<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] CONFIDENTIAL, FOR USE OF THE
[_] Preliminary Proxy Statement COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
IMPAC COMMERCIAL HOLDINGS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
N/A
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
IMPAC COMMERCIAL HOLDINGS, INC.
20371 IRVINE AVENUE
SANTA ANA HEIGHTS, CALIFORNIA 92707
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of IMPAC COMMERCIAL HOLDINGS, INC., a
Maryland corporation (the "Company"), will be held at the Sutton Place Hotel,
4500 MacArthur Boulevard, Newport Beach, California 92660, on July 23, 1998,
at 9:00 a.m., Pacific Time. Only stockholders of record at the close of
business on June 1, 1998, (the "Record Date") will be entitled to vote.
The Annual Meeting of the Stockholders of the Company is being held for the
following purposes:
1. To elect a Board of Directors to serve for the ensuing year;
2. To consider and act upon a proposal to ratify the appointment of KPMG
Peat Marwick LLP as the independent accountants of the Company for the year
ending December 31, 1998; and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only holders of Common Stock of record at the close of business on June 1,
1998, will be entitled to vote at the meeting.
Your proxy is enclosed. You are cordially invited to attend the meeting, but
if you do not expect to attend, or if you plan to attend, but desire the proxy
holders to vote your shares, please date and sign your proxy and return it in
the enclosed postage paid envelope. The giving of this proxy will not affect
your right to vote in person in the event you find it convenient to attend.
Please return the proxy promptly to avoid the expense of additional proxy
solicitation.
Dated: June 15, 1998
For the Board of Directors
/s/ Richard J. Johnson
-----------------------------
Richard J. Johnson, Secretary
<PAGE>
[LOGO OF IMPAC]
IMPAC COMMERCIAL HOLDINGS, INC.
----------------
PROXY STATEMENT
----------------
FOR ANNUAL MEETING TO BE HELD
JULY 23, 1998, AT 9:00 A.M. PACIFIC TIME
This proxy statement is delivered to you by Impac Commercial Holdings, Inc.
(the "Company" or "ICH"), a Maryland corporation, in connection with the
Annual Meeting of Stockholders of the Company to be held on July 23, 1998 at
9:00 a.m. Pacific Time at the Sutton Place Hotel, 4500 MacArthur Boulevard,
Newport Beach, California 92660 (the "Meeting"). The approximate mailing date
for this proxy statement and the enclosed proxy is June 15, 1998. If a proxy
in the accompanying form is duly executed and returned, the shares represented
by the proxy will be voted as directed. If no direction is given, the shares
represented by the proxy will be voted for the election of the six nominees
for director named herein and for the ratification of the appointment of KPMG
Peat Marwick LLP as the Company's independent accountants for the year ending
December 31, 1998. Any proxy given may be revoked at any time prior to its
exercise by notifying the Secretary of the Company in writing of such
revocation, by duly executing and delivering another proxy bearing a later
date, or by attending and voting in person at the Meeting. The Company's
principal executive office is located at 20371 Irvine Avenue, Santa Ana
Heights, California 92707.
The cost of this solicitation of proxies will be borne by the Company.
Solicitations will be made by mail. In addition, the officers and regularly
engaged employees of the Company may, in a limited number of instances,
solicit proxies personally or by telephone. The Company will reimburse banks,
brokerage firms, other custodians, nominees and fiduciaries for reasonable
expenses incurred in sending proxy materials to beneficial owners of Common
Stock of the Company.
The Company's Annual Report to Stockholders for the year ended December 31,
1997, is concurrently being provided to each stockholder.
Holders of Common Stock of record at the close of business on June 1, 1998
will be entitled to vote at the Meeting. There were 7,344,789 shares of Common
Stock, $.01 par value per share, outstanding at that date. Each share of
Common Stock is entitled to one vote and the presence in person or by proxy of
holders of a majority of the outstanding shares of Common Stock is necessary
to constitute a quorum for the Meeting. The affirmative vote of a plurality of
all of the votes cast at a meeting at which a quorum is present is necessary
for the election of a director. For purposes of the election of directors,
abstentions will not be counted as votes cast and will have no effect on the
result of the vote, although they will count toward the presence of a quorum.
The affirmative vote of a majority of all votes cast at a meeting at which a
quorum is present is necessary for the ratification of the appointment of KPMG
Peat Marwick LLP as the Company's independent accountants. For purposes of the
vote on this matter, abstentions will not be counted as votes cast and will
have no effect on the result of the vote, although they will count toward the
presence of a quorum.
1
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Directors are elected annually to serve until the next annual
meeting of stockholders and thereafter until their successors are elected and
qualify. The Company's Charter (the "Charter") and Bylaws currently provide
for a variable Board of Directors with a range of between three and 15
members. The Company's Bylaws give the Board the authority to establish,
increase or decrease the number of directors. The size of the Company's Board
is currently set at six. No proxy will be voted for more than six nominees for
Director.
Unless otherwise directed by stockholders within the limits set forth in the
Bylaws, the proxy holders will vote all shares represented by proxies held by
them for the election of the maximum number of the following nominees, all of
whom are now members of and constitute the Company's Board of Directors. The
Company is advised that all of the nominees have indicated their availability
and willingness to serve if elected. In the event that any nominee becomes
unavailable or unable to serve as a Director of the Company prior to the
voting, the proxyholders will refrain from voting for the unavailable nominee
or will vote for a substitute nominee in the exercise of their best judgment.
