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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): December 2, 1997
IMN FINANCIAL CORP.
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(Exact name of registrant as specified in its charter)
Delaware 2-72849 11-2558192
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification
Number)
520 Broad Hollow Road, Melville, New York 11746
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (516) 844-9805
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Item 2. Acquisition or Disposition of Assets
(a)(i) On December 2, 1997, the Registrant and American National
Mortgage Corp. ("ANM") executed and delivered a stock purchase agreement (the
"Agreement") pursuant to which the registrant agreed to acquire from ANM 100%
of the issued and outstanding shares of capital stock.
(ii) The amount and source of consideration used by the Registrant was:
1)at the closing, one million five hundred thousand dollars ($1,500,000)
worth of the Registrant's common stock, valued at three dollars twenty five
cents ($3.25), subject to Rule 144, in the name of Kenneth Barash (the
Principal of ANM); 2) on January 2, 1998, a check payable to the Principal in
the amount of one hundred thousand dollars ($100,000); 3) eight (8) monthly
checks in the amount of sixteen thousand two hundred fifty dollars ($16,250)
each, starting one (1) month after the Closing Date, and continue until eight
(8) months after the Closing Date; 4) for a period of eighteen (18) months
after the Closing Date, up to one million five hundred thousand dollars worth
of the Registrant's common stock, (valued at three dollars twenty five cents
($3.25), based upon a goal of average cumulative quarterly mortgage closings
of thirty million ($30,000,000) per quarter for operations under the
Principal's control.
(iii) The principle followed in determining the amount of such
consideration was based upon negotiation of the parties.
(b) The assets acquired by the Registrant were 100% of the issued and
outstanding capital stock of ANM. The business of ANM is mortgage banking.
The Registrant expects that ANM will remain a subsidiary of the registrant
and that GSM's business will continue in a manner in which it was conducted
prior to the acquisition.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial statements of the businesses acquired
As of the date of filing of this current report on Form 8-K, it is
impracticable for the Registrant to provide the financial statements
required by this Item 7(a). In accordance with Item 7(a)(4) of Form
8-K, such financial statements shall be filed by amendment to this
Form 8-K no later than 60 days after December 17, 1997.
(b) Pro forma financial information
As of the date of filing of this current report on Form 8-K, it is
impracticable for the Registrant to provide the financial statements
required by this Item 7(a). In accordance with Item 7(a)(4) of Form
8-K, such financial statements shall be filed by amendment to this
Form 8-K no later than 60 days after December 17, 1997.
(c) Exhibits
Stock Purchase agreement between the Registrant and ANM dated
December 2, 1997.
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and dated as of
December 2 , 1997, between IMN Financial Corp., a Delaware corporation,
whose principal office is located at 520 Broadhollow Road, Melville, New York
11747 ("IMNF"), Island Mortgage Network Inc., a New York Corporation, whose
principal office is located at 520 Broadhollow Road, Melville, New York 11747
("Island"), American National Mortgage Corp., a New Jersey corporation, whose
principal office is located at 195 Route 46 West, Suite 11, Totowa, New
Jersey 07512 ("ANM") and Kenneth Barash of 195 Route 46 West, Suite 11,
Totowa, New Jersey 07512 ("Principal").
W I T N E S S E T H:
WHEREAS, Island is a wholly-owned subsidiary of IMNF and the parties
hereto desire that ANM shall be merged into Island and shall operate as a
wholly-owned subsidiary of Island after the Closing of this Agreement;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and covenants herein contained, and other good and valuable
consideration, the receipt of which is hereby acknowledged, IMNF, Island, ANM
and the Principal hereby agree as follows:
1. Purchase and Sale of Stock / Employment of Principal.
1.1 Purchase and Sale. On the Closing Date, as defined herein,
IMNF shall purchase from ANM and Principal, and they will sell and transfer
to IMNF, all the issued and outstanding shares of stock of ANM of every kind
and description (the "Stock").
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1.2 Delivery at Closing. At the Closing, as defined herein, ANM
and Principal will deliver certificate(s) for the Stock duly endorsed so as
to make IMNF the sole owner of the Stock, free and clear of all claims,
liens, equities, encumbrances and restrictions of any kind.
1.3 Purchase Consideration and Payment Terms. IMNF will deliver to
Principal: (i) At the Closing, one million five hundred thousand dollars
($1,500,000) worth of IMNF common stock, valued at three dollars twenty five
cents ($3.25), subject to Rule 144, in the name of Principal; (ii) on January
2, 1998, a check payable to Principal in the amount of one hundred thousand
dollars ($100,000); (iii) eight (8) monthly checks in the amount of sixteen
thousand two hundred fifty dollars ($16,250) each, starting one (1) month
after the Closing Date, and continuing until eight (8) months after the
Closing Date; (iv) for a period of eighteen (18) months after the Closing
Date, up to one million five hundred thousand dollars worth of IMNF common
stock, (valued at three dollars twenty five cents ($3.25), based upon a goal
of average cumulative quarterly mortgage closings of thirty million dollars
($30,000,000) per quarter for operations under his control. This goal is
cumulative, except at the end of any period, the amount paid will not exceed
the pro-rata portion of the quarterly term. If mortgage closings do not
achieve the average cumulative quarterly goal, IMNF shall grant Principal a
pro-rated number of IMNF shares at the end of each quarter during the
eighteen (18) month period.
