EXCHANGE AGREEMENT
Between
ROYAL ACCEPTANCE CORPORATION,
RIT AUTO LEASING GROUP, INC.,
and
ALLIANCE HOLDINGS LIMITED PARTNERSHIP
Dated July 13, 1999
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (hereinafter referred to as this "Agreement"),
is entered into as of this 12th day of July, 1999, by and among Royal Acceptance
Corporation , a Delaware corporation ("Royal"), RIT Auto Leasing Group, Inc., a
New York corporation ("RIT") and Alliance Holdings Limited Partnership, the
beneficial owner of 100 shares of common stock of RIT common stock, which
constitutes 100% of the outstanding capital stock of RIT ("RIT Shareholder").
Premises
This Agreement provides for the acquisition by Royal of all of the
issued and outstanding shares of RIT solely in exchange for voting shares of
Royal, on the terms and conditions hereinafter provided, all for the purpose of
effecting a so-called "tax-free" reorganization pursuant to Sections
368(a)(1)(B) of the Internal Revenue Code of 1954, as amended.
Agreement
NOW THEREFORE, on the stated premises and for and in consideration of
the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS, AND WARRANTIES
OF ROYAL
As an inducement to, and to obtain the reliance of the RIT Shareholder,
Royal represents and warrants as follows:
Section 1.01 Organization. Royal is a corporation duly organized,
validly existing, and in good standing under the laws of the state of Delaware.
Royal has the corporate power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances, and orders of
public authorities to own all of its properties and assets and to carry on its
business in all material respects as it is now being conducted, including
qualification to do business as a foreign corporation in the states in which the
character and location of the assets owned by it or the nature of the business
transacted by it requires qualification. Included in Schedule 1.01 are complete
and correct copies of the certificate of incorporation, as amended, and bylaws
of Royal as in effect on the date hereof. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not, violate any provision of
the certificate of incorporation or bylaws. Royal has taken all action required
by law, its articles of incorporation, its bylaws, or otherwise to authorize the
execution and delivery of this Agreement. Royal has full power, authority, and
legal right and has taken all action required by law, its certificate of
incorporation, bylaws, and otherwise to consummate the transactions herein
contemplated.
Section 1.02 Capitalization. The authorized capitalization of Royal
consists of 25,000,000 shares of common stock, $.001 par value per share, of
which approximately 1,867,409 shares are currently issued and outstanding and
1,000,000 shares of preferred stock $.001 par value per share, none of which
have been issued. A shareholder list is set forth in Schedule 1.02. All issued
and outstanding shares are legally issued, fully paid, and non-assessable and
not issued in violation of the pre-emptive or other rights of any
person. There are no options, warrants, rights or convertible securities
outstanding to purchase any capital stock of Royal.
Section 1.03 Subsidiaries and Predecessor Corporations. Royal does not
have any subsidiaries and does not own, beneficially or of record, any shares of
any other corporation.
Section 1.04 Financial Statements.
(a) Included in Schedule 1.04(a) are the unaudited financial
statements of Royal for each of its last two fiscal years ended March
31, 1999.
(b) All such financial statements have been prepared in
accordance with generally accepted accounting principles. The unaudited
balance sheet presents fairly as of its date the financial condition of
Royal. Except as set forth on Schedule 1.04(b), Royal did not have, as
of the date of such balance sheet, except as and to the extent
reflected or reserved against therein, any liabilities or obligations
(absolute or contingent) which should be reflected in a balance sheet
or the notes thereto, prepared in accordance with generally accepted
accounting principles, and all assets reflected therein are properly
reported and present fairly the value of the assets of Royal in
accordance with generally accepted accounting principles. The
statements of income, stockholders' equity, and changes in financial
condition reflect fairly the information required to be set forth
therein by generally accepted accounting principles.
(c) Royal has filed all state, federal, or local income tax
returns required to be filed by it from inception to the date hereof.
Except as set forth on Schedule 104(c), Royal does not owe any federal,
state, county, local, or other taxes (including any deficiencies,
interest, or penalties) through the date hereof, for which Royal may be
liable in its own right or as a transferee of the assets of, or as a
successor to, any other corporation or entity. Furthermore, except as
accruing in the normal course of business, Royal does not owe any
accrued and unpaid taxes to date of this Agreement.
(d) The books and records, financial and otherwise, of Royal
are in all material respects complete and correct and have been
maintained in accordance with good business and accounting practices.
(e) Royal has good and marketable title to its assets and,
except as set forth in the financial statements of Royal or the notes
thereto, has no material contingent liabilities, direct or indirect,
matured or unmatured.
Section 1.05 Information. The information concerning Royal set forth in
this Agreement and in the Schedules attached hereto is complete and accurate in
all material respects and does not contain any untrue statement of a material
fact or omit to state a material fact required to make the statements made, in
light of the circumstances under which they were made, not misleading.
Section 1.06 Absence of Certain Changes or Events. Except as set forth
in this Agreement, since March 31, 1999:
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(a) there has not been (i) any material adverse change in the
business, operations, properties, assets, or financial condition of
Royal; or (ii) any damage, destruction, or loss to Royal (whether or
not covered by insurance) materially and adversely affecting the
business, operations, properties, assets, or financial condition of
Royal;
(b) Royal has not (i) amended its certificate of incorporation
or bylaws; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind
whatsoever to stockholders or purchased or redeemed, or agreed to
purchase or redeem, any of its capital stock; (iii) waived any rights
of value which in the aggregate are extraordinary or material
considering the business of Royal; (iv) made any material change in its
method of management, operation, or accounting; (v) entered into any
other material transaction; (vi) made any accrual or arrangement for
payment of bonuses or special compensation of any kind or any severance
or termination pay to any present or former officer or employee; (vii)
increased the rate of compensation payable or to become payable by it
to any of its officers or directors or any of its employees whose
monthly compensation exceeds $1,000; or (viii) made any increase in any
profit sharing, bonus, deferred compensation, insurance, pension,
retirement, or other employee benefit plan, payment, or arrangement
made to, for, or with its officers, directors, or employees;
(c) Royal has not (i) borrowed or agreed to borrow any funds
or incurred, or become subject to, any material obligation or liability
(absolute or contingent); (ii) paid any material obligation or
liability (absolute or contingent) other than current liabilities
reflected in or shown on the most recent Royal balance sheet; (iii)
sold or transferred, or agreed to sell or transfer, any of its assets,
properties, or rights, or canceled, or agreed to cancel, any debts or
claims; (iv) made or permitted any amendment or termination of any
contract, agreement, or license to which it is a party if such
amendment or termination is material, considering the business of
Royal; or (v) except as reflected on Schedule 1.02, issued, delivered,
or agreed to issue or deliver any stock, bonds or other corporate
securities including debentures (whether authorized and unissued or
held as treasury stock).
Section 1.07 Title and Related Matters. Royal has good and marketable
title to all of its properties, inventory, interests in properties, and assets,
real and personal, which are reflected in the most recent balance sheet or
acquired after that date (except properties, interests in properties, and assets
sold or otherwise disposed of since such date in the ordinary course of
business), free and clear of all liens, pledges, charges, or encumbrances except
(a) statutory liens or claims not yet delinquent; and (b) such imperfections of
title and easements as do not and will not materially detract from or interfere
with the present or proposed use of the properties subject thereto or affected
thereby or otherwise materially impair present business operations on such
properties. Royal owns, free and clear of any liens, claims, encumbrances,
royalty interests, or other restrictions or limitations of any nature
whatsoever, any and all products it is currently manufacturing, including the
underlying technology and data, and all procedures, techniques, marketing plans,
business plans, methods of management, or other information utilized in
connection with Royal's business. No third party has any right to, and Royal has
not received any notice of infringement of or conflict with asserted rights of
others with respect to any product, technology, data, trade secrets, know-how,
proprietary techniques, trademarks, service marks, tradenames, or copyrights
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling, or finding, would have a materially adverse effect on the business,
operations, financial condition, income, or business prospects of Royal or any
material portion of its properties, assets, or rights.
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Section 1.08 Litigation and Proceedings. There are no actions, suits,
proceedings, or investigations pending or, to the knowledge of Royal, after
reasonable investigation, threatened by or against Royal or affecting Royal or
its properties, at law or in equity, before any court or other governmental
agency or instrumentality, domestic or foreign, or before any arbitrator of any
kind. Royal does not have any knowledge of any default on its part with respect
to any judgment, order, writ, injunction, decree, award, rule, or regulation of
any court, arbitrator, or governmental agency or instrumentality or of any
circumstances which, after reasonable investigation, would result in the
discovery of such a default.
Section 1.9 Contracts.
(a) There are no material contracts, agreements, franchises,
license agreements, or other commitments to which Royal is a party or
by which it or any of its assets, products, technology, or properties
are bound;
(b) All contracts, agreements, franchises, license agreements,
and other commitments to which Royal is a party or by which its
properties are bound and which are material to the operations of Royal
taken as a whole are valid and enforceable by Royal in all respects,
except as limited by bankruptcy and insolvency laws and by other laws
affecting the rights of creditors generally;
(c) Royal is not a party to or bound by, and the properties of
Royal are not subject to, any contract, agreement, other commitment or
instrument; any charter or other corporate restriction; or any
judgment, order, writ, injunction, decree, or award which materially
and adversely affects, or in the future may (as far as Royal can now
foresee) materially and adversely affect, the business, operations,
properties, assets, or financial condition of Royal; and
(d) Royal is not a party to any oral or written (i) contract
for the employment of any officer or employee; (ii) profit sharing,
bonus, deferred compensation, stock option, severance pay, pension
benefit or retirement plan, agreement, or arrangement covered by Title
IV of the Employee Retirement Income Security Act, as amended; (iii)
agreement, contract, or indenture relating to the borrowing of money;
(iv) guaranty of any obligation, for the borrowing of money or
otherwise; (vi) collective bargaining agreement; (vii) agreement with
any present or former officer or director of Royal or (viii) contract,
agreement, or other commitment, with the exception of professional fees
to accountants and attorneys related to this Agreement and, involving
payments by it of more than $1,000 in the aggregate.
Section 1.10 Material Contract Defaults. Royal is not in default in any
material respect under the terms of any outstanding contract, agreement, lease,
or other commitment which is material to the business, operations, properties,
assets, or financial condition of Royal and there is no event of default in any
material respect under any such contract, agreement, lease, or other commitment
in respect of which Royal has not taken adequate steps to prevent such a default
from occurring.
Section 1.11 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust,
4
or other material contract, agreement, or instrument to which Royal is a party
or to which any of its properties or operations are subject.
Section 1.12 Governmental Authorizations. Royal has all licenses,
franchises, permits, and other governmental authorizations that are legally
required to enable it to conduct its business in all material respects as
conducted on the date hereof. Except for compliance with federal and state
securities and corporation laws, as hereinafter provided, no authorization,
approval, consent, or order of, or registration, declaration, or filing with,
any court or other governmental body is required in connection with the
execution and delivery by Royal of this Agreement and the consummation by Royal
of the transactions contemplated hereby.
Section 1.13 Compliance With Laws and Regulations. Royal has complied
with all applicable statutes and regulations of any federal, state, or other
governmental entity or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business, operations, properties,
assets, or financial condition of Royal or except to the extent that
noncompliance would not result in the incurrence of any material liability for
Royal.
Section 1.14 Insurance. All the insurable properties of Royal, if any,
are insured in their full replacement value against all risks customarily
insured against by persons operating similar properties in localities where such
properties are located and under valid and enforceable policies by insurers of
recognized responsibility. Such policy or policies, if any, containing
substantially equivalent coverage will be outstanding on the date of
consummation of the transactions contemplated by this Agreement.
Section 1.15 Approval of Agreement. The board of directors of Royal has
authorized the execution and delivery of this Agreement and has approved the
transactions contemplated hereby, and approved the submission of this Agreement
and the transactions contemplated hereby to the shareholders of Royal for their
approval with the recommendation that the reorganization be accepted if it has
been deemed necessary.
Section 1.16 Labor Relations. Royal has not had a work stoppage
resulting from labor problems. To the knowledge of Royal, no union or other
collective bargaining organization is organizing or attempting to organize any
employee of Royal.
Section 1.17 Royal Schedules. Royal has delivered to RIT a copy of the
board of directors' and shareholders' minutes (if applicable) of Royal approving
this transaction.
Section 1.18 Additional Capital. Within ninety days from the Closing
Date (as that term is defined in Section 4.03 hereof) contemplated by this
Agreement, the present principal shareholders of Royal will arrange for a
minimum of $600,000 of additional equity capital to be invested in Royal (the
"Additional Equity Investment"). In the event the Additional Equity Investment
is not made, Royal shall issue to the RIT Shareholder to 1,500,000 additional
shares of Royal common stock, on a pro rata basis, based upon the actual amount
of the Additional Equity Investment. For example, if a $200,000 Additional
Equity Investment is made, the RIT Shareholder will receive an additional
1,000,000 shares of Royal common stock.