INFORMATION CONCERNING NOMINEES
The following table sets forth certain information concerning the nominees
for Directors of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Joseph R. Tomkinson (S).. 50 Chairman of the Board and Chief Executive Officer
James Walsh.............. 48 Director
Frank P. Filipps 0....... 50 Director
Stephan R. Peers 0....... 45 Director
Thomas J. Poletti+, (S).. 40 Director
Timothy R. Busch+, 0,
(S)..................... 44 Director
</TABLE>
- --------
+ Unaffiliated Director
0 Member of Audit Committee
(S) Member of Compensation Committee
JOSEPH R. TOMKINSON has been Chairman of the Board and Chief Executive
Officer of ICH and Chairman of the Board and Chief Executive Officer of Impac
Commercial Capital Corporation ("ICCC") since their formation. Mr. Tomkinson
has been the Chairman of the Board since April 1998 (after being promoted from
Vice-Chairman of the Board) and Chief Executive Officer of Impac Mortgage
Holdings, Inc. ("IMH") (AMEX-IMH) and Chairman of the Board and Chief
Executive Officer of Impac Funding Corporation ("IFC") and Impac Warehouse
Lending Group ("IWLG") since August 1995. In October 1997, Mr. Tomkinson
became a director of BNC Mortgage, Inc. (Nasdaq-BNCM), a specialty finance
company that originates and sells non-conforming residential mortgage loans.
Mr. Tomkinson served as President and Chief Operating Officer of Imperial
Credit Industries, Inc. ("ICII") (Nasdaq-ICII) from January 1992 to February
1996 and, from 1986 to January 1992, he was President of Imperial Bank
Mortgage, a subsidiary of Imperial Bank, one of the companies that combined to
become ICII in 1992. Mr. Tomkinson has been a Director of ICII since December
1991. From 1984 to 1986, he was employed as Executive Vice President of Loan
Production for American Mortgage Network, a privately owned mortgage banker.
Mr. Tomkinson brings 22 years of combined experience in real estate, real
estate financing and mortgage banking to the Company.
JAMES WALSH has been a Director of ICH since February 1997 and a Director of
IMH since August 1995. Mr. Walsh is an Executive Vice President of Walsh
Securities, Inc. where he directs mortgage loan production, sales and
securitization. Mr. Walsh was an executive of Donaldson, Lufkin and Jenrette
Securities Corporation from January 1989 through March 1996 where he oversaw
residential mortgage securitization, servicing
2
<PAGE>
brokerage and mortgage banking services. From February 1987 to December 1988,
Mr. Walsh was an executive in the mortgage banking department at Bear Stearns
& Company. From December 1985 to February 1987, Mr. Walsh was a senior banking
officer at Carteret Savings Bank.
FRANK P. FILIPPS has been a Director of ICH since February 1997 and a
Director of IMH since August 1995. Mr. Filipps was elected President of CMAC
Investment Corporation and Chairman, President and Chief Executive Officer of
Commonwealth Mortgage Assurance Company ("CMAC") in January 1995. Mr. Filipps
joined CMAC in 1992 as Senior Vice President and Chief Financial Officer,
where he was responsible for the company's financial, investment and data
processing operations, as well as the legal and human resources functions. In
1994, Mr. Filipps was promoted to Executive Vice President and Chief Operating
Officer for both CMAC Investment Corporation and CMAC, where his additional
responsibilities included the company's sales, marketing, underwriting and
risk management operations. In 1975, Mr. Filipps joined American International
Group and, from 1989 to 1992, he was Vice President and Treasurer. Prior to
that, he was a Second Vice President for Chase Manhattan Bank, N.A., in New
York.
STEPHAN R. PEERS has been a Director of ICH since February 1997 and a
Director of IMH since October 1995. Since January 1998, Mr. Peers has been an
executive at Aames Financial Corporation, a mortgage
loan Company. Mr. Peers served as a Managing Director of Resource Bancshares
Corporation from August 1995 to December 1997. From April 1993 to December
1997, Mr. Peers was an Executive Vice President of International Strategic
Finance Corporation, Ltd., where he performs corporate finance services for
overseas issuers. From April 1989 to April 1993, Mr. Peers was a Vice
President in corporate finance at Montgomery Securities where he specialized
in financial services institutions. From March 1987 to March 1989, Mr. Peers
was a Vice President at The First Boston Corporation in mortgage finance
specializing in mortgage related products.
THOMAS J. POLETTI has been a Director of ICH since March 1997. Mr. Poletti
has been with the law firm of Freshman, Marantz, Orlanski, Cooper & Klein
since 1983 and a partner of the firm since 1989. Freshman, Marantz, Orlanski,
Cooper & Klein acts as counsel to the Company and IMH.
TIMOTHY R. BUSCH has been a director of ICH since March 1997. Since October
1985, Mr. Busch has been the President of T. R. Busch Realty Corporation, a
licensed real estate corporation, which was a general partner of European
Hotel Investors, II, a California limited partnership that filed a voluntary
petition pursuant to Chapter 11 of the Bankruptcy Code on February 22, 1994; a
confirmation order was issued on or about December 23, 1994. Since 1985, Mr.
Busch has been President of TRB Management, Inc., a California corporation,
which was the sole general partner of Mercado del Sol Investors Limited
Partners, an Arizona limited partnership. Mercado del Sol Investors Limited
Partnership filed a voluntary petition pursuant to Chapter 11 of the
Bankruptcy Code on August 10, 1993 and converted to a Chapter 7 bankruptcy in
1995. The assets of the entity were liquidated and the partnership was
dissolved. Since 1984, Mr. Busch has been President of The Busch Firm, a
professional corporation law firm. Mr. Busch is a director of Advanced
Materials Group (Nasdaq-ADMG).
There are no family relationships between any of the directors or executive
officers of the Company.
All Directors are elected at each annual meeting of the Company's
stockholders for a term of one year, and hold office until their successors
are elected and qualify. Any vacancy on the Board of Directors for any cause
other than an increase in the number of directors may be filled by a majority
of the remaining directors. Replacements for vacancies occurring among the
unaffiliated directors will be elected by a majority vote of the remaining
Directors, including a majority of the unaffiliated directors (the
"Unaffiliated Directors"). The Company pays an annual director's fee of
$20,000 to each Unaffiliated Director and reimburses such Unaffiliated
Director's costs and expenses for attending such meetings.