1.4 Employment of Principal. IMNF shall engage and Principal shall
agree to perform as a Senior Vice President of Island Mortgage Network Inc.
for an initial term of three (3) years. Principal's compensation shall be
one hundred fifty thousand dollars ($150,000) per year, plus five (5) basis
points (.05%) of all loans closed at former ANM locations once closings reach
ten million dollars ($10,000,000) per month and for each month
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closings remain at least at that cumulative level, plus normal reimbursement
for expenses and participation in all other employee benefit packages.
2. Closing: Effective Date of Merger.
2.1 Closing. On the closing date, the date upon which all
transactions constituting conditions precedent to the sale shall have been
consummated ("Closing Date"), Closing shall be held at the offices of IMNF,
520 Broadhollow Road, Melville, New York 11747, on December 2, 1997, at 3:00
p.m.
3. Representations and Warranties by ANM and Principals. ANM and
Principal each represent and warrant to IMNF as follows:
3.1 Organization, Powers, Qualification and Authority. ANM is a
corporation duly organized, validly existing and in good standing under the
laws of the State of New Jersey and in all other jurisdictions where the
nature of its business conducted therein requires such qualification; has all
requisite corporate power and authority to own its properties and assets and
carry on its business as now conducted; and has all requisite power and
authority to enter into, perform and carry out this Agreement.
3.2 Capital Stock. ANM authorized capital stock consists of one
class of voting common stock, consisting of two thousand five hundred (2,500)
shares, each share having no par value. Of the authorized capital stock, all
such shares are validly issued and outstanding, fully paid and nonassessable
at the date hereof, and all such shares are owned by Principal. There are no
options, warrants or rights to acquire any capital stock of ANM or securities
convertible into or exchangeable for, or which otherwise confer on the holder
or holders thereof any right (whether or not upon the happening of any
contingency or after any lapse of time, and whether or not upon the payment
or delivery of any consideration) to acquire, any capital stock of ANM, nor
is ANM committed to issue any such option, warrant, right or
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security.
3.3 Dissolution; Forfeiture. No action at law or suit in equity
and no other investigation or proceeding whatsoever is now pending or, to
their knowledge, threatened: (i) to liquidate, dissolve or disincorporate
ANM, (ii) to declare any of the corporate rights, powers, franchises or
privileges of ANM to be null and void or otherwise than in full force and
effect; (iii) to declare that ANM or any of its directors, officers, agents
or employees have exceeded or violated any of their corporate rights, powers,
franchises or privileges; or (iv) to obtain any decree, order, judgment or
other judicial determination or administrative or other ruling that will or
may impede or detract from any of the corporate rights, powers, franchises or
privileges now vested in or claimed by ANM.
3.4 Financial Statements.
(a) There have heretofore been furnished to IMNF copies of the
unaudited financial statements of ANM as at December 31, 1996, and the
related statements of income and retained earnings for the fiscal years then
ended, all prepared by Caruso and Company, Certified Public Accountants.
Such financial statements are complete and correct and have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods involved and fairly present the
financial position of ANM as at the dates indicated and the results of the
operations of ANM for the periods indicated.
(b) Prior to the Closing Date, ANM will have delivered to IMNF
a pro forma balance sheet of ANM as at September 30, 1997, and a pro forma
statement of income and retained earnings for the period then ended of ANM,
signed and certified by Principal (hereinafter collectively referred to as
the "December 1996 Balance Sheet"). The financial statements referred to
above shall be prepared in conformity with generally accepted accounting
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principles applied on a basis consistent with the financial statements
referred to in Subsection (a) above and will fairly present the financial
position of ANM as at September 30, 1997, and the results of operations of
ANM for the period then ended.
(c) Within thirty (30) days of Closing, ANM's certified public
accountants will provide unaudited financials as of November 30, 1997 to
IMNF.
3.5 Dividends; Stock Acquisitions; Stock Issues. Since the
September 30, 1997 ANM unaudited financial statement, ANM has not: (i)
declared or paid any dividends (either in cash, property or its stock of any
class) upon, nor made or become committed to make any distribution with
respect to, nor purchased, redeemed or otherwise beneficially acquired, any
of its outstanding capital stock of any class, nor become committed so to do;
nor (ii) split up, combined or reclassified any of its outstanding stock of
any class, nor become committed to issue any additional capital stock of any
class (whether or not from treasury stock, heretofore authorized but unissued
stock or newly acquired stock) or any options, rights or warrants to acquire,
or securities convertible into or exchangeable for or which otherwise confer
upon the holder or holders thereof any right to acquire, any shares of
capital stock of any class of ANM; and ANM will not take any such actions
from the date hereof to the Closing Date.
3.6 Properties. ANM has and will have on the Closing Date all
requisite corporate power and authority to own and hold, and (except for
assets disposed of in the ordinary course of business) will have on the
Closing Date, good and marketable indefeasible title to all of the properties
and assets reflected in the most recent of the balance sheets referred to in
Paragraph 3.4 above, subject to no mortgage, pledge, lien, encumbrance,
charge or security interest, except only: (i) liens in respect of pledges or
deposits under workers' compensation laws or similar legislation; (ii) liens
for property taxes, assessments or like governmental charges not yet
delinquent and payable without penalty; (iii) defects and
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exceptions, none of which (individually or in the aggregate) materially
interfere with the use by ANM of such properties for the purposes for which
they are held; and (iv) the liens described in Schedule 3.6A, attached
hereto, which schedule describes each such lien, the transaction or
circumstances out of which it arises, the amount of the obligation it
secures, and identifies the property affected thereby, and its owner, and is
complete and correct. Schedule 3.6A will also describe all notes payable of
ANM as of December 31, 1996. Attached hereto is Schedule 3.6B, which is
complete and correct, listing all real property owned by ANM. All of the
properties and assets of ANM are in existence, in the possession of ANM and
in good working order and repair, except for minor defects which do not
materially interfere with their use, or except as described in Schedule 3.6C,
attached hereto.