5
Section 1.19 Absence of Liabilities. Except as set forth in Schedule
1.19 and liabilities for professional fees relating to this transaction and the
auditing of Royal's financial statements, Royal shall have no other liabilities.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES
OF THE RIT SHAREHOLDER
As an inducement to, and to obtain reliance of Royal, the RIT
Shareholder represents and warrants as follows:
Section 2.01 Ownership of RIT Shares. It is the legal and beneficial
owner of the number of RIT shares set forth opposite its name at the foot of
this agreement, free and clear of any claims, charges, equities, liens, security
interests, and encumbrances whatsoever, and it has full right, power, and
authority to transfer, assign, convey, and deliver its RIT shares; and delivery
of such shares at the closing will convey to Royal good and marketable title to
such shares free and clear of any claims, charges, equities, liens, security
interests, and encumbrances whatsoever.
ARTICLE III
REPRESENTATIONS, COVENANTS, AND WARRANTIES
OF RIT AUTO LEASING GROUP, INC.
As an inducement to, and to obtain the reliance of Royal, RIT
represents and warrants as follows:
Section 3.01 Organization. RIT is a corporation duly organized, validly
existing, and in good standing under the laws of the state of New York. RIT has
the corporate power and is duly authorized, qualified, franchised, and licensed
under all applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets and to carry on its business
in all material respects as it is now being conducted, including qualification
to do business as a foreign corporation in the states in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification. Included in Schedule 3.01 are complete and correct
copies of the articles of incorporation, as amended, and bylaws of RIT as in
effect on the date hereof. The execution and delivery of this Agreement do not,
and the consummation of the transactions contemplated by this Agreement in
accordance with the terms hereof will not, violate any provision of these
articles of incorporation or bylaws. RIT has taken all action required by laws,
its articles of incorporation, its bylaws, or otherwise to authorize the
execution and delivery of this Agreement. RIT has full power, authority, and
legal right and has taken all action required by law, its certificate of
incorporation, bylaws, and otherwise to consummate the transactions herein
contemplated.
6
Section 3.02 Capitalization. The authorized capitalization of RIT
consists of 200 shares of common stock, no par value per share, of which 100
shares are currently issued and outstanding. There are no outstanding options,
warrants, rights or convertible securities to purchase any capital stock of RIT.
All issued and outstanding shares are legally issued, fully paid, and
non-assessable and not issued in violation of the pre-emptive or other rights of
any person.
Section 3.03 Subsidiaries and Predecessor Corporations. RIT does not
have any subsidiaries and does not own, beneficially or of record, any shares of
any other corporation.
Section 3.04 Financial Statements.
(a) Included in Schedule 3.04 (a) are unaudited financial
statements for each of the last two fiscal years ended December 31,
1998.
(b) All such financial statements have been prepared in
accordance with generally accepted accounting principles. The unaudited
balance sheet presents fairly as of its date, the financial condition
of RIT. RIT did not have, as of the date of such balance sheet, except
as and to the extent reflected or reserved against therein, any
liabilities or obligations (absolute or contingent) which should be
reflected in a balance sheet or the notes thereto, prepared in
accordance with generally accepted accounting principles, and all
assets reflected therein are properly reported and present fairly the
value of the assets of RIT in accordance with generally accepted
accounting principles. The statements of income, stockholders' equity,
and changes in financial condition reflect fairly the information
required to be set forth therein by generally accepted accounting
principles.
(c) RIT has filed all state, federal, and local income tax
returns required to be filed by it from inception to the date hereof.
Included in Schedule 3.04(c) are true and correct copies of the federal
income tax returns of RIT filed since 1996. None of such federal income
tax returns have been examined by the Internal Revenue Service. Each of
such income tax returns reflects the taxes due for the period covered
thereby, except for amounts which, in the aggregate, are immaterial.
(d) RIT does not owe any unpaid federal, state, county, local,
or other taxes (including any deficiencies, interest, or penalties)
through the date hereof, for which RIT may be liable in its own right
or as a transferee of the assets of, or as a successor to, any other
corporation or entity. Furthermore, except as accruing in the normal
course of business, RIT does not owe any accrued and unpaid taxes to
date of this Agreement.
(e) The books and records, financial and otherwise, of RIT are
in all material respects complete and correct and have been maintained
in accordance with good business and accounting practices.
(f) RIT has good and marketable title to its assets and,
except as pledged in the ordinary course of business or as set forth in
the financial statements of RIT or the notes thereto, has no material
contingent liabilities, direct or indirect, matured or unmatured.
Section 3.05 Information. The information concerning RIT set forth in
this Agreement and in Schedules attached hereto is complete and accurate in all
material respects and does not contain any untrue
7
statement of a material fact or omit to state a material fact required to make
the statements made, in light of the circumstances under which they were made,
not misleading.
Section 3.06 Absence of Certain Changes or Events. Since December
31, 1998:
(a) there has not been (i) any material adverse change in the
business, operations, properties, assets, or financial condition of RIT
or (ii) any damage, destruction, or loss to RIT (whether or not covered
by insurance) materially and adversely affecting the business,
operations, properties, assets, or financial condition of RIT;
(b) RIT has not (i) amended its articles of incorporation or
bylaws; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind
whatsoever to stockholders or purchased or redeemed, or agreed to
purchase or redeem, any of its capital stock; (iii) waived any rights
of value which in the aggregate are extraordinary or material
considering the business of RIT; (iv) made any material change in its
method of management, operation, or accounting; (v) entered into any
other material transaction; (vi) made any accrual or arrangement for
payment of bonuses or special compensation of any kind or any severance
or termination pay to any present or former officer or employee; (vii)
increased the rate of compensation payable or to become payable by it
to any of its officers or directors or any of its employees whose
monthly compensation exceeds $7,500; or (viii) made any increase in any
profit sharing, bonus, deferred compensation, insurance, pension,
retirement, or other employee benefit plan, payment, or arrangement
made to, for, or with its officers, directors, or employees;
(c) RIT has not (i) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability
(absolute or contingent) except liabilities incurred in the ordinary
course of business; (ii) paid any material obligation or liability
(absolute or contingent) other than current liabilities reflected in or
shown on the most recent RIT balance sheet, and current liabilities
incurred since that date in the ordinary course of business; (iii) sold
or transferred, or agreed to sell or transfer, any of its assets,
properties, or rights (except assets, properties, or rights not used or
useful in its business which, in the aggregate have a value of less
than $10,000), or canceled, or agreed to cancel, any debts or claims
(except debts or claims which in the aggregate are of a value of less
than $10,000); (iv) made or permitted any amendment or termination of
any contract, agreement, or license to which it is a party if such
amendment or termination is material, considering the business of RIT;
or (v) issued, delivered, or agreed to issue or deliver any stock,
bonds or other corporate securities including debentures (whether
authorized and unissued or held as treasury stock); and
(d) to the best knowledge of RIT, RIT has not become subject
to any law or regulation which materially and adversely affects, or in
the future may adversely affect, the business, operations, properties,
assets, or financial condition of RIT.
Section 3.07 Title and Related Matters. RIT has good and marketable
title to all of its properties, inventory, interests in properties, and assets,
real and personal, which are reflected in the most recent balance sheet or
acquired after that date (except properties, interests in properties, and assets
sold or otherwise disposed of since such date in the ordinary course of
business), free and clear of all liens, pledges, charges, or encumbrances except
(a) statutory liens or claims not yet delinquent; (b) such imperfections of
title and easements as do not and will not materially detract from or interfere
with the
8
present or proposed use of the properties subject thereto or affected thereby or
otherwise materially impair present business operations on such properties; and
(c) except as pledged in the ordinary course of business. Except as pledged in
the ordinary course of business, RIT owns, free and clear of any liens, claims,
encumbrances, royalty interests, or other restrictions or limitations of any
nature whatsoever, any and all procedures, techniques, marketing plans, business
plans, methods of management, or other information utilized in connection with
RIT's business. No third party has any right to, and RIT has not received any
notice of infringement of or conflict with asserted rights of others with
respect to any product, technology, data, trade secrets, know-how, proprietary
techniques, trademarks, service marks, tradenames, or copyrights which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling, or
finding, would have a materially adverse effect on the business, operations,
financial condition, income, or business prospects of RIT or any material
portion of its properties, assets, or rights.
Section 3.08 Litigation and Proceedings. Except as set forth in
Schedule 3.08, there are no actions, suits, proceedings, or investigations
pending or, to the knowledge of RIT after reasonable investigation, threatened
by or against RIT or affecting RIT or its properties, at law or in equity,
before any court or other governmental agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind. RIT does not have any knowledge
of any default on its part with respect to any judgment, order, writ,
injunction, decree, award, rule, or regulation of any court, arbitrator, or
governmental agency or instrumentality or of any circumstances which, after
reasonable investigation, would result in the discovery of such a default.
Section 3.09 Contracts.
(a) There are no material contracts, agreements, franchises,
license agreements, or other commitments to which RIT is a party or by
which it or any of its assets, products, technology, or properties are
bound outside of the ordinary course of business;
(b) All contracts, agreements, franchises, license agreements,
and other commitments to which RIT is a party or by which its
properties are bound and which are material to the operations of RIT,
taken as a whole, are valid and enforceable by RIT in all respects,
except as limited by bankruptcy and insolvency laws and by other laws
affecting the rights of creditors generally;
(c) RIT is not a party to or bound by, and the properties of
RIT are not subject to, any contract, agreement, other commitment or
instrument; any charter or other corporate restriction; or any
judgment, order, writ, injunction, decree, or award which materially
and adversely affects, or in the future may (as far as RIT can now
foresee) materially and adversely affect, the business, operations,
properties, assets, or financial condition of RIT; and
(d) Except as incurred in the ordinary course of business or
reflected in the most recent RIT balance sheet, RIT is not a party to
any oral or written (i) contract for the employment of any officer or
employee which is not terminable on 30 days or less notice; (ii) profit
sharing, bonus, deferred compensation, stock option, severance pay,
pension benefit or retirement plan, agreement, or arrangement covered
by Title IV of the Employee Retirement Income Security Act, as amended;
(iii) agreement, contract, or indenture relating to the borrowing of
money; (iv) guaranty of any obligation, other than one on which RIT is
a primary obligor, for the borrowing of money or otherwise, excluding
endorsements made for collection and other guaranties of obligations,
which, in the aggregate do not exceed more than one year or providing
for payments
9
in excess of $10,000 in the aggregate; (vi) collective bargaining
agreement; (vii) agreement with any present or former officer or
director of RIT or (viii) contract, agreement, or other commitment
involving payments by it of more than $10,000 in the aggregate.
Section 3.10 Material Contract Defaults. RIT is not in default in any
material respect under the terms of any outstanding contract, agreement, lease,
or other commitment which is material to the business, operations, properties,
assets, or financial condition of RIT and there is no event of default in any
material respect under any such contract, agreement, lease, or other commitment
in respect of which RIT has not taken adequate steps to prevent such a default
from occurring.
Section 3.11 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust, or other material contract, agreement, or instrument to which RIT is a
party or to which any of its properties or operations are subject.
Section 3.12 Governmental Authorizations. RIT has all licenses,
franchises, permits, and other governmental authorizations that are legally
required to enable it to conduct its business in all material respects as
conducted on the date hereof. Except for compliance with federal and state
securities and corporation laws, as hereinafter provided, no authorization,
approval, consent, or order of, or registration, declaration, or filing with,
any court or other governmental body is required in connection with the
execution and delivery by RIT of this Agreement and the consummation by RIT of
the transactions contemplated hereby.
Section 3.13 Compliance With Laws and Regulations. RIT has complied
with all applicable statutes and regulations of any federal, state, or other
governmental entity or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business, operations, properties,
assets, or financial condition of RIT or except to the extent that noncompliance
would not result in the incurrence of any material liability for RIT.
Section 3.14 Insurance. All the insurable properties of RIT are
insured for their full replacement value against all risks customarily insured
against by persons operating similar properties in localities where such
properties are located and under valid and enforceable policies by insurers of
recognized responsibility. Such policy or policies containing substantially
equivalent coverage will be outstanding on the date of consummation of the
transactions contemplated by this Agreement.
Section 3.15 Approval of Agreement. The board of directors of RIT has
authorized the execution and delivery of this Agreement and has approved the
transactions contemplated hereby.
Section 3.16 Labor Relations. RIT has not had a work stoppage resulting
from labor problems. To the knowledge of RIT, no union or other collective
bargaining organization is organizing or attempting to organize any employee of
RIT.