COMMITTEES AND ATTENDANCE AT BOARD MEETINGS
Six monthly meetings of the Board of Directors were held in 1997. Each
Director attended at least 75% of the aggregate of all meetings held by (i)
the Board of Directors and (ii) those committees of the Board of Directors on
which such Director served.
3
<PAGE>
The Audit Committee, established by the Board of Directors on June 3, 1997,
reviews the scope of auditing activities performed by the Company's
independent accountants. The Audit Committee met once during 1997. The
Compensation Committee was also established by the Board of Directors on June
3, 1997. The Compensation Committee met once during 1997. The Board of
Directors does not presently have a nominating committee.
EXECUTIVE COMPENSATION
Joseph R. Tomkinson, William S. Ashmore, Richard J. Johnson and Mary C.
Glass-Schannault, who are executive officers of ICH are also officers of IMH
and IFC and are officers of RAI Advisors, LLC ("RAI"), the Manager. See
"Certain Relationships and Related Transactions." These officers have modified
their employment agreements with IFC to also become officers of the Manager
(and of ICH and ICCC). The Manager has agreed to cause each of its officers to
devote as much of his or her time to the operations of the Company as is
reasonably necessary. The Company reimburses the Manager which reimburses IFC
on a dollar for dollar basis (including the service charge referenced below),
for the actual cost of providing the services of these officers to the Company
based upon the compensation payable to them by IFC, plus a 15% service charge.
Salary, other annual compensation and all other compensation are allocated to
the Company at a rate of one-third and to IMH at a rate of two-thirds for
services performed by the executive officers (except Mr. Endresen) as part of
the Submanagement Agreement among IMH, IFC and RAI. The following is the
amount of compensation allocated to the Company for services performed by
Messrs. Tomkinson, Ashmore, and Johnson and Ms. Glass-Schannault and cash
compensation paid to William D. Endresen for the period from January 15, 1997
(commencement of operations) through December 31, 1997 (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION --------------
----------------------------------------- SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY (1) BONUS COMPENSATION (4) OPTIONS (#)(5) COMPENSATION (6)
------------------ ---- ---------- ------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Joseph R. Tomkinson..... 1997 $100,000 $ 5,300(2) $252,992 10,000 $480
Chairman of the Board
and CEO of ICH and
ICCC
William S. Ashmore...... 1997 $ 75,000 $ 5,300(2) $250,192 10,000 $290
President and COO of
ICH, Executive Vice
President and Director
of ICCC
Richard J. Johnson...... 1997 $ 37,500 $ 5,300(2) $204,256 10,000 $ 88
Senior Vice President,
CFO, Treasurer and
Secretary of ICH and
ICCC and Director of
ICCC
Mary C. Glass-
Schannault............. 1997 $ 30,870 $27,790(2)(3) $ 42,317 10,000 $119
Senior Vice President
of ICH and ICCC
William D. Endresen .... 1997 $120,000 $49,000(2)(3) $ 43,280 50,000 $468
Senior Vice President
of ICH and President
and Director of ICCC
</TABLE>
- --------
(1) Pursuant to their respective employment agreements with IFC, total current
base salaries for Messrs. Tomkinson, Ashmore and Johnson and Ms. Glass-
Schannault are $300,000, $225,000, $112,500 and $92,930, respectively.
Effective January 1998, Mr. Johnson became Executive Vice President of
ICH.
4
<PAGE>
(2) Each of the persons in the above table is entitled to be paid a quarterly
bonus equal to the aggregate dividend such person would have received from
the Company on all shares of Common Stock underlying unexercised stock
options held by such person which are outstanding.
(3) Includes a performance and profitability bonus.
(4) Consists of (i) a car allowance paid by the Company, (ii) contributions
paid by the Company under the 401(k) plan, and (iii) the dollar value of
the difference between the price paid by each officer for shares of Common
Stock of ICH and the fair market value of such stock ($3.20) on the date
of purchase. See "Certain Relationships and Related Transactions--Stock
Compensation Expense."
(5) Consists of options granted under ICH's Stock Option and Awards Plan (as
described below). Options vest 33.33% per year on each anniversary of the
date of grant and have been granted with related dividend equivalent
rights ("DERs").
(6) For each person, consists of payments on group term-life insurance.
OPTION GRANTS, EXERCISES AND YEAR-END VALUES
The following table sets forth stock options granted to executive officers
under the Stock Option and Awards Plan as of December 31, 1997:
OPTIONS GRANTED IN FISCAL YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------- POTENTIAL REALIZABLE
NUMBER VALUE AT ASSUMED
OF SHARES ANNUAL RATES OF STOCK
UNDERLYING PERCENTAGE OF PRICE APPRECIATION FOR
OPTIONS OPTIONS EXERCISE OPTION TERM (4)
GRANTED(#) GRANTED TO PRICE EXPIRATION -----------------------
NAME (1) EMPLOYEES (%) ($/SH) (2) DATE (3) 5% ($) 10% ($)
---- ---------- ------------- ---------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
William D. Endresen..... 50,000 24 15.00 August 2007 471,671 1,195,307
Joseph R. Tomkinson..... 10,000 5 15.00 August 2007 94,334 239,061
William S. Ashmore...... 10,000 5 15.00 August 2007 94,334 239,061
Richard J. Johnson...... 10,000 5 15.00 August 2007 94,334 239,061
Mary C. Glass-
Schannault............. 10,000 5 15.00 August 2007 94,334 239,061
</TABLE>
- --------
(1) Such stock options vest 33.33% per year on each anniversary of the date of
grant and have been granted with related DERs.
(2) The exercise price for all options equals the fair market value of such
shares at the date of grant as determined by the Administrator.
(3) Such stock options expire ten years from the date of grant or earlier upon
termination of employment.
(4) Amounts reflect assumed risks of appreciation set forth in the
Commission's executive compensation disclosure requirements. The actual
value, if any, an executive officer may realize will depend on the excess
of the stock price over the exercise price on the date the option is
exercised.