3.7 Changes in Condition. Since September 30, 1997, there has been
no change in the assets, liabilities, condition (financial or otherwise) or
business of ANM from that set forth in or reflected in its financial
statements as at said date, except changes in the ordinary course of
business, none of which (individually or in aggregate) have been materially
adverse. Since September 30, 1997, ANM has not been adversely affected in
any material manner as a result of any fire, explosion, accident, flood,
earthquake, seismic or tidal wave, windstorm, strike, lockout, labor dispute,
riot, civil commotion or disturbance, sabotage, confiscation, condemnation or
purchase of any property by governmental authority, activities of armed
forces, or acts of God or the public enemy, except as shown on Schedule 3.7,
attached hereto.
3.8 Tax Returns and Payments. The balance sheets of ANM referred
to in Paragraph 3.4 hereof adequately provide in the accruals for taxes set
forth therein (on the basis of the rates applicable for the years in
question) for the payment of all federal, state, local and foreign income,
profits, franchise, sales, use, occupation, property, excise or other taxes,
if any,
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for the periods ended on the dates thereof and for the years prior thereto.
All tax returns and reports of ANM required by law (including, without
limiting the generality of the foregoing, all income, unemployment
compensation, social security, sales, compensating use, excise, privilege and
franchise tax laws of the United States or any state, territory or municipal
or political subdivision thereof) to be filed on or before the Closing Date
have been, or will be, duly and timely filed, other than those tax returns
and reports subject to a valid extension of time as of such date. All taxes,
assessments, fees, interest, penalties and other governmental charges or
impositions which are, or should be, shown on said returns and reports,
reflected on billings by governmental agencies, or required to be deposited
on or before the Closing Date, have been, or will be, duly and timely paid
(other than those not yet due and payable, those presently payable without
penalty, and those currently being contested in good faith).
ANM has not received any notice of deficiency assessment or proposed
deficiency assessment of any United States, state, municipal or other tax or
penalty and has no knowledge of any basis for any additional deficiency
assessment of any such tax or penalty, nor has it knowingly waived any law or
regulation fixing, or consented to the extension of, any period of time for
the assessment of any tax or other governmental imposition, or become
committed so to do, except as shown on Schedule 3.8, attached hereto.
3.9 Compliance with Other Instruments. ANM is not in violation of
or in default with respect to any term or provision of its: (i) Articles of
Incorporation or Bylaws; (ii) material indentures, contracts, agreements or
instruments to which it may by bound; or (iii) any judgment, order, writ,
injunction or decree of any court or of any federal, state, territorial,
municipal or other commission, board or other administrative or governmental
agency or authority; and it is not in violation of any federal, state,
territorial, municipal or other statute, rule or regulation applicable to it
or by which it may be bound in any case in any manner so as
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at present or at any future time to affect it adversely in any material
respect.
3.10 Undisclosed Liabilities. At the date of the most recent
balance sheet referred to in Paragraph 3.4 herein, there were no material
liabilities of ANM (actual, contingent or accrued) not shown or reflected in
such balance sheet or the notes thereto, except as may arise for individual
mortgage repurchases under the agreements referred to in 3.32A and 3.32B.
3.11 Books of Account. The books of account of ANM are complete and
correct in all material respects, and all moneys due or to become due from or
to or owing by, and all liabilities (actual, contingent or accrued) of, ANM
by reason of any transaction, matter, cause or thing whatsoever which, in
accordance with generally accepted accounting practices or principles, should
be entered therein have been duly, correctly and completely entered therein.
3.12 Litigation, etc. ANM is not a party to or affected by any
pending, and has no notice or knowledge of any threatened action, suit,
proceeding or investigation (at law or in equity or otherwise) in, before or
by any court or any governmental board, commission, agency, department or
office in which an adverse determination would have any material adverse
effect on the business, assets or financial condition of ANM, except as shown
on Schedule 3.12, attached hereto.
3.13 Accounts and Notes Receivable. Except as specified in Schedule
3.13, attached hereto, all accounts and notes receivable of ANM are and on
the Closing Date will be valid, genuine and subsisting; arise and/or will
arise out of bona fide sales and/ or performances of services; and are
subject and will be subject to no known defenses, set-offs or counterclaims.
ANM will deliver to IMNF at Closing, Schedule 3.13, showing the age of
accounts and notes receivable as at September 30, 1997, which will also
specify the amounts, if any, of such
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accounts and notes which ANM deems to be uncollectible.
3.14 Others' Defaults. No other party with whom ANM has any
material contractual arrangement is not in compliance with, or is in default
(without regard to any requirement of notice or grade period or both) in the
observance or performance of, any term, condition or provision of any such
contractual arrangement, except to the extent that ANM's net worth has
decreased the below net worth requirements of any warehouse lines in Schedule
3.32A.