Section 3.17 RIT Schedules. RIT has delivered to Royal a copy of the
board of directors' minutes of RIT approving this transaction.
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ARTICLE IV
PLAN OF EXCHANGE
Section 4.01 The Exchange. On the terms and subject to the conditions
set forth in this Agreement, on the Closing Date (as defined in Section 4.04),
the RIT Shareholder hereby agrees to assign, transfer, and deliver to Royal,
free and clear of all liens, pledges, encumbrances, charges, restrictions, or
known claims of any kind, nature, or description, the number of shares of common
stock of RIT set forth on Schedule 2.01 to this Agreement, constituting all of
the issued and outstanding shares of common stock of RIT and Royal agrees to
acquire such shares on such date by issuing and delivering in exchange therefor
shares of Royal restricted common stock, par value $0.001, in the amount of
56,500 shares of Royal for each outstanding share of RIT, or an aggregate amount
of 5,650,000 shares of Royal common stock, or approximately 72% of the
outstanding shares of Royal common stock. At the Closing, the RIT Shareholder
shall, upon surrender of its certificate or certificates representing such RIT
shares to the registrar and transfer agent, be entitled to receive a certificate
or certificates evidencing shares of the exchanged shares of Royal common stock
as provided herein. Upon the consummation of the transaction contemplated
herein, all shares of capital stock of RIT shall be held by Royal.
Section 4.02 Appointment of New Directors. In connection with the
Closing of the transactions contemplated by this Agreement, Xxxxxx Xxxxxxxxxxx
shall resign as a Director of Royal, seriatim, and shall appoint Xxxxxxx
Xxxxxxx, Xxxx Xxxxx and Xxxxxx Xxxxxxxx as directors to fill the vacancies
created thereby, to serve until the next annual stockholders' meeting of Royal
and their successors shall have been elected and qualified.
Section 4.03 Closing. The closing ("Closing") of the transactions
contemplated by this Agreement shall be on a date and at such time as the
parties may agree ("Closing Date"), but no later than July 15, 1999, provided
that the covenants and conditions set forth in Articles V, VI and VII have been
satisfied. Such Closing shall take place at a mutually agreeable time and place.
Section 4.04 Closing Events. At the Closing, each of the respective
parties hereto shall execute, acknowledge, and deliver (or shall cause to be
executed, acknowledged, and delivered) any and all certificates, opinions,
financial statements, schedules, agreements, resolutions, rulings, or other
instruments required by this Agreement to be so delivered at or prior to the
Closing, together with such other items as may be reasonably requested by the
parties hereto and their respective legal counsel in order to effectuate or
evidence the transactions contemplated hereby.
11
ARTICLE V
SPECIAL COVENANTS
Section 5.01 Board of Directors Action by Royal. Prior to the Closing,
the Board of Directors of Royal shall:
(a) effect the authorization and approval of this Agreement
and the transactions contemplated thereby;
(b) effect the action described in Section 4.02; and
(c) take such other actions as the directors may determine
are appropriate.
Section 5.02 Access to Properties and Records. Royal and RIT will each
afford to the officers and authorized representatives of the other full access
to the properties, books, and records of each other as the case may be, in order
that each may have full opportunity to make such reasonable investigation as it
shall desire to make of the affairs of the other, and each will furnish the
other with such additional financial and operating data and other information as
to the business and properties of each other, as the case may be, as the other
shall from time to time reasonably request.
Section 5.03 Delivery of Books and Records. At the Closing, each
company shall deliver each other the originals of the corporate minute books,
books of account, contracts, records, and all other books or documents now in
each company's possession or its representatives.
Section 5.04 Special Covenants and Representations Regarding the
Exchanged Stock. The consummation of this Agreement and the transactions herein
contemplated, including the issuance of the exchanged shares of Royal common
stock to the RIT Shareholder as contemplated hereby, constitutes the offer and
sale of securities under the Securities Act and applicable state statutes. Such
transaction shall be consummated in reliance on exemptions from the registration
and prospectus delivery requirements of such statutes which depend, inter alia,
upon the circumstances under which the RIT Shareholder acquired such securities.
The RIT Shareholder represents and warrants that the Royal shares to be
acquired by it pursuant to the terms of Section 4.1 hereof is being acquired for
its 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"). The RIT
Shareholder 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 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) Royal has received a written
opinion of counsel reasonably satisfactory to Royal 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.
The RIT Shareholder understands that the Royal 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.
Furthermore, the RIT Shareholder understands that the Royal Stock is not being
registered under the Act in part on the ground that the issuance thereof is
exempt under Section 4(2) of
12
the 1933 Act as a transaction by an issuer not involving any public offering;
that Royal's reliance on such exemption is predicated in part on the foregoing
representation and warranty of the RIT Shareholder and that in the view of the
Commission, the statutory basis for the exemption claimed would not be present
if, notwithstanding such representation and warranty, the RIT Shareholder
contemplates acquiring any of the shares of Royal common stock for sale upon the
occurrence or non-occurrence of some predetermined event.
Section 5.05 Restrictive Legend. The RIT Shareholder understands that
Royal 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 shares of Royal 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.
Section 5.06 Third Party Consents and Certificates. Royal and RIT agree
to cooperate with each other in order to obtain any required third party
consents to this Agreement and the transactions herein and therein contemplated.
Section 5.07 Actions Prior to Closing.
(a) From and after the date of this Agreement until the
Closing Date and except as set forth in the Agreement or Schedules
attached hereto or as permitted or contemplated by this Agreement,
Royal and RIT respectively, will each:
(i) carry on its business in substantially the same
manner as it has heretofore;
(ii) maintain and keep its properties in states of good
repair and condition as at present, except for depreciation
due to ordinary wear and tear and damage due to casualty;
(iii) maintain in full force and effect insurance
comparable in amount and in scope of coverage to that now
maintained by it;
(iv) perform in all material respects all of its
obligation under material contracts, leases, and instruments
relating to or affecting its assets, properties, and business;
(v) use its best efforts to maintain and preserve its
business organization intact, to retain its key employees, and
to maintain its relationship with its material suppliers and
customers; and
13
(vi) fully comply with and perform in all material
respects all obligations and duties imposed on it by all
federal and state laws and all rules, regulations, and orders
imposed by federal or state governmental authorities.
(b) From and after the date of this Agreement until the
Closing Date, neither RIT nor Royal will:
(i) make any change in their articles of incorporation
(except as provided for in Section 5.01) or bylaws;
(ii) take any action described in section 1.06 in the case
of Royal, or in section 3.06, in the case of RIT (all except
as permitted therein or as disclosed in the applicable party's
schedules); or
(iii) enter into or amend any contract, agreement, or
other instrument of any of the types described in such party's
schedules, except that a party may enter into or amend any
contract, agreement, or other instrument in the ordinary
course of business involving the sale of goods or services.
Section 5.08 Indemnification.
(a) Royal hereby agrees to indemnify RIT, the RIT
Shareholders, and each of the officers, agents and directors of RIT as
of the date of execution of this Agreement against any loss, liability,
claim, damage, or expense (including, but not limited to, any and all
expense whatsoever reasonably incurred in investigating, preparing, or
defending against any litigation, commenced or threatened, or any claim
whatsoever), to which it or they may become subject arising out of or
based on any inaccuracy appearing in or misrepresentation made under
Article I of this Agreement. The indemnification, as well as the rights
and remedies thereto, provided for in this paragraph shall survive the
Closing and consummation of the transactions contemplated hereby and
termination of this Agreement.
(b) RIT hereby agrees to indemnify Royal and each of the
officers, agents and directors of Royal as of the date of execution of
this Agreement against any loss, liability, claim, damage, or expense
(including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever), to
which it or they may become subject arising out of or based on any
inaccuracy appearing in or misrepresentation made under Article III of
this Agreement. The indemnification, as well as the rights and remedies
thereto, provided for in this paragraph shall survive the Closing and
consummation of the transactions contemplated hereby and termination of
this Agreement.
Section 5.09 Reverse Split. For a two (2) year period, commencing with
the closing of the transaction contemplated by this Agreement, the RIT
Shareholder shall not vote its shares of Royal in favor of a reverse stock split
unless a reverse stock split is necessary in connection with raising the price
of Royal's common stock in connection with a listing of its shares on NASDAQ or
the American Stock Exchange or as a condition imposed by an underwriter in
connection with an underwritten offering of Royal's securities. Anything to the
contrary herein notwithstanding, a majority of the shares of common
14
stock outstanding, not including the shares of the RIT shareholder, may waive
this provision by written consent.
Section 5.10 Exchange Act Registration Statement. The present officers,
directors and principal shareholders of Royal agree to cooperate with the filing
of a Form 10SB with the Securities and Exchange Commission to enable Royal to
become a fully reporting company.
Section 5.11 Issuance of Additional Shares. For a one (1) year period,
commencing with the Closing, if any additional shares of Common Stock of Royal
are issued to any of the RIT Shareholder, other than in "arms-length"
transactions, and except as may be set forth in Section 1.18 hereof, additional
shares of Common Stock of Royal will also be issued to the present shareholders
of Royal, pro rata to their current ownership. Anything to the contrary in this
Section 5.10 notwithstanding, after the Closing, Royal shall be able to issue
shares of common stock or employee stock options to key employees of Royal but
no such shares and/or options shall be issuable to Xxxxxxx Xxxxxxx during the
first year after the Closing.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF ROYAL
The obligations of Royal under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 6.01 Accuracy of Representations. The representations and
warranties made by RIT in this Agreement were true when made and shall be true
at the Closing Date with the same force and effect as if such representations
and warranties were made at and as of the Closing Date (except for changes
therein permitted by this Agreement), and RIT shall have performed or complied
with all covenants and conditions required by this Agreement to be performed or
complied with by RIT prior to or at the Closing. Royal shall be furnished with a
certificate, signed by a duly authorized officer of RIT and dated the Closing
Date, to the foregoing effect.
Section 6.02 Good Standing. Royal shall have received a certificate of
good standing from the Secretary of State of the State of New York or other
appropriate office, dated as of a date within ten days prior to the Closing Date
certifying that RIT is in good standing as a corporation in the State of New
York and has filed all tax returns required to have been filed by it to date and
has paid all taxes reported as due thereon.
Section 6.03 Other Items. Royal shall have received such further
documents, certificates, or instruments relating to the transactions
contemplated hereby as Royal may reasonably request in order to satisfy due
diligence concerns.
15
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF RIT
AND THE RIT SHAREHOLDERS
The obligations of RIT and the RIT Shareholder under this Agreement are
subject to the satisfaction, at or before the Closing Date, of the following
conditions:
Section 7.01 Accuracy of Representations. The representations and
warranties made by Royal in this Agreement were true when made and shall be true
as of the Closing Date (except for changes therein permitted by this Agreement)
with the same force and effect as if such representations and warranties were
made at and as of the Closing Date, and Royal shall have performed and complied
with all covenants and conditions required by this Agreement to be performed or
complied with by Royal prior to or at the Closing. RIT shall have been furnished
with a certificate, signed by a duly authorized executive officer of Royal and
dated the Closing Date, to the foregoing effect.
Section 7.02 Good Standing. RIT shall have received a certificate of
good standing from the Secretary of State of the state of Delaware or other
appropriate office, dated as of a date within ten days prior to the Closing Date
certifying that Royal is in good standing as a corporation in the State of
Delaware and has filed all tax returns required to have been filed by it to date
and has paid all taxes reported as due thereon.
Section 7.03 Other Items.
(a) RIT shall have received a list of shareholders of Royal
containing the name, address, and number of shares held by each Royal
shareholder as of the date of Closing, certified by an executive
officer of Royal as being true, complete, and accurate.
(b) RIT shall have received bank cards appointing Xxxxxxx
Xxxxxxx and/or his designees as signatory on the Royal bank account
with Chase Manhattan Bank N.A.
(c) RIT shall have received such further documents,
certificates, or instruments relating to the transactions contemplated
hereby as RIT may reasonably request in order to satisfy due diligence
concerns.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Brokers. Royal and RIT agree that there were no finders or
brokers involved in bringing the parties together or who were instrumental in
the negotiation, execution, or consummation of this Agreement. RIT and Royal
each agree to indemnify the other against any claim by any third person other
than those described above for any commission, brokerage, or finders' fee
arising from the transactions contemplated hereby based on any alleged agreement
or understanding between the indemnifying party and such third person, whether
express or implied from the actions of the indemnifying party.
16
Section 8.02 Governing Law. This Agreement shall be governed by,
enforced, and construed under and in accordance with the laws of the United
States of America and, with respect to matters of state law, with the laws of
New York.
Section 8.03. 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.