On August 4, 1997, the Company granted to each of Messrs. Walsh, Filipps,
Peers, Poletti and Busch options to purchase 10,000 shares of ICH Common Stock
at a per share exercise price of $15.00, the initial public offering ("IPO")
price per share, vesting 50% on the first anniversary of the date of grant and
50% on the second anniversary of the date of grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END AT FISCAL YEAR-END
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE (#)(1) UNEXERCISABLE ($)(2)
- ---- ----------- ------------ -------------------- --------------------
<S> <C> <C> <C> <C>
Joseph R. Tomkinson..... -- -- --/10,000 --/ 26,250
William S. Ashmore...... -- -- --/10,000 --/ 26,250
Richard J. Johnson...... -- -- --/10,000 --/ 26,250
Mary C. Glass-
Schannault............. -- -- --/10,000 --/ 26,250
William D. Endresen..... -- -- --/50,000 --/131,250
</TABLE>
- --------
(1) For a description of the terms of such options, see "--Stock Option and
Awards Plan."
(2) Based on a price per share of $17.625, which was the price of a share of
Common Stock as quoted on the American Stock Exchange at the close of
business on December 31, 1997.
5
<PAGE>
EMPLOYMENT AGREEMENTS
In August 1997, in connection with ICH's IPO, each officer's employment
agreement with IFC was amended and restated to allow him or her to become an
officer of RAI (and of ICH and ICCC). See "--Executive Compensation--Summary
Compensation Table" for annual salary descriptions. RAI has agreed to cause
each of its officers to devote as much of his or her time to the operations of
ICH as is necessary. ICH reimburses RAI, who reimburses IFC, on a dollar for
dollar basis (see "Certain Relationships and Related Transactions--
Relationships with the Manager--Management Agreement"), for the actual cost of
providing the services of its officers to ICH based upon the compensation
payable to them by IFC, plus a 15% service charge. In August 1997,
Mr. Endresen entered into an employment agreement with ICCC for a term of five
years. His base salary is currently $175,000 per year subject to an annual
review and cost of living adjustment.
Pursuant to the employment agreements, if the officer is terminated without
cause (as defined therein) then the officer will receive (i) his or her base
salary for a period of one year following the date of termination, (ii) any
bonus or incentive compensation prorated through the date of termination;
provided that if the bonus or incentive compensation is discretionary, then
the officer will receive a payment at least equal to the last previous payment
made to the officer, if any, for the previous year prorated to the date of
termination, and (iii) any expense reimbursements. Each officer agreed that he
or she will not compete with the Company if the agreement is voluntarily
terminated by the officer. The employment agreements will not be terminated
upon any merger or the transfer of all or substantially all of the Company's
assets.
STOCK OPTION AND AWARDS PLAN
In April 1997, the Company adopted the 1997 Stock Option and Awards Plan
(the "Stock Option and Awards Plan") which provides for the grant of qualified
incentive stock options ("ISOs") which meet the requirements of section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), stock options not
so qualified ("NQSOs"), deferred stock, restricted stock, performance shares,
stock appreciation and limited stock appreciation rights awards ("Awards") and
DERs.
The purpose of the Stock Option and Awards Plan is to provide a means of
performance-based compensation in order to attract and retain qualified
personnel and to provide an incentive to others whose job performance affects
the Company. The Stock Option and Awards Plan is administered by the Board of
Directors or a Committee appointed by the Board of Directors (the
"Administrator"). ISOs may be granted to the officers and key employees of the
Company. NQSOs and Awards may be granted to the directors, officers, key
employees, agents and consultants of the Company, any of its subsidiaries or
parent corporation, of RAI, and to the directors, officers and key employees
of ICCC.
The Stock Option and Awards Plan provides for the granting of DERs in tandem
with all options granted under the Stock Option and Awards Plan. Such DERs
accrue shares of Common Stock for the account of the optionee upon the payment
of cash dividends on outstanding shares of Common Stock. The number of shares
accrued is determined by a formula and such shares are currently transferred
to the optionee only upon exercise of the related option. The Stock Option and
Awards Plan permits DERs to be granted under the Stock Option and Awards Plan
with certain characteristics. First, DERs can be issued in "current-pay" form
so that payments can be made to the optionee at the same time as dividends are
paid to holders of outstanding Common Stock. Second, DERs can be made eligible
to participate not only in cash distributions but also distributions of stock
or other property made to holders of outstanding Common Stock. Shares of
Common Stock accrued for the account of the optionee pursuant to a DER grant
may also be made eligible to receive dividends and distributions. Finally,
DERs can be made "performance based" by conditioning the right of the holder
of the DER to receive any dividend equivalent payment or accrual upon the
satisfaction of specified performance objectives.
Subject to anti-dilution provisions for stock splits, stock dividends and
similar events, the Stock Option and Awards Plan currently authorizes the
grant of options to purchase, and Awards of, an aggregate of 632,500 shares.
At March 31, 1998, options to acquire 84,000 shares were outstanding at a per
share exercise price of
6
<PAGE>
$17.625, options to acquire 22,250 shares were outstanding at a per share
exercise price of $18.875 and options to acquire 190,000 shares were
outstanding at a per share exercise price of $15.00. If an option granted
under the Stock Option and Awards Plan expires or terminates, or an Award is
forfeited, the shares subject to any unexercised portion of such option or
Award will again become available for the issuance of further options or
Awards under the Stock Option and Awards Plan.
Unless previously terminated by the Board of Directors, the Stock Option and
Awards Plan will terminate in April 2007, and no options or Awards may be
granted under the Stock Option and Awards Plan thereafter.
Options granted under the Stock Option and Awards Plan will become
exercisable in accordance with the terms of the grant made by the
Administrator. Awards will be subject to the terms and restrictions of the
Award made by the Administrator. The Administrator has discretionary authority
to select participants from among eligible persons and to determine at the
time an option or Award is granted when and in what increments shares covered
by the option or Award may be purchased and, in the case of options, whether
it is intended to be an ISO or a NQSO provided, however, that certain
restrictions applicable to ISOs are mandatory, including a requirement that
ISOs not be issued for less than 100% of the then fair market value of the
Common Stock (110% in the case of a grantee who holds more than 10% of the
outstanding Common Stock) and a maximum term of ten years (five years in the
case of a grantee who holds more than 10% of the outstanding Common Stock).