3.15 Collective Bargaining Agreements. ANM is not a party to, or
bound by, any collective bargaining agreement or other labor agreement with
any bargaining agent (exclusive or otherwise) with respect to its employees.
3.16 Overtime, Back-Wage, Vacation and Discrimination Claims.
Except as described in Schedule 3.16, which will be delivered by ANM to IMNF
on the Closing Date, no present or former employee of ANM has any claim
against ANM (whether under federal or state law, under any employment
agreement or otherwise) on account of or for: (i) overtime pay, other than
overtime pay for work done in the current payroll period; (ii) wages or
salary for any period other than the current payroll period; (iii) vacation
time off or pay in lieu of vacation time off, other than (a) accumulated
vacation pay as at the Closing Date as shown in the schedule referred to
above, and (b) vacation time (or pay in lieu thereof) earned in or in respect
of the current fiscal year; or (iv) any violation of any statute, ordinance
or regulation relating to minimum wages or maximum hours of work. No
employee has taken or requested leave pursuant to the Family and Medical
Leave Act of 1994, or any State counterpart thereof. No person or party
(including, but not limited to, governmental agencies of any kind) has made
any claim against, or asserted any basis for any action or proceeding
against, ANM under or arising out of any statute, ordinance or regulation
relating to discrimination in employment or
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employment practices which would, if upheld, result in any material monetary
loss to ANM, except a governmental claim on Schedule 3.16. ANM's employment
manual (if any), vacation and sick policies are also attached as part of
Schedule 3.16.
3.17 Contracts for Personal Services. ANM is not a party to or
bound by any contract, agreement or undertaking with any person whatsoever
for personal services to be rendered by any person for ANM, except as set
forth in Schedule 3.17A, attached hereto. Attached hereto is Schedule 3.17B,
showing the names, positions and current annual rates of compensation of all
employees of ANM, including commission arrangements. ANM will deliver all
personnel files for these employees on IMNF's request.
3.18 Profit Sharing Arrangements; Bonuses. ANM is not and will not
be, at the Closing Date, a party to or bound by any contract, agreement or
undertaking by the terms of which any person, firm, corporation, business
trust or other entity is or may be entitled (for any reason or in any
capacity other than as a shareholder or employee of ANM) to any share in the
gross receipts, earnings or profits of ANM, except for any leases,
concessions, franchises or other agreements providing for payments by ANM
based on sales or profits, true copies of all such leases, concessions,
franchises or other agreements have been delivered by ANM to IMNF, and except
as set forth on Schedule 3.18, attached hereto.
3.19 Pensions and Other Deferred Compensation. ANM will not as of
the Closing Date have a pension, profit sharing or retirement income plan,
contract or arrangement in force, except as disclosed in Schedule 3.19,
attached hereto, copies of which plans have heretofore been delivered to IMNF.
3.20 Benefit Claims. No person or party whatsoever now has or will
have on the Closing Date any claim known to ANM under which ANM has any
liability under any health, sickness, disability, medical, surgical, hospital
or similar benefit plan or arrangement
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(whether or not legally binding) maintained by ANM, or to or by which ANM is
a party or is bound, or under any workers' compensation or similar law, which
is not fully covered by insurance maintained with reputable, financially
responsible insurers. ANM herewith delivers to IMNF Schedule 3.20, listing
all insurance contracts relating to all such benefit plans, arrangements and
copies of such benefit plans themselves.
3.21 Interests in Property, Etc. No other party owns, holds or
claims any interest in any real or personal property or other assets
(tangible or intangible) used by ANM in its businesses, except as disclosed
in Paragraphs 3.6(a), except as disclosed or on Schedule 3.12.
3.22 Leases. ANM is not, either as lessee or lessor, a party to or
bound by any lease or any property or assets having a term of (or subject to
renewal or extension by any party other than ANM for a total term, including
the initial term and any such renewal or extended term, aggregating) more
than one year, except only for the leases described on Schedule 3.22,
attached hereto, true copies of which have been heretofore delivered to IMNF.
3.23 Contracts for Purchase or Sale. ANM is not a party to or bound
by any contract, agreement or undertaking with any person or party whatsoever
(other than cost and insurance contracts entered into in the ordinary course
of business) for the purchase of any property or assets of any nature
whatsoever which requires that payment for such property or assets shall be
made regardless of the Closing Date of this Agreement. ANM is not a party
to, or bound by any other contract, agreement or undertaking for, the sale of
any property or assets of any nature whatsoever, except only such as have
been made in the ordinary course of business and that expire by their terms
or are otherwise cancelable by ANM (without any right of renewal or extension
in any party other than ANM) no later than 30 days after the Closing Date.
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3.24 Insurance Contracts; Banking Relationships. ANM hereby
delivers to IMNF Schedule 3.24A, showing all contracts of insurance and
indemnity (not shown in any other schedule
referred to in this Agreement) in force at the date hereof. ANM also hereby
delivers to IMNF Schedule 3.24B, showing the names and locations of all banks
in which ANM has accounts and the names of all persons authorized to draw on
such accounts.
3.25 Brokerage; Indemnity. Neither ANM or Principal have retained
any broker or finder in connection with the transactions contemplated by this
Agreement, and ANM and Principal, jointly and severally, will indemnify,
defend and hold harmless IMNF against all the claims for brokers' or finders'
fees made or asserted by any party claiming to have been employed by either
of them, and all costs and expenses (including the reasonable fees of
counsel) of investigating and defending such claims.