Section 8.04 Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if personally delivered to it or
sent by registered mail or certified mail, postage prepaid, or by prepaid
telegram addressed as follows:
If to Royal to: Xxxxxx Xxxxxxxxxxx
Royal Acceptance Corporation
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
If to RIT to: Xxxxxxx Xxxxxxx
RIT Auto Leasing Group,
00 Xxxxxxx Xxxxxxxx
Xxxxxx Xxxx, Xxx Xxxx 00000
With copies to: Xxxxxx X. Xxxxx
Xxxxx & Schloss LLP
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed, or
telegraphed.
Section 8.05 Attorney's Fees. In the event that any party institutes
any action or suit to enforce this Agreement or to secure relief from any
default hereunder or breach hereof, the breaching party or parties shall
reimburse the non-breaching party or parties for all costs, including reasonable
attorneys' fees, incurred in connection therewith and in enforcing or collecting
any judgment rendered therein.
Section 8.06 Confidentiality. Each party hereto agrees with the other
parties that, unless and until the transactions contemplated by this Agreement
have been consummated, it and its representatives will hold in strict confidence
all data and information obtained with respect to another party or any
subsidiary thereof from any representative, officer, director, or employee, or
from any books or records or from personal inspection, of such other party, and
shall not use such data or information or disclose the same to others, except
(i) to the extent such data or information is published, is a matter of public
knowledge, or is required by law to be published; and (ii) to the extent that
such data or information must be used or disclosed in order to consummate the
transactions contemplated by this Agreement.
17
Section 8.07 Schedules; Knowledge. Each party is presumed to have full
knowledge of all information set forth in the other party's schedules delivered
pursuant to this Agreement.
Section 8.08 Third Party Beneficiaries. This contract is solely between
Royal and RIT and the RIT Shareholder, and, except as specifically provided, no
director, officer, stockholder, employee, agent, independent contractor, or any
other person or entity shall be deemed to be a third party beneficiary of this
Agreement.
Section 8.09 Entire Agreement. This Agreement represents the entire
agreement between the parties relating to the subject matter hereof and fully
and completely expresses the agreement of the parties relating to the subject
matter hereof. There are no other courses of dealing, understandings,
agreements, representations, or warranties, written or oral, except as set forth
herein.
Section 8.10 Survival; Termination. The representations, warranties,
and covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated.
Section 8.11 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
Section 8.12 Amendment or Waiver. Every right and remedy provided
herein shall be cumulative with every other right and remedy, whether conferred
herein, at law, or in equity, and may be enforced concurrently herewith, and no
waiver by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may be amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance hereof may be extended by a
writing signed by the party or parties for whose benefit the provision is
intended.
.
Section 8.13 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.
(THIS SPACE LEFT BLANK INTENTIONALLY)
18
IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly authorized,
as of the date first above-written.
ROYAL ACCEPTANCE CORPORATION
By: /s/ Xxxxxx Xxxxxxxxxxx
-------------------------------------
Xxxxxx Xxxxxxxxxxx, President
RIT AUTO LEASING GROUP, INC.
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------
Xxxxxxx Xxxxxxx, President
ALLIANCE HOLDINGS
LIMITED PARTNERSHIP (100 Shares)
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------
Xxxxxxx Xxxxxxx, General Partner
19
SCHEDULE 1.02
Royal Shareholder List
SHAREHOLDER LIST - ROYAL ACCEPTANCE CORPORATION
CLOSE OF BUSINESS: July 20, 1999
LAST(1) FIRST(l) MI (1) LAST(2) FIRST(2) MI (2) SSN ADDRESS(l)
------- -------- -- --- ------- -------- -- --- --- ----------
XXXXX XXXXXX X. XXXXX & XXXXXXX
XXXXX XXXXXX X. XXXXX & XXXXXXX
XXXXXXXX XXXXXXX
XXXXXXXX XXXXXX
XXXXX XXXXXXX
XXXXXXXX XXXXXX C/O XXXXX INVESTMENT
GROUP, INC.
XXXXXXXX XXXX C/O XXXXX INVESTMENT
GROUP, INC.
BATT FAMILY IRREVOCABLE C/O THE XXXXX
TRUST INVESTMENT GROUP
XXXXXX XXXXXX C/X XXXXX & XXXXXXX
XXXX XXXXXXX
XXXXX & SCHLOSS LLP
XXXXX & XXXXXXX LLP
XXXXXXXXX XXXXXX C/O XXXXX INVESTMENT
GROUP, INC.
XXXXXXXXXXX F. JEAN XXXXXXXXXXX XXXXXX I JTWROS
XXXXX XXXXX XXXXX XXXXXXX JTTEN ###-##-####
CAL-TEX ENTERPRISES PROF 00-0000000
SH PLAN
XXXXXXX XXXX F.
XXXXXXXX XXXX ###-##-####
XXXXXXXX XXXX F. ###-##-#### C/O ROYAL FINANCE CO
XXXXXX XXXXX
XXXXXX XXXXX C/O XXXXX INVESTMENT
GROUP, INC.
XXXXXXX XXXX C/O XXXXX INVESTMENT
GROUP, INC.
XXXXXXX XXXX C/O XXXXX INVESTMENT
GROUP, INC.
LAST(1) ADDRESS(2) CITY ST ZIP DATE PRE # #SHS ST
------- ---------- ---- -- --- ----- --- ----- ---- --
XXXXX 0 XXXX 00XX XXXXXX XXX XXXX XX 00000 3/11/99 RA 2074 50,000 F
XXXXX 0 XXXX 00XX XXXXXX XXX XXXX XX 00000 3/11/99 RA 2073 75,000 R
XXXXXXXX 000 XXXXX XXX, #0 XXXXXXXXX XX 0000 3/25/99 RA 2077 1,200 F
XXXXXXXX 0000 XXXXXXXXX XX #0000 XXX XXXXXXXX XX 00000 0/0/00 XX 0000 00 X
XXXXX 00-00 XXXXX XX XXXXXX XXXXX XX 00000 7/27/95 1032 50 F
BARBETTA 00 XXXXX XXXXXX, #000 XXXXXXXX XX 0000 11/18/98 RA 2062 10,000 R
BARBETTA 00 XXXXX XXXXXX, #000 XXXXXXXX XX 0000 11/18/98 RA 2064 2,000 R
BATT FAMILY IRREVOCABLE 00 XXXXX XXX #000 XXXXXXXX XX 0000 4/14/99 RA 2106 5,000 R
TRUST
BAYARD 0 XXXX 00XX XXXXXX XXX XXXX XX 00000 7/14/99 RA 2133 40,000 F
BHOJ 00000 XXXXXXX XXX XXXXXXXXX XX 00000 10/9/97 RA 2017 500 R
XXXXX & XXXXXXX LLP 0 XXXX 00XX XXXXXX XXX XXXX XX 00000 3/11/99 RA 2072 75,000 R
XXXXX & XXXXXXX LLP 0 XXXX 00XX XXXXXX XXX XXXX XX 00000 3/11/99 RA 2075 50,000 F
BORZOMATI 00 XXXXX XXXXXX, #000 XXXXXXXX XX 0000 11/18/98 RA 2065 10,000 R
XXXXXXXXXXX 0000 XXXXXX XXXX XXXXXXX XX 00000 9/3/97 RA 2010 100 F
XXXXX 000 XXXXXXXXX XXXXXXX #0 XXXXX XX 00000 6/13/95 1001 100 F
CAL-TEX ENTERPRISES PROF 000 XXXXXXXX XX XXXXXX XX 00000 6/13/95 1002 500 F
SH PLAN
XXXXXXX 000-00XX XX X. XXXXXX XX 0000 3/25/99 RA 2060 4,000 F
XXXXXXXX 000 XXXXXXX XX XXXXXXXX XX 00000 4/21/98 RA 2044 57,036 F
XXXXXXXX 000 XXXXXXXXXX XXX #000 XXXXXXXXXX XX 0000 6/13/95 1003 50,000 R
CANTOR 000 XXXXX XX XXXXXX XX 00000 7/27/95 1036 750 F
XXXXXX 00 XXXXX XXXXXX, #000 XXXXXXXX XX 0000 11/18/98 RA 2063 2,000 R
XXXXXXX 00 XXXXX XXXXXX, #000 XXXXXXXX XX 0000 11/18/98 RA 2060 500 R
XXXXXXX 00 XXXXX XXXXXX. #000 XXXXXXXX XX 0000 11/18/98 RA 2055 500 F
OLDE MONMOUTH STOCK TRANSFER CO., INC. PAGE 1
SHAREHOLDER LIST - ROYAL ACCEPTANCE CORPORATION
CLOSE OF BUSINESS: July 20, 1999
LAST(1) FIRST(l) MI (1) LAST(2) FIRST(2) MI (2) SSN ADDRESS(l)
------- -------- -- ----- ------- -------- -- --- --- ----------
CEDE & CO 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 XX XXX 00
XXXX & XX 00-0000000 PO BOX 20
XXXXXX XXXXXXX X.
XXXXXX XXXXXX X.
XXXXXX XXXXX X.
CONTINENTAL TERMINALS
XXXXXX XXXXXX XXXXXX XXXXXXXX JT TEN
XXXXXX XXXXX
XXXXXX X. C/O XXXXX XXXXXXX
XXXX XXXXXX
XXXX XXXXXXX C/O CUTLER HAMMER
XXXX XXXXXXX X/X XXXXXX XXXXXX
XXXXXXX XXXXXXX
LAST(1) ADDRESS(2) CITY ST ZIP DATE PRE # #SHS ST
------- ---------- ---- -- --- ----- --- ----- ---- --
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 3/17/99 RA 2076 100,000 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 6/1/99 RA 2120 5,000 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 4/6/99 RA 2104 16,000 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 7/6/99 RA 2130 4,000 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 4/17/98 RA 2042 250 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 4/14/99 RA 2105 2,000 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 7/13/99 RA 2132 6,000 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 5/3/99 RA 2115 4,000 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 6/3/99 RA 2121 37,500 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 6/21/99 RA 2128 9,500 F
CEDE & CO BOWLING GREEN SATION XXX XXXX XX 00000 5/26/99 RA 2119 5,000 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 5/25/99 RA 2117 5,000 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 7/6/99 RA 2131 8,000 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 4/30/99 RA 2114 4,000 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 6/29/99 RA 2129 4,000 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 4/29/99 RA 2113 37,000 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 4/27/99 RA 2112 2,000 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 6/15/99 RA 2123 450 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 6/11/99 RA 2122 10,000 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 4/20/98 RA 2043 3,250 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 5/9/98 RA 2048 1,250 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 5/13/98 RA 2047 500 F
CEDE & CO XXXXXXX XXXXX XXXXXXX XXX XXXX XX 00000 3/26/98 RA 2034 330 F
XXXXXX 0000 X.X. 00 X/ XXX 0 XXXXXXXX XX 00000 9/3/97 RA 2013 50 F
XXXXXX 000 XXXXXXXX XX XXXXXXXX XX 00000 9/3/97 RA 2014 150 F
XXXXXX 0 XXXX XX XXXXXXXXX XX 00000 9/3/97 RA 2003 100 F
CONTINENTAL TERMINALS 2/10/97 1079 2,958 F
DAVIDO 000 00XX XX XXXXXXXX XX 00000 7/27/95 1034 100 F
XXXXXX 00 XXXXXX XX XXXXXXX XXXXX XX 00000 7/27/95 1035 1,250 F
XXXXXX 00 XXXXX XXXXXX XXXXX 000 XXXXXXXX XX 0000 10/6/98 RA 2053 17,000 R
XXXX 0000 XXXXXXXX #00 XXX XXXX XX 00000 7/27/95 1033 000 X
XXXX 0 XXXXXXX XXXXXX XXXXXXXXXX XX 00000 10/9/97 RA 2019 1,000 R
DUIN 0 XXXXXXX XXXXXX XXXXXXXXXX XX 00000 10/17/96 1074 250 F
XXXXXXX 0000 XX 0XX XXX XXXXXXX XX 00000 7/27/95 1038 100 F
OLDE MONMOUTH STOCK TRANSFER CO., INC. PAGE 2
SHAREHOLDER LIST - ROYAL ACCEPTANCE CORPORATION
CLOSE OF BUSINESS: July 20, 1999
LAST(1) FIRST(l) MI (1) LAST(2) FIRST(2) MI (2) SSN ADDRESS(l)
------- -------- -- --- ------- -------- -- --- --- ----------
FALCO XXXX XXXXX XXXX XX TEN C/O XXXXX INVESTMENT
GROUP, INC.
FESCHAREK XXXXXXX X.
XXXXXXXXX XXXXXXX ###-##-#### 000 XXXXX XXXXXX
XXXX XXXXX
XXXXXXX XXXXX F.