Under current law, ISOs may not be granted to any director of the Company
who is not also an employee, or to directors, officers and other employees of
entities unrelated to the Company. No options or Awards may be granted under
the Stock Option and Awards Plan to any person who, assuming exercise of all
options held by such person, would own or be deemed to own more than 9.8% of
the outstanding shares of equity stock of the Company.
Each option must terminate no more than 10 years from the date it is granted
(or five years in the case of ISOs granted to an employee who is deemed to own
in excess of 10% of the combined voting power of the Company's outstanding
equity stock). Options may be granted on terms providing for exercise either
in whole or in part at any time or times during their respective terms, or
only in specified percentages at stated time periods or intervals during the
term of the option.
The exercise price of any option granted under the Stock Option and Awards
Plan is payable in full in cash, or its equivalent as determined by the
Administrator. The Company may make loans available to option holders to
exercise options evidenced by a promissory note executed by the optionholder
and secured by a pledge of Common Stock with fair market value at least equal
to the principal of the promissory note unless otherwise determined by the
Administrator.
The Board of Directors may from time to time revise or amend the Stock
Option and Awards Plan, and may suspend or discontinue it at any time.
However, no such revision or amendment may impair the rights of any
participant under any outstanding Award without his consent.
401(k) PLAN
The Company participates in the ICII contributory retirement plan ("401(k)
Plan") for all full time employees with at least six months of service, which
is designed to be tax deferred in accordance with the provisions of Section
401(k) of the Code. The 401(k) Plan provides that each participant may
contribute from 2% to 14% of his or her salary, and the Company will
contribute to the participant's plan account at the end of each plan year 50%
of the first 4% of salary contributed by a participant. Under the 401(k) Plan,
employees may elect to enroll on the first day of any month, provided that
they have been employed for at least six months.
Subject to the rules for maintaining the tax status of the 401(k) Plan, an
additional Company contribution may be made at the discretion of the Company,
as determined by the Unaffiliated Directors. Should a discretionary
contribution be made, the contribution would first be allocated to those
employees deferring salaries
7
<PAGE>
in excess of 4%. The matching contribution would be 50% of any deferral in
excess of 4% up to a maximum deferral of 8%. Should discretionary contribution
funds remain following the allocation outlined above, any remaining Company
matching funds would be allocated as a 50% match of employee contributions, on
the first 4% of the employee's deferrals. Company matching contributions will
be made as of December 31st each year in the form of Company Common Stock. No
contributions were made for any period presented herein.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee consists of Messrs. Tomkinson, Busch
and Poletti. Other than Mr. Tomkinson, Chairman of the Board and Chief
Executive Officer of ICH, no member of the Compensation Committee was, during
the fiscal year, an officer or employee of ICH.
Mr. Tomkinson is also Chairman of the Board and Chief Executive Officer of
IMH, a one-third owner of RAI and an owner of 25% of the common stock of ICCC.
See "Certain Relationships and Related Transactions--Relationships with the
Manager" and "--Relationships with IMH." Thomas J. Poletti is a partner in the
law firm Freshman, Marantz, Orlanski, Cooper & Klein, which is counsel to the
Company. Mr. Poletti owns 12,000 shares of the Company's Common Stock and
options to purchase 10,000 shares of Common Stock.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company's Board of Directors administers
the policies governing the Company's executive compensation program. All
issues pertaining to executive compensation are reviewed by the Compensation
Committee and approved by the Company's Board of Directors.
The Compensation Committee believes that executive compensation should
reward sustained earnings and long-term value created for stockholders and
reflect the business strategies and long-range plans of the Company. The
guiding principles affecting executive compensation are: (1) to attract and
retain key high caliber executives; (2) to provide levels of compensation
competitive with those offered by the Company's competitors; and (3) to
motivate executives to enhance earnings and long-term stockholder value by
linking stock performance (on a total returns basis) with long-term incentive
compensation.
The Company's executive compensation philosophy is to set base salary at a
conservative market rate and then to provide performance-based variable
compensation which allows total compensation to fluctuate according to the
Company's earnings as well as to value received by stockholders. Targeted
levels of executive compensation are set at levels consistent with others in
the Company's industry, determined after comparison, with such compensation
increasingly weighted towards programs contingent upon the Company's level of
annual and long-term performance.
Each executive officer's compensation is comprised of three principal
components: base salary, bonus and stock options or awards granted pursuant to
the Company's Stock Option and Awards Plan. Base salary and bonus are
determined by the executive officer's employment agreement with IFC (with the
exception of Mr. Endresen, whose employment agreement is with ICCC) and are
reviewed at least annually by the Compensation Committee. See "Executive
Compensation" for a description of the allocation of base salary and bonus.
Each executive officer's, including the Chief Executive Officer's, bonus
compensation, excluding Mr. Endresen, consisted of monies received on DERs
granted with stock options. In addition, Ms. Glass-Schannault's bonus included
a performance and profitability bonus and Mr. Endresen's bonus included a
discretionary contribution determined by the Chief Executive Officer. The
Compensation Committee believes that the total compensation package of the
executive officers should be linked to such factors as return on equity and to
the total return of the Company's stock, both on an absolute basis and
relative to similar companies, and to the attainment of planned objectives
established at the beginning of the year. The Company uses stock options and
sometimes DERs to align the long-range interest of its executive officers with
the interest of stockholders.
8
<PAGE>
The amount of stock options that is granted to executive officers is
determined by taking into consideration the officer's position with the
Company, overall individual performance, the Company's performance and an
estimate of the long-term value of the award considering current base salary
and any cash bonus awarded. The Compensation Committee applies the foregoing
principles and policies in examining the compensation of Joseph R. Tomkinson,
the Company's Chief Executive Officer. The Compensation Committee believes
that Mr. Tomkinson, as Chief Executive Officer, significantly and directly
influences the Company's overall performance.