3.26 Contracts, Leases, etc. As of the date hereof, ANM is not a
party to any lease, contract, undertaking or other commitment, written or
oral, except:
(a) Those leases, contracts, undertakings or other commitments
listed in the Schedules attached hereto; and
(b) Those leases, contracts, undertakings and commitments not
materially affecting the business of ANM. The original or a full, true and
correct copy of each item listed in the aforementioned schedules (together
with supplements and amendments thereto) or a summary of the material
provisions, in the event a formal document is not in existence, has been
delivered to or examined by IMNF. ANM is not in default under any lease,
contract, undertaking or other commitment materially affecting its business.
To the extent that any lease, contract, undertaking or other commitment set
forth in the aforementioned schedules
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requires the consent of any other person or party to its assignment, ANM
agrees to use its best efforts to procure such consent and to deliver the
same to IMNF on or before the Closing Date.
3.27 Trademarks, Licenses, Etc. ANM owns or holds valid,
subsisting licenses for the use of all trademarks, trademark registrations,
trade names and copyrights necessary for the conduct of its business as now
conducted, with no known conflict with or infringement upon any valid
trademarks, trade names or copyrights or others. Attached hereto as Schedule
3.27 is a complete and correct listing of all such material trademarks,
trademark registrations, trade names and copyrights. ANM holds or has
obtained all governmental permits, licenses, consents, approvals and waivers
necessary for the lawful conduct of its business as now conducted.
3.28 No Conflict with Other Agreements. Neither the execution and
delivery of this Agreement nor compliance with its terms and provisions will
conflict with or result in a breach of any agreement or instrument to which
ANM is a party or by which it may be bound or constitute a default thereunder
or result in the creation or imposition of any lien, charge, encumbrance or
restriction of any nature whatsoever upon, or give to anyone any interest or
rights, including rights of termination or cancellation, in or with respect
to, any of the properties, assets, contracts, or business of ANM.
3.29 No Restrictions. ANM is not subject to any charter, bylaw,
judgment or other restriction which would prevent the consummation of the
transactions contemplated by this Agreement. The board of directors of ANM
and its stockholders have duly approved this agreement and the transactions
contemplated herein as required under the laws of the State of New Jersey and
have authorized the execution and delivery of this Agreement by ANM.
3.30 Disclosure. Neither the financial statements, any schedule
referred to herein nor this Agreement contains any untrue statements of a
material fact or knowingly omits
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to state a material fact (other than facts generally known to the business
community) necessary in order to make the statements contained therein or
herein not misleading. To the best knowledge of ANM, there is no such fact
which materially adversely affects or in the future may (so far as ANM can
now reasonably foresee) materially adversely affect the business or prospects
or condition (financial or otherwise) of ANM or any of its properties or
assets which has not been set forth herein in Schedule 3.30, delivered by ANM
to IMNF.
3.31 Licenses, etc. ANM owns or holds valid, subsisting licenses
necessary for the conduct of its business as now conducted, including valid
Mortgage Banking licenses. Attached hereto as Schedule 3.31 is a complete and
correct listing of all such licences, governmental permits, consents and
approvals. ANM holds or has obtained all governmental permits, licenses,
consents and approvals necessary for the lawful conduct of its business.
3.32A Warehouse Lines. ANM has in place warehouse lines of
credit in the total amount of approximately twelve million dollars
($12,000,000) together with an uncapped credit line, in force at the date
hereof. ANM hereby delivers to IMNF Schedule 3.32A showing the names,
locations and amounts of all such warehouse lines of credit.
3.32B Investors. Schedule 3.32B lists the entities to which
ANM sells mortgages, their addresses and contact names, as well as providing
a percentage breakdown of business and type of business for each, and a total
in volume. Also attached are agreements with such entities.
3.33 Mortgage Originations in Process. ANM has in place existing
mortgage originations in process in the total amount of approximately thirty
two million dollars ($32,000,000) at the date hereof. ANM hereby delivers to
IMNF Schedule 3.33 setting forth the names, locations and amounts of all such
mortgage originations in process.
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4. Representations and warranties by IMNF. IMNF represents and
warrants to Principal as follows:
4.1 Organization and Standing. IMNF is a corporation duly
organized and existing and in good standing under the laws of the State of
Delaware and has full corporate power to carry out this Agreement.
4.2 Authority of IMNF. The execution and performance of this
Agreement by IMNF has been duly authorized and approved by its board of
directors. Neither the execution nor the performance by IMNF of this
Agreement will result in the breach of any term or provision of any other
agreement to which IMNF is a party.
4.3 Brokerage; Indemnity. IMNF has not retained any broker or
finder in connection with the transactions contemplated by this Agreement,
and IMNF will indemnify, defend and hold harmless ANM and Principal against
all claims for brokers' or finders' fees made or asserted by any party
claiming to have been employed by IMNF, and all costs and expenses (including
the reasonable fees of counsel) of investigating and defending such claims.
4.4 Pending Investigation. There are no pending investigations
by, or administrative proceedings before the Securities and Exchange
Commission, any state banking or mortgage regulatory authority.
4.5 Island subsidiary of IMNF. Island is a New York corporation
licensed as a Mortgage lender in New York, New Jersey and other states and is
a wholly owned subsidiary of IMNF.
