 8.11 Severability. In case any one or more of the provisions of this Agreement shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the Parties will attempt to agree upon a valid and enforceable provision which shall be a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement such substitute provision to have the same force and effect as if it were part of this Agreement as of the date hereof. Section 8.12 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. Section 8.13 Fees and Expenses. Each Party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such Party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. Section 8.14 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the Parties and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Persons. IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by the undersigned, thereunto duly authorized, as of the date first set forth above. TEXXAR, INC. By: /s/Aron Govil ------------------- Aron Govil, President NEXGEN HOLDINGS, INC. By: /s/Guy Cohen ------------------ Guy Cohen, President 19 EX-23 13 auditconsent.txt AUDITORS CONSENT INDEPENDENT AUDITORS'CONSENT We consent to the use in the Registration Statement on Form SB-2 in connection with the registration under the Securities Act of 1933, as amended, for shares of common stock and our report dated November 1, 2002, with respect to the financial statements of Texxar, Inc. for the years ended September 30, 2002 and 2001 and to the reference to our firm under the caption "Experts" in this registration statement. /s/Baum & Co. PA - ------------------ Baum & Co. PA Certified Public Accountants April 8, 2003 EX-23 14 counselconsent.txt CONSENT OF COUNSEL CONSENT I, Joel Pensley, hereby consent to the use of my opinion dated April 8, 2003 and my name under the caption "Legal Matters" in the Registration Statement on Form SB-2 and prospectus, and any amendments thereto, of Texxar, Inc. to be filed with the Securities and Exchange Commission. /s/Joel Pensley --------------------- Joel Pensley Dated: April 8, 2003 -----END PRIVACY-ENHANCED MESSAGE-----