XXXXXXXX XXXXXXX XXXXX XXXXXXXX XXXXXXX X. JT TEN C/O ASSIST
ASSOCIATES, INC.
GUHA XXXX
XXXXXX XXXX
XXXXXX NAIM ###-##-####
XXXX XXXXXXX ###-##-####
HARDDON XXXXXXX ###-##-####
XXXXX XXXXXXX C/X XXXXX & SCHLOSS
LLP
IMPERIALE XXXXXX
XXXXXX IVOR
XXXXXXXX XXXXXX ###-##-####
L. ROLLS (NOMINEES) LTD 00 XXXXX XX
L. ROLLS (NOMINEES) LTD 00 XXXXX XX
XXXXXX XXXX ###-##-####
XXXXXXX XXXXXX ###-##-####
XXXXXXX XXXXXXX ###-##-####
XXXXX INVESTMENT GROUP,
INC.
XXXXX INVESTMENT GROUP,
INC.
MIELE XXXXXX
XXXXXX XXXX ###-##-####
LAST(1) ADDRESS(2) CITY ST ZIP DATE PRE # #SHS ST
------- ---------- ---- -- --- ----- --- ----- ---- --
FALCO 00 XXXXX XXXXXX, #000 XXXXXXXX XX 0000 11/18/98 RA 2061 9,500 R
FESCHAREK 000 XXXXX XXXXXX XXXXXXXXX XX 0000 6/17/99 RA 2126 5,000 F
FESCHAREK WORCESTER MA 1602 10/9/97 RA 2022 5,000 F
XXXX 0000 X. 00XX XX XXXXXXXX XX 00000 7/27/95 1040 50 R
GASSOSO 000 XXXXXXXX XXXX XXX XXXXXX XX 0000 3/25/99 RA 2084 20,000 F
XXXXXXXX 000 XX 00 XXXXX 000 XXXXXXXX XX 0000 9/3/97 RA 2007 250 F
GUHA 0000 XXXXXXXX XXX XX XXXXXX XX 00000 00/0/00 XX 0000 000 X
XXXXXX 00 XXXXXXX XXXXX XXXXXXXXX XX 0000 3/25/99 RA 2085 10,000 F
XXXXXX 00 XXXXXXX XXXXX XXXXXXXXX XX 0000 6/13/95 1010 000 X
XXXX X.X. XXX 00 XXXXXX XX 00000 6/13/95 1011 175 F
HARDIDON 0 XXXXXXXX XXXX XXX XXXXX XX 00000 6/13/95 1012 2,500 F
XXXXX 0 X. 00XX XX XXX XXXX XX 00000 4/16/98 RA 2040 150,000 R
IMPERIALE 00 XXXXXX XX XXX XXXX XX 0000 9/3/97 RA 2008 000 X
XXXXXX #0 XXXXX XXXX XXXXX XXXXXX, XXXXXXX 6/13/95 1013 500 F
KHANIMOV 000-00 XXXXXXXX XX XXXXXXX XXXXXXX XX 00000 6/13/95 1014 200 F
L. ROLLS (NOMINEES) LTD XXXXX XXXXXX XXXXXX, XXXXXXX XX0 0XX 7/22/96 1054 2,500 F
L. ROLLS (NOMINEES) LTD XXXXX XXXXXX XXXXXX, XXXXXXX XX0 0XX 7/22/96 1056 5,000 XX
XXXXXX 0000 XXXXX XXXXX XX XXXXXXX XX 00000 6/13/95 1015 550 F
XXXXXXX 00 XXXXXXXXXX XX XXXXXXX XX 0000 6/13/95 1016 50 F
XXXXXXX 0000 X. XXXX XXXXXXXX XX 00000 6/13/95 1017 50 F
XXXXX INVESTMENT GROUP, INC. 00 XXXXX XXXXXX, #000 XXXXXXXX XX 0000 11/18/98 RA 2068 65,000 R
XXXXX INVESTMENT GROUP, INC. 00 XXXXX XXXXXX XXX 000 XXXXXXXX XX 0000 1/11/99 RA 2068 73,000 F
MIELE 00-00 XXXXXX XXX XXXXXXXX XX 0000 3/25/99 RA 2090 2,400 F
XXXXXX 00 XXXXXXX XX X. XXXXX XX 00000 6/13/95 1019 250 F
OLDE MONMOUTH STOCK TRANSFER CO., INC. PAGE 3
SHAREHOLDER LIST - ROYAL ACCEPTANCE CORPORATION
CLOSE OF BUSINESS: July 20, 1999
LAST(1) FIRST(l) MI (1) LAST(2) FIRST(2) MI (2) SSN ADDRESS(l)
------- -------- -- --- ------- -------- -- --- --- ----------
XXXXXX XXXXX 055-4O-7909
XXXXXX XXXXXXX X.
XXXXX XXXXX
XXXXX XXXXX ###-##-####
XXXXX XXXXX
NATIONAL INVESTOR SERVICES 00-0000000
NEARING XXXXXXX
XXXXXXX XXXXXXX
XXXXXXX XXXXX
XXXXXXXXXX
XXXXXXX XXXXXX X.
XXXXX XXXXXXX ###-##-####
XXXXXXXXX XXXX
XXXXXXXXX XXXXXXX
XXXXXXXXXXX XXXXXX XXXXXXXXXXX XXXXX JT TEN
XXXXXXXXXXX XXXXXX C/X XXXXX & SCHLOSS
LLP
XXXXXXXXXXX XXXXXX XXXXXXXXXXX XXXXX JT TEN
XXXXXXXXXXX XXXXX XXXXXXX C/O THE XXXXX
INVESTMENT GROUP
PONSIGLIONE XXXX XXXXX C/O THE XXXXX
INVESTMENT GROUP
PROTESTA XXXXXX ###-##-####
XXXXXXXXX XXXXXX W. ###-##-####
XXXX XXXXXXXX ###-##-####
XXXXXXX XXXX XXXXXXX JAN JT TEN
ROLLS LEN 45 RIVER CT
XXXX XXXX
XXXXX XXXX
XXXX(1) ADDRESS(2) CITY ST ZIP DATE PRE # #SHS ST
------- ---------- ---- -- --- ----- --- ----- ---- --
XXXXXX 000 X. 00XX XX XXX XXXX XX 00000 6/13/95 1018 250 F
XXXXXX 000 XXXXX XXX XXXXXXXXX XX 0000 3/25/99 RA 2091 15,000 F
XXXXX 000 XXXXXXXX XX #0 XXX XXXX XX 00000 9/14/95 1048 250 F
XXXXX 000 XXXXXXXX XX #0 XXX XXXX XX 00000 6/13/95 1020 350 F
XXXXX 10/9/97 RA 2023 2,000 R
NATIONAL INVESTOR SERVICES 00 XXXXX XX 00XX XX XXX XXXX XX 00000 1/27/97 1076 350 F
NEARING 0000 XXXXXXXXXX XX XXXXXXXXXX XX 00000 10/9/97 RA 2025 6,250 R
NEARING 0000 XXXXXXXXXX XX XXXXXXXXXX XX 00000 10/9/97 RA 2015 2,500 R
XXXXXXX 00 X. 00XX XX #000 XXX XXXX XX 00000 9/14/95 1049 1,750 R
XXXXXXX 0000 XXXX XXXX XX XXXXX XX 00000 10/9/97 RA 2015 2,500 R
OYAGA 0000 X. 00XX XX XXXXXXXX XX 00000 6/13/95 1022 125 F
PIZZICARA 000 XX. XXXXX XX XXXXXXXX XX 00000 7/27/95 1037 50 F
PIZZICARA 000 XXXXXX XX XXXXXXXX XX 00000 7/27/95 1042 100 F
PONSIGLIONE 2/10/97 1078 7,500 F
PONSIGLIONE 0 X. 00XX XX XXX XXXX XX 00000 4/16/98 RA 2041 200,000 R
PONSIGLIONE 10/9/97 RA 2027 2,033 F
PONSIGLIONE 00 XXXXX XXX #000 XXXXXXXX XX 0000 4/14/99 RA 2109 75,000 R
PONSIGLIONE 00 XXXXX XXX #000 XXXXXXXX XX 0000 4/14/99 RA 2108 75,000 R
PROTESTA 0000 X. XXXXXX XX XXXXX XXXX XX 00000 6/13/95 1023 750 F
XXXXXXXXX 0000 XXXXX XXX XXXXXX XXXX XX 0000 6/13/95 1024 25,000 R
RAZA 0000 XXXXXXXXXX XX XXXXXXX XX 0000 6/13/95 1025 500 F
XXXXXXX 0000 X. XXXXXXXX XXXXXXX XX 00000 7/27/95 1044 50 F
ROLLS UPPER GROUND LONDON 3/25/99 RA 2092 20,000 F
XXXX 00-00 XXXXXX XX XXXXXXXX XX 00000 10/9/97 RA 2021 1,000 R
XXXXX 00 XXXX XX XXX XXXX XX 00000 7/27/95 1043 50 F
OLDE MONMOUTH STOCK TRANSFER CO., INC. PAGE 4
SHAREHOLDER LIST - ROYAL ACCEPTANCE CORPORATION
CLOSE OF BUSINESS: July 20, 1999
LAST(1) FIRST(l) MI (1) LAST(2) FIRST(2) MI (2) SSN ADDRESS(l)
------- -------- -- --- ------- -------- -- --- --- ----------
XXXXXXXXXX X.
XXXXXXX XXXXX X.
XXXXXXX XXXXX X.
XXXXXXXX XXXXXX ###-##-####
XXXXX B. C/O XXXXX XXXXXXX
XXXXX L. C/O XXXXX XXXXXXX
XXXXXX XXXXXX XXXXXX XXXXX JT TEN ###-##-####
XXXXXXXXXX XXXXX
XXXXXXXXXX XXXXX A. XXXXXXXXXX XXXXXXX F JTWROS
XXXXX XXXXXXXXX PAL ###-##-####
XXXXXXX XXXXX XXXXXXX XXXXX XX TEN C/O RIT AUTO LEASING
GROUP, INC.
XXXXXX XXXXXX
XXXXXXXXX XXXXXX
THE XXXXX INVESTMENT C/O RIT AUTO LEASING
GROUP, INC. GROUP, INC
XXXXXX XXXXXXXX
XXXXXX XXXXXXX
XXXX XXXX XXXX XXX XX TEN
XXXX XXXX DONG XXX XX TEN
TUTTA ITALIA INC.
XXXXXXX XXXXX ###-##-####
XXXXXXX XXXXXX
WELLINGTON XXXXX X. ###-##-####
XXXXXXX XXXXXX ###-##-####
YAULEY XXXXXXX
XXXXXX XXXXXXX T.