5. Certain covenants by Principal and ANM. Principal and ANM covenant
and agree with IMNF that:
5.1 Investments, Loans and Advances. From and after the date of
this
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Agreement, to and including the Closing Date, ANM will not make any
investment (whether by acquisition of stock, capital contribution or
otherwise) in, or loan or advance to, any person, firm, corporation, business
trust or other party or entity whatsoever, except ANM may invest temporarily
surplus funds in readily marketable obligations (fully guaranteed as to
principal and interest) of, the United States of America, and prime
commercial paper or certificates of deposit having a maturity of less than
one year from the date of such investment.
5.2 Wage, Salary or Benefit Changes. From and after the date of
this Agreement, to and including the Closing Date, ANM will not: (i) grant
any general increase in the rates of pay of any of its hourly paid employees,
except only general increases consistent with past practice; (ii) grant any
increase in the salaries or other compensation of any of its officers or
other salaried employees; (iii) enter into any employment agreement with any
person whatsoever, except those (on terms and conditions and for compensation
consistent with past practice) terminable by the employer without further
liability (except for accrued vacation and severance pay consistent with past
practice) on not more than one month's notice; or (iv) grant any increase in
employee benefits of any character or grant any new benefits to any of its
officers or employees.
5.3 Advice of Claims and Changes. ANM will promptly advise IMNF
in writing of the commencement or threat of any claim, litigation or
proceeding against or affecting ANM of which it has knowledge, not covered by
insurance, when the amount claimed (taken alone or when added to other claims
of which such advice has not theretofore been given) exceeds $2,000. ANM
shall also give IMNF prompt written notice of any change in any of the
information contained in the representation and warranties made in Article 3
hereof or in the schedules hereto and the financial statements described
herein which occurs prior to the
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Closing, and of any fact, occurrence, information, action, failure to act or
other event which, had it existed on the date of the schedules, would have
been required to be disclosed in one of the schedules.
5.4 Consents. ANM shall promptly apply for or otherwise seek, and
use its best efforts to obtain, all consents and approvals of all parties
whose consent or approval is necessary for the valid effective consummation
and completion of the transactions contemplated hereby or is otherwise
necessary in order that ANM may validly, lawfully and effectively perform and
carry out its obligations hereunder, except for banking and licensing
approvals which IMNF will seek and ANM will cooperate with, as requested by
IMNF.
5.5 Resignations of all Directors and Officers. ANM shall deliver
to IMNF at the Closing written resignations signed by all Directors and
Officers of ANM dated as of the Closing Date.
5.6 Transfer of Authority to Access and Draw upon Bank Accounts.
ANM shall deliver to IMNF at the Closing written transfer of authority to
access and draw upon each and every bank account of every nature and kind, as
set forth in Schedule 3.24B, maintained by ANM into the name of IMNF dated as
of the Closing Date.
6. Conditions to IMNF's Obligations. The obligations of IMNF to
complete and consummate this Agreement shall be subject to compliance by ANM
and, if applicable, Principal with all of the agreements herein contained and
to the satisfaction of the following conditions precedent:
6.1 Representations and Warranties True. The representations and
warranties contained in Paragraph 3 hereof shall be true and correct in all
material respects as of the Closing Date with the same force and effect as
though made on and as of the Closing
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Date, and IMNF shall have received on the Closing Date a certificate from ANM
dated the Closing Date signed by the president and secretary of ANM to that
effects.
6.2 Opinion of Counsel. At the Closing Date, ANM shall deliver or
cause to be delivered to IMNF an opinion (in form and content satisfactory to
IMNF), dated the Closing Date, counsel for ANM, to the following effect:
(a) That ANM is a corporation duly organized and validly
existing and in good standing under the laws of the State of New Jersey,
entitled to own or lease its properties and to carry on its business as and
in the places where such properties are now owned, or leased, or such
businesses are now conducted, and, insofar as is known to such counsel, has
fully complied with all federal, state and local laws with respect to its
operation and the conduct of its business.
(b) That ANM has full power and authority to make, execute,
deliver and perform this Agreement in accordance with its terms; this
Agreement has been duly authorized and approved by proper corporate action of
ANM and constitutes the valid and legally binding obligation of ANM in
accordance with its terms. All of the shares of stock currently outstanding
as reflected in paragraph 3.2 of this Agreement are validly issued and
outstanding and are currently not subject to any lien, pledge, encumbrance,
restriction or claim, and the shareholders, and Principal have full right and
authority to transfer the same pursuant to this transaction. Upon assignment
and delivery of the share certificate(s) to IMNF, it will take title thereto
free and clear of any lien, pledge, encumbrance, charge, agreement or claim.
(c) That such counsel does not know that any action, suit,
proceeding or investigation is pending against ANM which might result in any
material adverse change in the condition (financial or otherwise) or business
of ANM (other than those referred to in
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Paragraph 3.12 hereof), or which questions the legality, validity or
propriety of this Agreement or of any actions taken or to be taken pursuant
to or in connection with this Agreement.
In rendering such opinion, Counsel for AMN may rely (and will state
in such opinion the belief that IMNF is justified in relying) upon opinions
of other counsels and upon the certificates of a principal officer of ANM as
to matters of fact.
6.3 No Action to Prevent Completion. No action or proceeding
shall have been instituted or threatened on or prior to the Closing Date to
set aside, restrain or prohibit, or to obtain damages in respect of, this
Agreement or the consummation of the transactions contemplated herein which
in the opinion of IMNF makes it inadvisable to consummate such transactions.