Section 162(m) was added to the Code as part of the Omnibus Budget
Reconciliation Act of 1993. Section 162(m) limits the deduction for
compensation paid to the Chief Executive Officer and the other Named Executive
Officers to the extent that compensation of a particular executive exceeds
$1,000,000, unless such compensation was based upon performance goals
determined by a compensation committee consisting solely of two or more
outside directors, the material terms of which are approved by a majority vote
of the stockholders prior to the payment of such remuneration, or paid
pursuant to a binding contract that was in effect on February 17, 1993. The
compensation paid in 1997 to the Named Executive Officers was deductible.
The Committee will review the Company's existing compensation program to
determine the deductibility of the future compensation paid or awarded
pursuant thereto and will seek guidance with respect to changes to the
Company's existing compensation program that will enable the Company to
continue to attract and retain key individuals while optimizing the
deductibility to the Company of amounts paid as compensation.
The Committee believes that its overall executive compensation program will
be successful in providing competitive compensation appropriate to attract and
retain highly qualified executives and also to encourage increased performance
from the executive group which will create added stockholder value.
COMPENSATION COMMITTEE
Joseph R. Tomkinson
Thomas J. Poletti
Timothy R. Busch
9
<PAGE>
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a performance graph comparing the cumulative total
stockholder return on the Company's Common Stock, the S & P 500 Stock Index and
an index average of the Company's peer group, composed of comparable publicly-
traded companies in the mortgage banking business, in each case for the period
commencing on August 5, 1997 through December 31, 1997. Such peer group
includes: American Residential Investment Trust, Inc., Asset Investors
Corporation, Capstead Mortgage Corporation, Commercial Assets, Inc., CRIIMI
MAE, Inc., Imperial Credit Commercial Mortgage Investment Corp., Laser Mortgage
Management, Inc., Ocwen Asset Investment Corporation, Redwood Trust, Inc., and
Thornburg Mortgage Asset Corporation. The stock price performance shown on the
graph is not necessarily indicative of future price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF PEER GROUP AND BROAD MARKET
<TABLE>
<CAPTION>
Measurement Period IMPAC COMMERCIAL S&P 500
(Fiscal Year Covered) HOLDINGS, INC. PEER GROUP INDEX
- ------------------- ---------------- ---------- ---------
<S> <C> <C> <C>
Measurement Pt- 8/5/97 $100 $100 $100
FYE 8/29/97 $106.09 $ 99.59 $ 94.40
FYE 9/30/97 $106.81 $ 96.61 $ 99.57
FYE 10/31/97 $104.07 $ 91.13 $ 96.24
FYE 11/28/97 $102.99 $ 88.29 $100.70
FYE 12/31/97 $104.16 $ 81.52 $102.43
</TABLE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Act of 1934 requires the Company's Directors
and executive officers, and persons who own more than ten percent of a
registered class of the Company's securities, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of the Common Stock of the Company. Officers, Directors and greater
than ten percent stockholders are required by the Commission's regulations to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company during the fiscal year which ended December
31, 1997, all Section 16(a) filing requirements applicable to its officers,
Directors and greater than ten percent Stockholders were satisfied by such
persons.
10
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIPS WITH THE MANAGER
The Manager, RAI, commenced operations in August 1997. Each of the persons
who are executive officers of the Manager has significant experience in
purchasing, financing, servicing, securitizing and investing in mortgage loans
and mortgage securities and all of such persons are officers of IMH and IFC;
however, they have not previously managed a Commercial Mortgage REIT. RAI is a
recently formed entity with no significant assets and no prior history of
operations. RAI is owned equally by each of Messrs. Tomkinson, Ashmore, and
Johnson. IMH owns all of the outstanding shares of non-voting preferred stock
of IFC, its conduit operations, representing 99% of the economic interest in
IFC, and Messrs. Tomkinson, Johnson and Ashmore own all of the outstanding
shares of common stock of IFC, representing 1% of the economic interest. The
officers of RAI have modified their employment agreements with IFC to allow
them to become officers of the Manager (and of ICH and ICCC). The Manager has
agreed to cause each of its officers to devote as much of his or her time to
the operations of the Company as is reasonably necessary. ICH reimburses the
Manager, who reimburses IFC on a dollar for dollar basis (including the
service charge referenced below), for the actual cost of providing the
services of these officers to the Company based upon the compensation payable
to them by IFC, plus a 15% service charge. ICH reimburses the Manager for
expenses incurred by the Manager, plus a service charge of 15% on all expenses
owed by the Manager to IFC for costs and expenses owed by the Manager to IFC
for costs and services under any submanagement agreement between IFC and the
Manager. The Manager pays all such third parties on a dollar for dollar basis
for the aforementioned amounts received by it from the Company; no such 15%
service charge is paid to third party service providers other than IFC. For
the first three years of the Management Agreement there is a minimum amount of
$500,000 per annum (including the 15% service charge) payable by ICH in
connection with services provided and expenses incurred by the Manager and
payable by RAI to IFC. After the third year, ICH is only responsible for
reimbursing expenses and services provided, with the 15% service charge for
amounts due to IFC. RAI has entered into a Submanagement Agreement with IFC,
the conduit operations of IMH, to provide administrative services as required
by the Company including facilities and costs associated therewith,
technology, human resources, management information systems, general ledger
accounts, check processing and accounts payable as RAI deems necessary. See
"--Management Agreement--Expenses."
The address of the Manager is 20371 Irvine Avenue, Santa Ana Heights,
California 92707, telephone (714) 556-0122.
Managers and Executive Officers
The managers and executive officers of RAI are as follows:
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<C> <S>
Joseph R. Tomkinson* Chairman and Chief Executive Officer
William S. Ashmore* President and Manager
Richard J. Johnson* Executive Vice President, Chief Financial
Officer and Manager
Mary C. Glass-Schannault* Senior Vice President
</TABLE>
- --------
* Each of these persons also serve as directors or executive officers of the
Company.