LAST(1) ADDRESS(2) CITY ST ZIP DATE PRE # #SHS ST
------- ---------- ---- -- --- ----- --- ----- ---- --
XXXXXXXXXX 0000 00XX XXX XXXXXXXX XX 00000 3/25/99 RA 2094 3,000 F
XXXXXXX 0000 X. XXXXXXXX XXXXXXX XX 00000 0/0/00 XX 0000 00 X
XXXXXXX 0000 X. XXXXXXXX XXXXXXX XX 00000 0/0/00 XX 0000 000 X
XXXXXXXX 00 XXXXXXXXXX XX XXXXXXXXX XX 0000 6/13/95 1026 50 F
XXXXX 00 XXXXX XXXXXX XXXXX 000 XXXXXXXXX XX 0000 10/6/98 RA 2050 17,000 R
XXXXX 00 XXXXX XXXXXX XXXXX 000 XXXXXXXXX XX 0000 10/6/98 RA 2051 17,000 R
XXXXXX 0000 X. XXXXX XXXX XXXX XXXXX XX 6/13/95 1027 250 F
XXXXXXXXXX 10/9/97 RA 2026 1,715 R
XXXXXXXXXX 00 XXXXXXX XX XXXXXXXXXXX XX 00000 9/3/97 RA 2001 500 F
SINGH 000 XXXXXXXX XXX #0 XXXXXXXX XX 00000 4/21/98 RA 2045 10,000 F
XXXXXXX 00 XXXXXXX XXXX XXXXXX XXXX XX 00000 4/22/99 RA 2111 5,000 R
XXXXXX 000 XXXXX XX XXXXXXX XX 0000 7/27/95 1041 500 F
XXXXXXXXX 0000 00XX XXX XXXXXXXX XX 00000 3/25/99 RA 2097 2,000 F
THE XXXXX INVESTMENT
GROUP, INC. 00 XXXXXXX XXXX XXXXXX XXXX XX 00000 4/22/99 RA 2110 140,000 R
XXXXXX 00 XXXXX XX XXXXX XXXXX XX 00000 3/25/99 RA 2098 100,000 F
XXXXXX 0000 XXXXX XXXXX XX XXXXXXX XX 00000 10/9/97 RA 2020 1,250 R
TUNG 00 X. XXXXXX XXXX XX XXXXXXXXX XX 00000 6/13/95 1028 1,000 F
TUNG 00 X. XXXXXX XXXX XX XXXXXXXXX XX 00000 9/14/95 1047 1,850 F
TUTTA ITALIA INC. 00 XXXX XXXXX XX XXXXX XXXX XX 0000 3/25/99 RA 2099 10,000 F
UMANOFF 0000 XXXXXXXXX XXX XXXXXXXX XX 6/13/95 1029 250 F
XXXXXXX 00 XXXXX XX XXXXXXXXX XXXXXX XX 0000 3/25/99 RA 2101 4,000 F
WELLINGTON 0000 XXXXXX XX XXXXXXXX XX 00000 6/13/95 1030 250 F
WESLOCK 000 XXXXXXX XX XXXXXXX XXXX XX 0000 9/25/95 1050 227 F
YAULEY 000 XXXXXXX XXXX XXXXXXXX XX 00000 9/3/97 RA 2011 1,250 F
XXXXXX 000 XXXXXX XXX XXXXXXXXX XX 0000 9/3/97 RA 2006 50 F
==================== ========================= ================ == ===== ======= === ==== ========= ==
TOTAL COUNT 1,831,508
131
OLDE MONMOUTH STOCK TRANSFER CO., INC. PAGE 5
SCHEDULE 1.04(a)
Royal Financial Statement
Presentation of Royal Audited Financial Statements for fiscal years Ending March
1998 and 1999 have been waived by RIT
SCHEDULE 1.04(b)
Liabilities or Obligations Not Reflected in Financial Statements
Presentation of Royal Liabilities not set forth in Royal Balance Sheet have been
waived by RIT
SCHEDULE 1.04(c)
Federal, State, County, Local or Other Taxes Owed
NONE
SCHEDULE 1.19
Royal Liabilities Other Than Professional Fees
NONE
SCHEDULE 3.01
RIT Certificate of Incorporation, as Amended, and By-Laws
CERTIFICATE OF INCORPORATION
OF
RIT AUTO LEASING GROUP, INC.
Under Section 402 of the Business Corporation Law
The undersigned, a natural person of the age of eighteen years or over,
desiring to form a corporation pursuant to the provisions of the Business
Corporation Law of the State of New York, hereby certifies as follows:
FIRST: The name of the corporation is:
RIT AUTO LEASING GROUP, INC.
SECOND: The purpose for which it is formed is as follows:
To engage in any lawful act or activity for which corporations may be
formed under the Business Corporation Law provided that the corporation is not
formed to engage in any act or activity which requires the consent or approval
of any state official, department, board agency or other body, without such
approval or consent first being obtained.
For the accomplishment of the aforesaid purposes, and in furtherance
thereof, the corporation shall have and may exercise all of the powers conferred
by the Business Corporation Law upon corporations formed thereunder, subject
to any limitations contained in Article 2 of said law or in accordance with the
Provisions of any other statute of the State of New York.
THIRD: The office of the corporation in the State of New York is to be
located in the County of Nassau.
FOURTH: The aggregate number of shares which the corporation shall have
the authority to issue is 200, no par value.
FIFTH: The Secretary of State is designated as agent of the corporation
upon whom process against the corporation may be served, and the address to
which the Secretary of State shall mail a copy of any process against the
corporation served upon him is: c/o, 00 Xxxxxxx Xxxxxxxx, Xxxxxx Xxxx, XX 00000.
SIXTH: A director of the corporation shall not be liable to the
corporation or its shareholders for damages for any breach of duty in such
capacity except for liability if a judgment or other final adjudication adverse
to a director establishes that his or her acts or omissions were in bad faith or
involved intentional misconduct or a knowing violation of law or that the
director personally gained in fact a financial profit or other advantage to
which he or she was not legally entitled or that the director's acts violated
Section 719 of the Business Corporation Law; or liability for any act or
omission prior to the adoption of this provision.
IN WITNESS WHEREOF, I hereunto sign my name and affirm that
the statements made herein are true under the penalties of perjury.
Dated: March 16, 1993
_______________________________
Xxxxx X. Xxxxxxxx, Incorporator
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
BY-LAWS
OF
RIT AUTO LEASING GROUP INC.
____________________________________
ARTICLE I. SHAREHOLDERS' MEETING
Section 1. Annual Meeting.
The annual meeting of the shareholders shall be held within five months
after the close of the fiscal year of the Corporation, for the purpose of
electing directors, and transacting such other business as may properly come
before the meetings.
Section 2. Agenda at the Shareholders' Annual Meeting.
(a) Calling the meeting to order;
(b) Roll call;
(c) Reading of the minutes of the last meeting;
(d) Reports of the Officers;
(e) Reports of the Committees;
(f) Election of the Directors;
(g) Adjournment
Section 3. Special Meetings.
Special meetings of the shareholders may be called at any time
by the Board of Directors or by the President or the Secretary at the written
request of the holders of fifty percent (50%) of the shares then outstanding and
entitled to vote thereat, or as otherwise required under the provisions of the
Business Corporation Law.
Section 4. Place of Meetings.
All meetings of shareholders shall be held at the principal
office of the Corporation, or at such other places within or without the State
of New York as shall be designated in the notices or waivers of notice of such
meetings.
BY-LAWS
1
Section 5. Notice of Meetines.
(a) Written notice of each meeting of shareholders, whether
annual or special, stating the time when and place where it is to be held, shall
be served either personally or by mail, not less than ten or more than fifty
days before the meeting, upon each shareholder of record entitled to vote at
such meeting, and to any other shareholder to whom the giving of notice may be
required by law. Notice of a special meeting shall also state the purpose or
purposes for which the meeting is called, and shall indicate that it is being
issued by, or at the direction of, the person or persons calling the meeting.
If, at any meeting, action is proposed to be taken that would, if taken, entitle
shareholders to receive payment for their shares pursuant to the Business
Corporation Law, the notice of such meeting shall include a statement of that
purpose and to that effect. If mailed, such notice shall be directed to each
such shareholder at his address, as it appears on the records of the
shareholders of the Corporation, unless he shall have previously filed with the
Secretary of the Corporation a written request that notices intended for him be
mailed to some other address, in which case, it shall be mailed to the address
designated in such request.
(b) Notice of any meeting need not be given to any person who
may become a shareholder of record after the mailing of such notice and prior to
the meeting, or to any shareholder who attends such meeting in person or by
proxy, or to any shareholder who, in person or by proxy, submits a signed waiver
of notice either before or after such meeting. Notice of any adjourned meeting
of shareholders need not be given, unless otherwise required by statute.
Section 6. Quorum of Shareholders:
(a) Except as otherwise provided herein, or by statute, or in
the Certificate of Incorporation (such Certificate and any amendments thereof
being hereinafter collectively referred to as the "Certificate of
Incorporation"), at all meetings of shareholders of the Corporation, the
presence at the commencement of such meetings in person or by proxy of
shareholders holding of record a majority of the total number of shares of the
Corporation then issued and outstanding and entitled to vote, shall be necessary
and sufficient to constitute a quorum for the transaction of any business. The
withdrawal of any shareholder after the commencement of a meeting shall have no
effect on the existence of a quorum, after a quorum has been established at such
meeting.
(b) Despite the absence of a quorum at any annual or special
meeting of shareholders, the shareholders, by a majority of the votes cast by
the holders of shares entitled to vote thereon, may adjourn the meeting. At any
such adjourned meeting at which a quorum is present, any business may be
transacted which might have been transacted at the meeting as originally called
if a quorum had been present. However, if after the adjournment, the Board of
Directors fixes a new record date for the adjourned meeting, a notice of the
adjourned meeting shall be given to each shareholder of record on the new record
date.
BY-LAWS
2
Section 7. Voting:
(a) Except as otherwise provided by statute or by the
Certificate of Incorporation, any corporate action, other than the election of
directors to be taken by vote of the shareholders, shall be authorized by a
majority of votes cast at a meeting of shareholders by the holders of shares
entitled to vote thereon. Election of directors shall be accomplished by a
candidate receiving a plurality of the votes cast at a shareholder's meeting by
the shareholders entitled to vote in the election.
(b) Except as otherwise provided by statute or by the
Certificate of Incorporation, at each meeting of shareholders, each holder of
record of stock of the Corporation entitled to vote thereat, shall be entitled
to one vote for each share of stock registered in his name on the books of the
Corporation. Upon demand of the shareholders holding ten percent (10%) in
interest of the shares, present in person or by proxy, and entitled to vote, and
voting shall be by ballot.
Section 8. Proxies.
Each shareholder entitled to vote or to express consent or
dissent without a meeting, may do so by proxy; provided, however, that the
instrument authorizing such proxy to act shall have been executed in writing by
the shareholder himself, or by his attorney-in-fact thereunto duly authorized in
writing. No proxy shall be valid after the expiration of eleven months from the
date of its execution, unless the persons executing it shall have specified
therein the length of time it is to continue in force. Such instrument shall be
exhibited to the Secretary at the meeting and shall be filed with the records of
the Corporation.
Section 9. Action Without a Meeting.
Any resolution in writing, signed by all of the shareholders
entitled to vote thereon, shall constitute action by such shareholders to the
effect therein expressed, with the same force and effect as if the same had been
duly passed by unanimous vote at a duly called meeting of shareholders, and such
resolution so signed shall be inserted in the minute book of the Corporation
under its proper date.
BY-LAWS
3
ARTICLE II. DIRECTORS
Section 1. Number.
The affairs and the business of the Corporation, except as
otherwise provided in the Certificate of Incorporation, shall be managed by the
Board of Directors. The number of the directors of the Corporation shall be
( ) unless and until otherwise determined by vote of a majority of the entire
Board of Directors. The "entire Board" as used in this Article shall mean the
total number of directors which the Corporation would have if there were no
vacancies. The number of directors shall not be less than three, unless all of
the outstanding shares are owned beneficially and of record by less than three
shareholders, in which event the number of directors shall not be less than the
number of shareholders.
Section 2. How Elected.
At the annual meeting of shareholders, the persons duly
elected by the votes cast at the election held thereat shall become the
directors for the ensuing year.
Section 3. Term of Office and Qualifications.
The term of office of each of the directors shall be until the
next annual meeting of shareholders and thereafter until a successor has been
elected and qualified. Each director shall be at least eighteen years of age.
Section 4. Duties of Directors.
The Board of Directors shall have the control and general
management of the affairs and business of the Corporation unless otherwise
provided in the certificate of Incorporation. Such directors shall in all cases
act as a Board regularly convened by a majority, and they may adopt such rules
and regulations for the conduct of their meetings, and the management and
business of the Corporation as they may deem proper, not inconsistent with these
By-Laws and the Laws of the State of New York.
Section 5. Directors' Meetings.
Regular meetings of the Board of Directors shall be held
immediately following the annual meetings of the shareholders, and at such other
times as the Board of Directors may determine. Special meetings of the Board of
Directors may be called by the President at any time and must be called by the
President or the Secretary upon the written request of two directors. All
meetings, both regular and special, shall be held at the principal office of the
Corporation or at such other location, within or without the State of New York,
as the Board of Directors may from time to time determine.
BY-LAWS
4
Section 6. Notice of Meetings.
Notice of the place, day and hour of every regular and special
meeting shall be given to each director by delivering the same to him personally
or sending the same to him by telegraph or leaving the same at his residence or
usual place of business, at least one (1) day before the meeting, or shall be
mailed to each director, postage prepaid and addressed to him at the last known
Post Office address according to the records of the Corporation, at least three
(3) days before the meeting. No notice of any adjourned meeting of the Board of
Directors needs to be given other than by announcement at the meeting, subject
to the provisions of Section 7 of this Article.
Section 7. Quorum of Directors.
At any meeting of the Board of Directors, except as otherwise
provided by the Certificate of Incorporation, or by these By-Laws, a majority of
the Board of Directors shall constitute a quorum for the transaction of
business. However, a lesser number, when not constituting a quorum, may adjourn
the meeting until a quorum shall be present or represented.
Section 8. Director and Committee Action by Conference Telephone.
Any one or more members of the Board of Directors, or of any
committee thereof, may participate in a meeting of such Board or committee by
means of a conference telephone or similar equipment which allows all persons
participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at such a meeting.
Section 9. Voting.
Except as otherwise provided by statute, or by the Certificate
of Incorporation, or by these By-Laws, the affirmative vote of a majority of the
Directors present at any meeting of the Board of Directors at which a quorum is
present shall be necessary for the transaction of any item of business thereat.