6.4 December 31, 1996 Balance Sheet. IMNF shall have received
prior to the Closing Date the December 1996 Balance Sheet of ANM and related
financial statements, which balance sheet will show no material adverse
change in the financial position of ANM from the date of the September 30,
1997 financial statement described in Paragraph 3.4 hereof. In addition,
there shall have been no material adverse change in the financial position of
ANM from December 31, 1996, up to and including the Closing Date.
6.5 Consent. To the extent specified in any paragraph or schedule
with respect to obtaining the consent of any other person or party to the
assignment of specified contracts, licenses, leases, agreements or
commitments, ANM shall have obtained by the Closing Date such consents in
form and substance satisfactory to IMNF.
6.6 Full Compliance. IMNF's obligations to complete and
consummate this Agreement shall be subject to material compliance by ANM and
Principal with all of their agreements herein contained, and to the
reasonable satisfaction of all of the conditions of this
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Agreement.
7. Conditions to ANM and Principal's Obligations. ANM and Principal's
obligations to complete and consummate this Agreement shall be subject to
material compliance by IMNF with all of its agreements herein contained and
to the reasonable satisfaction of the following conditions precedent:
7.1 Representations and Warranties True. The representations and
warranties contained in Paragraph 4 hereof shall be true and correct in all
material respects as of the Closing Date, and ANM shall have received at the
Closing a certificate dated the Closing Date signed by the president or vice
president and the secretary or assistant secretary of IMNF to that effect.
7.2 Opinion of Counsel. At the Closing Date, IMNF shall deliver
or cause to be delivered to ANM an opinion dated the Closing Date, of the
General Counsel for IMNF to the following effect:
(a) IMNF is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
(b) IMNF has full power and authority to make, execute,
deliver and perform this Agreement in accordance with its terms; this
Agreement has been duly authorized and approved by proper corporate action of
IMNF and constitutes the valid and legally binding obligation of IMNF in
accordance with its terms.
(c) Except for those items of litigation disclosed to ANM,
that such General Counsel does not know, and has no reason to believe, that
any action, suit, proceeding or investigation is pending or threatened
against IMNF which questions the legality, validity or propriety of this
Agreement or of any actions taken or to be taken pursuant to or in
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connection with this Agreement.
In rendering such opinion, General Counsel for IMNF may rely (and
will state in such opinion the belief that ANM is justified in relying) upon
opinions of other counsels and upon the certificates of a principal officer
of IMNF as to matters of fact.
7.3 No Action to Prevent Completion. No action or proceeding
shall have been instituted or threatened on or prior to the Closing Date to
set aside the authorizations of the transfers hereunder or any of them, and
no action or proceeding shall have been instituted or threatened before any
court or governmental agency to restrain or prohibit, or to obtain
substantial damages in respect of, this Agreement or the consummation of the
transactions contemplated herein which in the opinion of ANM makes it
inadvisable to consummate such actions.
8. Closing. This Agreement shall close when all of the deliveries
referred to heretofore in this Agreement, and all of the deliveries referred
to in this Paragraph 8, are made on or prior to the Closing Date.
8.1 IMNF and ANM shall deliver to each other copies of the
resolutions of their boards of directors authorizing the execution and
performance of this Agreement and the acts of the officers of each in
carrying out the terms and provisions thereof.
8.2 IMNF, ANM and Principal agree to execute and deliver such
instruments and take such other action as any of them may reasonably require
in order to carry out the intent of this Agreement.
8.3 ANM shall deliver to IMNF a certificate of the Secretary of
State of New Jersey evidencing the good standing of ANM as of a date or dates
not more than ten (10) days before the Closing Date.
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8.4 ANM shall deliver to IMNF a tax clearance certificate issued
by the appropriate State authority as of the Closing Date.
8.5 Principal will issue and deliver to IMNF certificate(s) for
the Stock sold to IMNF by this Agreement.
8.6 ANM shall deliver to IMNF all formal corporate records and
devices, including the corporate minute book, corporate stock transfer
records and corporate seal.
8.7 ANM shall deliver to IMNF written resignations signed by all
Directors and Officers of ANM dated as of the Closing Date.
8.8 ANM shall deliver to IMNF written transfer of authority to
access and draw upon each and every bank account of every nature and kind, as
set forth in Schedule 3.24B, maintained by ANM into the name of IMNF dated as
of the Closing Date.
9. Indemnification of IMNF.
9.1 Principal shall indemnify and hold IMNF harmless after the
Closing Date from and against any and all of the following:
(a) The breach by ANM or Principal of any warranty or
representation made by ANM or Principal pursuant to this Agreement;
(b) The nonperformance of any covenant of ANM or Principal;
(c) Any claim, action, suit or proceeding brought against
IMNF based on a cause or causes of action arising before the Closing Date and
relating to ANM or Principal's operation of ANM;
(d) Any claims for unpaid taxes of any kind which are asserted
or levied against IMNF or the properties of ANM after the Closing Date and
which relate to any period before the Closing Date; and
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(e) All costs, assessments, judgments, demands (including
costs of defense and reasonable attorneys' fees) arising out of any claim, or
the defense thereof, made with respect to Paragraphs 9.1 (a) through 9.1 (d).