For biographical information on these persons, see "Information Concerning
Nominees."
MANAGEMENT AGREEMENT
In August 1997, the Company entered into a Management Agreement with the
Manager for an initial term expiring on December 31, 2002. Successive
extensions, each for a period not to exceed one year, may be made by agreement
between the Company and the Manager. The Management Agreement may be
terminated by the
11
<PAGE>
Company without cause at any time upon 60 days' written notice. Any such
termination or failure to extend by the Company without cause shall result in
the payment of a termination or non-renewal fee to the Manager determined by
an independent appraisal. In addition, the Company and the Manager will have
the right to terminate the Management Agreement upon the occurrence of a
breach by the other party of any provision contained in the Management
Agreement which remains uncured for 30 days. In addition, the Company may
renew or terminate the Management Agreement by a majority vote of its
Unaffiliated Directors or by a vote of the holders of a majority of the
outstanding shares of Common Stock.
The terms of the Management Agreement, including the management fees, were
determined by what the management of both RAI and ICH believe are comparable
with other advisory relationships and have been approved by the Board of
Directors of RAI and the Unaffiliated Directors of ICH. ICH's Bylaws provide
that the Unaffiliated Directors shall determine at least annually that the
compensation paid to the Manager is reasonable in relation to the nature and
quality of the services performed by the Manager.
The Manager is at all times subject to the supervision of the Company's
Board of Directors and provides advisory services to the Company in accordance
with the terms of the Management Agreement. The Manager is involved in three
primary activities: (1) capital management--primarily the oversight of the
Company's structuring, analysis, capital raising and investor relations
activities; (2) asset management--primarily the analysis and oversight of the
acquisition, management, securitization and disposition of Company assets; and
(3) operations management--primarily the oversight of ICH's operating
subsidiaries. Specifically, the Manager performs such services and activities
relating to the assets and operations of the Company as may be appropriate,
including:
(1) serving as the Company's consultant with respect to the formulation
of investment criteria and interest rate risk management by its Board of
Directors;
(2) advising as to the issuance of commitments on behalf of the Company
to purchase Commercial Mortgages or purchasing Commercial Mortgages and
Commercial Mortgage-Backed Securities ("CMBSs") meeting the investment
criteria set from time to time by the Company's Board of Directors;
(3) advising, negotiating, and overseeing the securitization of the
Company's Commercial Mortgages in real estate mortgage investment conduits
("REMICs") or collateralized mortgage obligations ("CMOs") and negotiating
terms with rating agencies and coordinating with investment bankers as to
structure and pricing of the securities formed by the Company;
(4) advising the Company in connection with and assisting in its Long-
Term Investment Operations;
(5) furnishing reports and statistical and economic research to the
Company regarding the Company's activities and the services performed for
the Company by the Manager;
(6) monitoring and providing to the Board of Directors on an on-going
basis price information and other data obtained from certain nationally-
recognized dealers who maintain markets in Commercial Mortgages identified
by the Board of Directors from time to time, and providing data and advice
to the Board of Directors in connection with the identification of such
dealers;
(7) providing the executive and administrative personnel, office space
and services required in rendering services to the Company, which includes
contracting with appropriate third parties, which may include IMH and its
affiliates, to provide various services including facilities and costs
related therewith, technology, management information systems, human
resource administration, general ledger accounts, check processing,
accounts payable and other similar operational or administrative services;
12
<PAGE>
(8) overseeing the day-to-day operations of ICH and supervising the
performance of such other administrative functions necessary in the
management of ICH as directed by the Board of Directors of ICH;
(9) advising and negotiating agreements on behalf of the Company with
banking institutions and other lenders to provide for the short-term
borrowing of funds by the Company;
(10) communicating on behalf of the Company with the holders of the
equity and debt securities of the Company as required to satisfy the
reporting and other requirements of any governmental bodies or agencies and
to maintain effective relations with such holders;
(11) subject to an agreement executed by the Company, advising as to the
designation of a servicer for those loans sold by ICCC whereby ICCC elected
not to service such loans;
(12) counseling the Company in connection with policy decisions to be
made by its Board of Directors; and
(13) upon request by and in accordance with the direction of the Board of
Directors of the Company, investing or reinvesting any money of the
Company.
RAI entered into a Submanagement Agreement with IFC, the conduit operations
of IMH, to provide administrative services as required by the Company
including facilities and costs associated therewith, technology, human
resources, management information systems, general ledger accounts, check
processing and accounts payable as RAI deems necessary. The Manager may also
enter into additional contracts with other parties, which may include IMH or
its affiliates, to provide any such services for the Manager, which third
party shall be approved by the Company's Board of Directors. See "--Expenses."
RAI currently has a total of four officers and three managers who
participate in the oversight of the Company's operations.
Management Fees
The Manager is entitled to receive for each fiscal quarter, an amount equal
to 25% of the Net Income of the Company, before deduction of such
compensation, in excess of the amount that would produce an annualized Return
on Equity equal to the daily average Ten Year U.S. Treasury Rate plus 2% (the
"25% Payment"). The term "Return on Equity" is calculated for any quarter by
dividing the Company's Net Income for the quarter by its Average Net Worth for
the quarter. For such calculations, the "Net Income" of the Company means the
net income of the Company determined in accordance with the Code before the
Manager's compensation, the deduction for dividends paid and any net operating
loss deductions arising from losses in prior periods. A deduction for all of
the Company's interest expenses for borrowed money is also taken in
calculating Net Income. "Average Net Worth" for any period means the
arithmetic average of the sum of the gross proceeds from any offering of its
equity securities by the Company, before deducting any underwriting discounts
and commissions and other expenses and costs relating to the offering, plus the
Company's retained earnings less dividends declared (without taking into account
any losses incurred in prior periods) computed by taking the daily average of
such values during such period. The 25% Payment to the Manager is calculated
quarterly in arrears before any income distributions are made to stockholders
for the corresponding period.