Any resolution in writing, signed by all of the directors entitled to vote
thereon, shall constitute action by such directors to the effect therein
expressed, with the same force and effect as if the same had been duly passed by
unanimous vote at a duly called meeting of directors and such resolution so
signed shall be inserted in the minute book of the Corporation under its proper
date.
Section 10. Vacancies.
Unless otherwise provided in the Certificate of Incorporation,
vacancies in the Board of Directors occurring between annual meetings of the
shareholders, other than vacancies due to the removal of directors without
cause, shall be filled for the unexpired portion of the term by a majority vote
of the remaining directors, even though less than a quorum exists. Vacancies
occurring in the Board by reason of the removal of directors
BY-LAWS
5
without cause may be filled only by vote of the shareholders. A director so
elected shall hold office for the unexpired term of his predecessor, and until
his successor has been elected and qualified.
Section 11. Removal of Directors.
Any or all of the directors may be removed, either with or
without cause at any time by a vote of the shareholders at any meeting called
for such purpose, and another director, or more than one may be elected by such
shareholders in the place of the director(s) so removed, to serve for the
remainder of the term.
Section 12. Resignation.
Any director may resign at any time by giving written notice
to the Board of Directors, the President or the Secretary of the Corporation.
Unless otherwise specified in such written notice, such resignation shall take
effect upon receipt thereof by the Board of Directors or such officer, and the
acceptance of such resignation shall not be necessary to make it effective.
However, such resignation will not be effective to discharge any accrued
obligations or duties of a director.
Section 13. Salary.
No stated salary shall be paid to directors, as such, for
their services, but by resolution of the Board of Directors a fixed sum and
expenses of attendance, if any, may be allowed for attendance at each regular or
special meeting of the Board, provided, that nothing herein contained shall be
construed to prevent any director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 14. Contracts.
(a) No contract or other transaction between this Corporation
and any other Corporation shall be impaired, affected or invalidated, nor shall
any director be liable in any way by reason of the fact that any one or more of
the directors of this Corporation is or are interested in, or is a director or
officer, or are directors or officers of such other Corporation, provided that
such facts are disclosed or made known to the Board of Directors.
(b) Any director, personally and individually, may be
interested in any contract or transaction of this Corporation, and no director
shall be liable in any way by reason of such interest, provided that the fact of
such interest be disclosed or made known to the Board of Directors, and provided
that the Board of Directors shall authorize, approve or ratify such contract or
transaction by the vote (not counting the vote of any such director) of a
majority of a quorum, notwithstanding the presence of any such director at the
meeting at which such action is taken. Such director or directors may be counted
in determining the presence of a quorum at such meeting. This Section shall not
be construed to impair or invalidate or in any way affect any contract or other
transaction which would otherwise be valid under the law (common, statutory or
otherwise) applicable thereto.
BY-LAWS
6
(c) However, if there was no such disclosure or knowledge, or
if the vote of such interested director was necessary for the approval of such
contract or transaction at a meeting of the Board or committee at which it was
approved, the Corporation may avoid the contract or transaction, unless the
party or parties thereto shall establish affirmatively that the contract or
transaction was fair and reasonable as to the Corporation, at the time it was
approved by the Board, a committee or the shareholders.
Section 15. Committees.
The Board of Directors, by resolution adopted by a majority of
the entire Board, may designate from among its members an executive committee
and such other committees, and alternate members thereof, as they deem
desirable, each consisting of three or more members, with such powers and
authority (to the extent permitted by law) as may be provided in such
resolution. Each such committee shall serve at the pleasure of the Board of
Directors.
BY-LAWS
7
ARTICLE III. OFFICERS
Section 1. Number of Officers.
The officers of the Corporation shall consist of a President,
a Secretary, a Treasurer, and such other officers, including a Chairman of the
Board of Directors, and one or more Vice Presidents, as the Board of Directors
may from time to time deem advisable. Any officer other than the Chairman of the
Board of Directors may be, but is not required to be, a director of the
Corporation. Any officer may hold more than one office except the same person
may not hold the office of President and Secretary.
Section 2. Election of Officers.
Officers of the Corporation shall be elected at the first
meeting of the Board of Directors. Thereafter, and unless otherwise provided in
the Certificate of Incorporation, the officers of the Corporation shall be
elected annually by the Board of Directors at its meeting held immediately after
the annual meeting of shareholders and shall hold office for one year and until
their successors have been duly elected and qualified.
Section 3. Removal of Officers.
Any officer elected by the Board of Directors may be removed,
with or without cause, and a successor elected, by a vote of the Board of
Directors. Any officer elected by the shareholders may be removed, with or
without cause, and a successor elected, only by a vote of the shareholders.
Additionally, an officer elected by the shareholders may have his authority
suspended, for cause, by the Board of Directors.
Section 4. President.
The President shall be the chief executive officer of the
Corporation and shall have general charge of business, affairs and property
thereof, subject to direction of the Board of Directors, and shall have general
supervision over its officers and agents. He shall, if present, preside at all
meetings of the Board of Directors in the absence of a Chairman of the Board and
at all meetings of shareholders. He may do and perform all acts incident to the
office of President.
Section 5. Vice President.
In the absence of or inability of the President to act, the
Vice President shall perform the duties and exercise the powers of the President
and shall perform such other functions as the Board of Directors may from time
to time prescribe.
BY-LAWS
8
Section 6. Secretary.
The Secretary shall:
(a) Keep the minutes of the meetings of the Board of Directors
and of the shareholders in appropriate books.
(b) Give and serve all notice of all meetings of the
Corporation.
(c) Be custodian of the records and of the seal of the
Corporation and affix the latter to such instruments or documents as may be
authorized by the Board of Directors.
(d) Keep the shareholder records in such a manner as to show
at any time the amount of shares, the manner and the time the same was paid for,
the names of the owners thereof alphabetically arranged and their respective
places of residence, or their Post Office addresses, the number of shares owned
by each of them and the time at which each person became owner, and keep such
shareholder records available daily during the usual business hours at the
office of the Corporation subject to the inspection of any person duly
authorized, as prescribed by law.
(e) Do and perform all other duties incident to the office of
Secretary.
Section 7. Treasurer.
The Treasurer shall:
(a) Have the care and custody of and be responsible for all of
the funds and securities of the Corporation and deposit of such funds in the
name and to the credit of the Corporation in such a bank and safe deposit vaults
as the directors may designate.
(b) Exhibit at all reasonable times his books and accounts to
any director or shareholder of the Corporation upon application at the office of
the Corporation during business hours.
(c) Render a statement of the condition of the finances of the
Corporation at each stated meeting of the Board of Directors if called upon to
do so, and a full report at the annual meeting of shareholders. He shall keep at
the office of the Corporation correct books of account of all of its business
and transactions and such books of account as the Board of Directors may
require. He shall do and perform all other duties incident to the office of
Treasurer.
(d) Give the Corporation security for the faithful performance
of his duties in such sum and with such surety as the Board of Directors may
require.
Section 8. Duties of Officers May be Delegated.
In the case of the absence of any officer of the Corporation,
or for any reason the Board may deem sufficient, the Board may, except as
otherwise provided in these By-Laws, delegate the powers or duties of such
officers to any other officer or any director for the time being, provided a
majority of the entire Board concur therein.
BY-LAWS
9
Section 9. Vacancies - How Filled.
Should any vacancy in any office occur by death, resignation
or otherwise, the Board of Directors may appoint any qualified person to fill
such vacancy, without undue delay, at its next regular meeting or at a special
meeting called for that purpose, except as otherwise provided in the Certificate
of Incorporation.
Section 10. Compensation of Officers.
The officers shall receive such salary or compensation as may
be fixed and determined by the Board of Directors, except as otherwise provided
in the Certificate of Incorporation. No officer shall be precluded
from receiving any compensation by reason of the fact that he is also a
director of the Corporation.
BY-LAWS
10
ARTICLE IV. CERTTFICATES REPRESENTING SHARES
Section 1. Issue of Certificates Representing Shares.
The President shall cause to be issued to each shareholder one
or more certificates, under the seal of the Corporation, signed by the President
(or Vice-President) and the Treasurer (or Secretary) certifying the number of
shares owned by him in the Corporation. Each certificate shall state upon the
face thereof: (1) That the Corporation is formed under the laws of this state.
(2) The name of the person or persons to whom issued. (3) The number and class
of shares, and the designation of the series, if any, which such certificate
represents. Any restrictions upon transfers imposed by the Corporation should be
conspicuously noted on the certificate.
Section 2. Lost, Destroyed and Stolen Share Certificates.
The holder of any certificate representing shares of the
Corporation shall immediately notify the corporation of any loss, destruction or
wrongful taking of the certificate representing the same. The Corporation may
issue a new certificate in the place of any certificate thereto issued by it,
alleged to have been lost, destroyed or wrongfully taken. On production of such
evidence of loss as the Board of Directors in its discretion may require, the
Board of Directors may require the owner of the missing certificate, or his
legal representatives, to give the Corporation a bond in such sum as the Board
may direct, and with such surety or sureties as may be satisfactory to the
Board, to indemnify the Corporation against any claims, loss, liability or
damage it may suffer on account of the issuance of the new certificate. A new
certificate may be issued without requiring any such evidence or bond when, in
the judgment of the Board of Directors, it is proper so to do.
Section 3. Transfers of Shares.
(a) Transfers of shares of the Corporation shall be made on
the shares records of the Corporation only by the holder of record thereof, in
person or by his duly authorized attorney, upon surrender for cancellation of
the certificate or certificates representing such shares, with an assignment or
power of transfer endorsed thereon or delivered therewith, duly executed, with
such proof of the authenticity of the signature and of authority to transfer and
of payment of transfer taxes as the Corporation or its agents may require.
(b) The Corporation shall be entitled to treat the holder of
record of any share or shares as the absolute owner thereof for all purposes
and, accordingly, shall not be bound to recognize any legal, equitable or other
claim to, or interest in, such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise expressly provided by law.
BY-LAWS
11
ARTICLE V. SEAL
The seal of the Corporation shall be as follows:
ARTICLE VI. INDEMNIFICATION.
The Corporation shall indemnify any person, made a party to an
action by or in the right of the corporation to procure a judgment in its favor
by reason of the fact that he, his testator or intestate, is or was a director,
officer, or employee of the Corporation, against the reasonable expenses,
including attorneys' fees, actually and necessarily incurred by him in
connection with the defense of such action, or in connection with an appeal
therein, except in relation to matters as to which such person is adjudged to
have breached his duty to the Corporation. The Corporation shall indemnify any
person made a party to an action against judgments, fines, amounts paid in
settlement and reasonable expenses, including attorneys' fees actually and
necessarily incurred as a result of such action, if such person acted in good
faith, for a purpose which he reasonably believed to be in the best interests of
the Corporation, and, in criminal actions, had no reasonable cause to believe
that his conduct was unlawful. Such rights of indemnifiation shall not exclude
other rights to which such person may be entitled.
ARTICLE VII. DIVIDENDS OR OTHER DISTRIBUTIONS
The Corporation, by vote of the Board of Directors, may
declare and pay dividends or make other distributions in cash or its bonds or
its property on its outstanding shares to the extent as provided and permitted
by law, unless contrary to any restriction contained in the Certificate of
Incorporation.
ARTICLE VII. NEGOTIABLE INSTRUMENTS
All checks, notes or other negotiable instruments shall be signed
on behalf of this Corporation by such of the officers, agents and employees as
the Board of Directors may from time to time designate, except as otherwise
provided in the Certificate of Incorporation.
ARTICLE IX. FISCAL YEAR
The fiscal year of the Corporation shall be determined by
resolution of the Board Director.
BY-LAWS
12
ARTICLE X. AMENDMENTS
Section 1. By Shareholders.
All by-laws of the Corporation shall be subject to alteration
or repeal, and new by-laws may be made, by a majority vote of the shareholders
at the time entitled to vote in the election of directors.
Section 2. By Directors.
The Board of Directors shall have power to make, adopt, alter,
amend and repeal, from time to time, the by-laws of the Corporation; provided,
however, that the shareholders entitled to vote with respect thereto, as in this
Article X above-provided, may alter, amend or repeal by-laws made by the Board
of Directors; except that the Board of Directors shall have no power to change
the quorum for meetings of shareholders or of the Board of Directors, or to
change any provisions of the by-laws with respect to the removal of directors or
the filling of vacancies in the Board resulting from the removal by the
shareholders. If any by-law regulating an impending election of directors is
adopted, amended or repealed by the Board of Directors, there shall be set forth
in the notice of the next meeting of shareholders for the election of directors,
the by-law so adopted. amended or repealed, together with a concise statement of
the changes made therein.