IMNF will seek in good faith by all reasonable means to defeat or reduce any
damages as to which indemnification may be sought so as to minimize such
indemnification and will give Principal timely notice of, and the opportunity
to participate in, at Principal's expense, the defense or compromise of any
claim which may give rise to such indemnification. Failure to give timely
notice to Principal shall be a defense only to the extent that it prejudices
Principal's rights. Final settlement authority remains with IMNF.
9.2 Except as provided in Subparagraph 9.1(d), no liability of ANM
or Principal under this Agreement shall exist with respect to the
representations, warranties and covenants made in this Agreement or any
schedule or certificate furnished by them with respect thereto, except as to
claims which are made within two (2) years of the Closing Date, to be offset
solely against the stock to be transferred to Principal pursuant to Section
1.3 hereof.
9A. Indemnification of Principal.
9A.1 IMNF shall indemnify and hold Principal harmless after the
Closing Date from and against any and all of the following:
(a) The breach by IMNF of any warranty or representation made
by IMNF pursuant to this Agreement;
(b) The nonperformance of any covenant of IMNF.
9A.2 No liability of IMNF under this Agreement shall exist with
respect to the representations, warranties and covenants made in this
Agreement or any schedule or certificate furnished by IMNF with respect
thereto, except as to claims which are made within
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two (2) years of the Closing Date.
10. Miscellaneous.
10.1 Expenses. Whether or not the transactions herein set forth
shall be consummated, IMNF will pay all expenses of the preparation and
performance of this Agreement incurred by IMNF, and ANM will pay all expenses
incurred by it in connection with the preparation and performance of this
agreement.
10.2 Confidentiality. Except as contemplated by this Agreement or
as necessary to carry out the transactions herein set forth, all information
or documents furnished hereunder by IMNF or ANM to the other shall be kept
confidential by the party to whom furnished at all times to the Closing Date,
and in the event such transactions are not consummated, each shall return to
the other all documents furnished hereunder and copies thereof and shall
continue to keep confidential all information furnished hereunder and not
thereafter use the same for its advantage.
10.3 Notices. Any notice required or permitted hereunder shall be
in writing and shall be given by overnight mail addressed, if to IMNF to: IMN
Financial Corp., 520 Broadhollow Road, Melville, New York 11747, Attention:
General Counsel. If to ANM and Principal to: American National Mortgage
Corp., 195 Route 46 West, Suite 11, Totowa, New Jersey 07512, Attention:
Kenneth Barash, Chairman.
10.4 Best Efforts, Cooperation. IMNF, ANM and Principal shall
exert their best efforts to obtain all consents and approvals necessary for
the due and punctual performance of this Agreement and the satisfaction of
the conditions hereof on their part to be satisfied, and all shall cooperate
with the other with respect thereto. ANM shall have the right to review its
books and records in IMNF's possession after the Closing hereof, as may be
necessary.
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10.5 Entire Agreement. This Agreement constitutes and contains the
entire agreement of the parties and supersedes any and all prior
negotiations, correspondence, understandings and agreements between the
parties respecting the subject matter hereof.
10.6 Parties in Interest. All of the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be
enforceable by the successors and permitted assigns of the parties hereto,
whether herein so expressed or not, but neither this Agreement nor any of the
rights, interests or obligations hereunder of any party hereunder shall be
assigned without the prior written consent of the other parties, except that
IMNF may, without such consent, assign to another of its wholly-owned
corporate subsidiaries all of its duties, rights and privileges hereunder.
10.7 Controlling Law. This Agreement shall be governed by and
construed in accordance with the law of the state of New York.
10.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and in making proof
hereof it shall not be necessary to produce or account for more than one such
counterpart.
10.9 Schedules. The following schedules are attached hereto and by
this reference herein. All schedules shall be delivered to IMNF at the
Closing unless otherwise indicated herein.
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Schedule Subject Matter
3.6A Liens and Encumbrances
3.6B Real Property Owned
3.6C Defects in Properties or Assets
3.7 Changes in Condition
3.8 Taxes and Deficiency Assessments
3.12 Litigation
3.13 Accounts and Notes Receivable
3.15 Overtime, Back-Wage, Vacation, Discrimination
Claims
3.16 Employee Claims/ Vacation and Sick Policies
3.17A Personal Service Contracts
3.17B ANM Employees; Positions and Compensation
3.18 Leases, Concessions, Franchises (Profit
Sharing Arrangements)
3.19 Pensions, Employee Profit Sharing, Retirement
Plans
3.20 Insurance Contracts; Benefit Plans
3.22 Leases
3.24A All other Insurance and Indemnity Contracts
3.24B All Bank Accounts and names of Persons
Authorized to Draw
3.27 Trademarks
3.30 Disclosure (Material Adverse Affects)
3.31 Licenses, Permits
3.32A Warehouse Lines
3.32B Investors
3.33 Mortgage Originations in Process
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
AMERICAN NATIONAL MORTGAGE CORPORATION
By:______________________________
Kenneth Barash, Chairman & CEO
By:______________________________
Secretary
PRINCIPAL
By:_______________________________
Kenneth Barash
IMN FINANCIAL CORP.
By:_______________________________
Edward R. Capuano, President
ISLAND MORTGAGE NETWORK INC.
By:_______________________________
Edward R. Capuano, President
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
IMN FINANCIAL CORP.
(Registrant)
By: s/Edward Capuano
-----------------------
Edward Capuano,
President and Principal
Executive Officer and
Principal Financial Officer
Dated: December 15, 1997
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