ARTICLE XI. OFFICES
The offices of the Corporation shall be located in the City,
County and State designated in the Certificate of Incorporation. The Corporation
may also maintain offices at such other places within or without the United
States as the Board of Directors may, from time to time, determine.
The undersigned Incorporator certifies that he has adopted the
foregoing by-laws as the first by-laws of the Corporation, in accordance with
the requirements of the Business Corporation Law.
Dated:_____________________
------------------------------
Incorporator
BY-LAWS
13
SCHEDULE 3.04(a)
RIT Financial Statements
RIT AUTO LEASING GROUP, INC
REPORT ON REVIEW OF COMPARATIVE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
Xxxxxxxx X. Xxxxxxxx
Certified Public Accountant, P.C.
0000 Xxxx Xxxx Xxxxxx
Xxxxx 000
Xxxx Xxxx, Xxx Xxxx 00000
--------------------
Tel. 000-000-0000
Fax. 000-000-0000
Rit Auto Leasing Group Inc.
00 Xxxxxxx Xxxxxxxx
Xxxxxx Xxxx, XX 00000
To the Board of Directors:
I have reviewed the accompanying balance sheets and statements of income,
expenses and retained earnings and statements of cash flows for the years ended
December 31, 1997 and 1996 in accordance with standards established by the
American Institute of Certified Public Accountants.
A review of financial information consists principally of obtaining an
understanding of the system for preparation of financial information, applying
analytical review procedures of financial information, inquiries of persons
responsible for financial and accounting matters. It is substantially less in
scope than an examination in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, I do not express such an
opinion.
Based on my review, I am not aware of any material modifications that should be
made to the accompanying financial statements for them to be in conformity with
generally accepted accounting principles.
April 15, 0000
Xxxx Xxxx, Xxx Xxxx
RIT AUTO LEASING GROUP INC.
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31,
************************************************************************************************************************************
ASSETS
1997 1996
Cash in Bank $85,793 $ 46,384
Accounts Offlease Receivable (Net of an allowance of $244,185 & $18,500) 476,471 21,036
Investment in Direct Financing Leases (Note & B) 7,112,736 7,856,396
Vehicle Inventory (Note A) 569,558 743,426
Automobiles held under Operating Leases 634,161 618,512
Net of accumulated depreciation of $555,573 and $303,673
(Note A & B)
Office Furniture & Equipment & leasehold Improvements
Net of Accumulated Depreciation of $45,954 & $30,308 113,046 128,692
Other Assets - Due From Related Party (Note F) 0 0
Security Deposits 7,775 7,775
---------- ----------
Total Assets $8,999,540 $9,152,221
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Loans Payable (Note B) $7,458,486 $7,413,543
Accounts Payable 154,891 83,795
Taxes Payable 5,099 0
Deferred Taxes Payable (Note E) 134,000 445,000
---------- ----------
Total Liabilities 7,752,476 7,942,338
---------- ----------
STOCKHOLDERS' EQUITY
Common Stock (Note A) 150,000 150,000
Retained Earnings 1,097,064 1,059,883
---------- ----------
Total Stockholders' Equity 1,247,064 1,209,883
---------- ----------
Total Liabilities and Stockholders' Equity $8,999,540 $9,152,221
========== ==========
See Accountants' Review Letter & Notes to Financial Statements
RIT AUTO LEASING GROUP INC.
COMPARATIVE STATEMENT OF REVENUE, EXPENSES & RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31,
************************************************************************************************************************************
1997 1996
Leasing Income
Rental Income Operating Leases (Note A- B) $ 262,229 $ 287,760
Amortization of Unearned Lease Income (Note A) 604,198 1,224,562
Gain On Sale of Auto's (Note A-F) 680,832 655,948
---------- ----------
Total Leasing Income 1,547,259 2,168,270
Interest Expense 811,760 814,684
Amortization of Initial Direct Cost 23,798 24,391
Depreciation Expense Operating Leases (Note A- B) 284,538 251,900
---------- ----------
Total Directly Related Leasing Cost 1,120,096 1,090,975
---------- ----------
Gross Profit 427,163 1,077,295
---------- ----------
Operating Expenses:
Salaries & Wages 104,732 117,523
Rent & Related Taxes 75,550 47,648
Promotional & Entertainment 62,820 26,376
Medical and Insurance 40,003 14,764
Telephone & Utilities 19,933 22,307
Professional Fees 18,908 87,481
Depreciation - Furniture 15,646 17,646
Office & Administrative Expense 13,141 27,076
Payroll Taxes 10,425 12,460
Federal Express and Postage 5,055 3,935
Cleaning and Maintenance 1,355 3,853
---------- ----------
Total Operating Expenses 367,568 381,069
---------- ----------
Income From Operations Before Provision for Taxes 59,595 696,226
Provision for Taxes (Note E) 14,000 301,075
---------- ----------
Net Income 45,595 395,151
Retained Earnings - Beginning of Year 1,059,883 53,752
Dividends (8,414) 189,020
---------- ----------
Retained Earnings - End of Year $1,097,064 $1,059,883
========== ==========
See Accountant's Review Letter & Notes to Financial Statements
RIT AUTO LEASING GROUP, INC.
COMPARATIVE STATEMENT OF CASH FLOW
FOR THE YEARS ENDED DECEMBER 31,
********************************************************************************
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 45,595 $ 395,151
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation and Amortization 300,184 269,546
(Increase) Decrease in:
Accounts Receivable (455,435) 235,394
Inventory (96,132) 170,948
Due from Related Party 0 54,708
Security Deposits 0 (2,000)
Increase (Decrease) in:
Taxes Payable (305,903) 297,563
Accounts Payable 71,096 30,809
Due to Related Party 0 (18,500)
----------- -----------
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES (440,595) 1,433,619
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in Direct Financing Leases 743,660 1,188,200
Investment in Operating Leases (300,187) (201,824)
Purchases of Property and Equipment 0 0
Dividends Paid (8,414) (189,020)
----------- -----------
NET CASH PROVIDED BY (USED) BY INVESTING
ACTIVITIES 435,059 797,356
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
New borrowings 1,783,750 2,898,870
Debt--reduction (1,738,805) (5,126,153)
----------- -----------
NET CASH PROVIDED BY (USED) BY
FINANCING ACTIVITIES 44,945 (2,227,283)
----------- -----------
NET INCREASE (DECREASE) IN CASH 39,409 3,692
CASH AT BEGINNING OF YEAR 46,384 42,692
----------- -----------
CASH AT END OF YEAR $85,793 $46,384
=========== ===========
See Accountant's Review Report and Notes to Financial Statements
RIT AUTO LEASING GROUP, INC
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
********************************************************************************
NOTE A Summary of Significant Accounting Policies
The company was incorporated under the laws of the State
of New York with an authorized capital of 200 shares
common stock, no par value. The company is engaged in
the arranging of financing of automobiles on a long term
basis.
1) Cash and Cash Equivalents
For purposes of the statement of cash flows, the company
considers cash and cash equivalents to include cash on
hand, amount due from banks and other high liquid debt
instruments purchased with a maturity of three months or
less.
2) Revenue Recognition and Lease Classifications
The company is engaged in long-term leasing of vehicles
with terms generally ranging from twelve to sixty
months. Substantially all vehicles are financed on a
lease by lease basis through recourse notes payable.
Leases are either classified as direct financing leases
or as operating leases.
a) Direct Financing Leases
Includes all leases containing open-end lessee
purchase options and/or bargain purchase options.
Open-end lessee purchase options require each lessee
upon termination to either purchase the related
vehicle for the stated option price or, if returned,
to be responsible for any deficiency between the
stated option price and the eventual amount realized
by the company upon the vehicles disposition.
RIT AUTO LEASING GROUP, INC
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
********************************************************************************
NOTE A Summary of Accounting Policies (continued)
Direct financing leases also include certain leases
containing closed-end Lessee options whereby the company
expects the lessee to purchase (although not a
requirement) the vehicle for the stated option price.
The majority of these leases are situations where large
capital cost reductions were made and/or option prices
are well below the anticipated value of the related
vehicle.
The investment in direct financing leases includes all
future lease payments and the lessee purchase options of
the respective vehicles, net of unearned income.
Revenue under the direct financing leases is accounted
for by recognizing the excess of aggregate rentals
receivable and lessee purchase options over the cost of
the leased vehicles during the term of the lease in
decreasing amounts related to the declining balance of
the unrecovered cost.
b) Operating Leases
Operating leases consists of vehicles which do not meet
the direct financing lease criteria. The majority of
these leases contain closed-end lessee purchase options,
or closed end leases with no purchase option.
Vehicles which are classified as operating leases are
stated at cost less accumulated depreciation and
unamortized capital cost reduction payment.
Depreciation is computed on a straight-line basis over
the terms of the leases to estimated residual values at
expiration of the lease periods.
Rentals from operating leases are recognized as revenue
over the life of the lease on the straight-line basis
and expenses are charged against such revenue as
incurred.
Initial lessee capital cost reduction payments are
amortized on a straight line basis consistent with
depreciation periods.
Initial direct costs are included as a component of the
equipment held and are amortized on a straight-line
basis over the lives of the related leases.
RIT AUTO LEASING GROUP, INC.
NOTES TO COMPARATIVE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
********************************************************************************
NOTE A Summary of Accounting Policies (continued)
c) Vehicle Inventory
Represents vehicles returned upon lease termination's
and held for sale or re-lease. Amounts are stated at the
lower of net book value or market. It is management's
estimate that the fair market value of their offlease
and paid off vehicles is $698,000.00. Subsequent to the
issuance of this report, the Company has liquidated
$190,950 of this inventory.
d) Property and Equipment
Depreciation of property and equipment is computed on
the straight-line method over the estimated useful lives
of the related assets.
e) Net Leasing Income
Income from leasing activities includes revenues from
direct financing leases, rentals from operating leases
and proceeds from sales of vehicles. Cost and expenses
primarily represent the net book value of vehicles sold.
f) Gain on Sale of Autos'
Represents the net gain derived from the sale of auto's
classified as operating leases.
1997 1996
Gross Sales Proceeds $860,382 $826,916
Net Depreciated Basis $179,550 $170,948
-------- --------
Gain on Sale $680,832 $655,968
-------- --------
NOTE B Investment in Direct Financing Leases
The investment in direct financing leases consists of
the following.
1997 1996
Future Lease payments $6,213,946 $7,406,264
Lease purchase Options 2,583,711 2,338,820
---------- ----------
$8,797,657 $9,745,084
Unearned income (net of
unamortized initial direct
costs) 1,708,359 1,888,688
---------- ----------
$7,112,736 $7,856,396
========== ==========
In the opinion of Management, no allowance for
uncollectibles was deemed necessary.
Future Lease payments and lessee purchase options due
are summarized as follows:
RIT AUTO LEASING GROUP INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
********************************************************************************
NOTE B Investment In Direct Financing Leases (continued)
Year ending December 31 1997 1996
-----------------------
1996 $ -0- $2,241,639
1997 3,325,912 2,319,083
1998 2,089,617 2,093,112
1999 1,297,621 1,297,863
2000 892,001 1,195,040
2001 619,221 598,347
2002 573,285 -0-
---------- ----------
$8,797,657 $9,745,084
========== ==========
NOTE C Operating Leases
Future minimum rental payments due, (excluding
unguaranteed residual values of approximately $244,905
and $378,125) are summarized as follows:
Year ending December 31 1997 1996
-----------------------
1997 $ -0- $231,435
1998 239,070 185,148
1999 191,111 111,089
2000 114,753 92,574
2001 95,114 46,287
2002 24,237 -0-
-------- --------
$664,285 $666,533
======== ========
NOTE D Loans Payable
Represents borrowings for leased vehicles under several
separate credit facilities which are materially identical
in their terms and conditions. The obligations are
collateralized by the leases and first lien on each
vehicle. The shareholders have also guaranteed the loans.
The obligations are payable on a monthly basis. Interest
range from 8% to 14% per annum.
RIT AUTO LEASING GROUP INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
********************************************************************************
NOTE E Income Taxes
Income taxes are provided for the tax effects of the
transactions reported on the financial statements and consists
of taxes currently due, plus deferred taxes. Deferred taxes
are recorded to provide for differences between the basis of
assets and liabilities for financial and income tax purposes.
The differences relate to, primarily, to revenue recognition
and depreciation expense for assets for leasing transactions.
The deferred taxes payable represent the future tax
consequences of those differences. These differences will be
taxable when the liability is settled.
NOTE F Related Party Transactions
The Company leases space from a related party. The minimum
annual rental payments are $72,000. per annum, plus
escalation's. In 1997 and 1996 rent expenses to the related
party was $75,550 and $47,648 respectively.
SCHEDULE 3.04(b)
RIT Income Tax Returns
SCHEDULE 3.08
RIT Litigation