The Manager's fees are calculated by the Manager within 60 days after the
end of each calendar quarter, with the exception of the fourth quarter for
which compensation will be computed within 30 days, and such calculation shall
be promptly delivered to the Company. The Company is obligated to pay the fee
within 90 days after the end of each calendar quarter. For the period January
15, 1997 to December 31, 1997, ICH recorded no expenses in connection with the
25% Payment payable to RAI.
Expenses
Pursuant to the Management Agreement, ICH pays all operating expenses
incurred by the Manager under the Management Agreement. The operating expenses
generally required to be incurred by the Manager and reimbursed by ICH include
out-of-pocket costs, equipment and other personnel required for the Company's
13
<PAGE>
operations, including amounts payable by RAI pursuant to submanagement
agreements with outside third parties, which include IMH and its affiliates,
to provide various services to the Company including facilities and costs
related therewith, technology, management information systems, human resource
administration, general ledger accounts, check processing, accounts payable
and other similar operational services ("Reimbursable Expenses"). Reimbursable
Expenses also include issuance and transaction costs associated with the
purchase, disposition and financing of investments, regular legal and auditing
fees and expenses of the Company, the fees and expenses of the Company's
Directors, premiums for directors' and officers' liability insurance, premiums
for fidelity and errors and omissions insurance, servicing and sub-servicing
expenses, the costs of printing and mailing proxies and reports to
stockholders, and the fees and expenses of the Company's custodian and
transfer agent, if any.
The Company reimburses the Manager for all Reimbursable Expenses, plus a
service charge of 15% on all Reimbursable Expenses owed by RAI to IFC, the
conduit operations of IMH, for costs and services under any subcontract
between RAI and IFC. RAI pays all such third parties on a dollar-for-dollar
basis the aforementioned amounts received by it from the Company; no such 15%
service charge will be paid to third party service providers other than IFC.
All of the persons who are officers of the Manager are also officers of IMH,
IFC, ICH and ICCC. IMH owns all of the outstanding shares of the non-voting
preferred stock of IFC, its conduit operations, representing 99% of the
economic interest in IFC, and Messrs. Tomkinson, Johnson and Ashmore own all
of the outstanding shares of common stock of IFC, representing 1% of the
economic interest. Each of these officers have modified their employment
agreements with IFC to allow them to become officers of the Manager (and of
ICH and ICCC). The Manager will agree to cause each of its officers to devote
as much of his or her time to the operations of the Company as is reasonably
necessary. The Company will reimburse the Manager, who will reimburse IFC on a
dollar for dollar basis, for the actual cost (the "Reimbursable Executive
Amounts") of providing the services of these officers to the Company based
upon compensation payable to them by IFC, plus a 15% service charge.
For the first three years of the Management Agreement, there is a minimum
amount of $500,000 per annum (which includes the 15% service charge) payable
by ICH to RAI for Reimbursable Expenses and Reimbursable Executive Amounts.
After the third year, ICH is responsible for paying RAI the actual amount of
Reimbursable Expenses and Reimbursable Executive Amounts, with the 15% service
charge for amounts due to IFC.
The Company does not believe that its operations are adversely affected as a
result of these relationships. Payments of Reimbursable Expenses and
Reimbursable Executive Amounts by the Company to RAI are made monthly. For the
period January 15, 1997 to December 31, 1997, ICH recorded an aggregate of
$525,000 representing Reimbursable Expenses and Reimbursable Executive amounts
payable to RAI.
Tabular Presentation of Amount Payable to Manager
The following table presents all compensation, fees, profits and other
benefits (including reimbursement of out-of-pocket expenses) which RAI and its
affiliates may earn or receive in connection with the Management Agreement.
<TABLE>
<CAPTION>
RECIPIENT PAYOR AMOUNT
--------- ----- ------
<C> <C> <S>
RAI(1) ICH 25% Payment(2)
RAI(3) ICH Reimbursable Expenses, plus a 15% service charge(4)
RAI(3) ICH Reimbursable Executive Amounts, plus a 15% service
charge(4)
</TABLE>
- --------
(1) RAI is equally owned by each of Messrs. Tomkinson, Ashmore and Johnson;
the 25% payment to RAI will be retained by RAI, resulting in a direct
benefit to its owners.
(2) For a more detailed explanation of the 25% Payment, see "--Management
Fees." There is no minimum or maximum amount of the 25% Payment due in any
year.
14
<PAGE>
(3) All amounts payable by ICH to RAI for Reimbursable Expenses and
Reimbursable Executive Amounts, plus the 15% service charge, are payable
by RAI to IFC.
(4) For a more detailed explanation of Reimbursable Expenses and Reimbursable
Executive Amounts see "--Expenses." For the first three years of the
Management Agreement, there is a minimum amount of $500,000 per annum
(which includes the 15% service charge) payable by ICH to RAI for
Reimbursable Expenses and Reimbursable Executive Amounts due in any year.
There is no maximum amount of Reimbursable Expenses or Reimbursable
Executive Amounts due in any year.
STOCK OPTION AND AWARDS PLAN
The Company has adopted the Stock Option and Awards Plan and the directors,
officers and employees of the Manager will be granted certain options or
rights under the Stock Option and Awards Plan and may in the future be granted
additional options or rights under the Stock Option and Awards Plan. See
"Executive Compensation--Stock Option and Awards Plan."
LIMITS OF RESPONSIBILITY
Pursuant to the Management Agreement, the Manager will not assume any
responsibility other than to render the services called for thereunder and
will not be responsible for any action of the Company's Board of Directors in
following or declining to follow its advice or recommendations. The Manager,
its directors, officers, equityholders and employees will not be liable to the
Company, any mortgage security issuer, any subsidiary of the Company, the
Unaffiliated Directors, the Company's stockholders or any subsidiary's
shareholders for acts performed in accordance with and pursuant to the
Management Agreement, except by reason of acts or omissions constituting bad
faith, willful misconduct, gross negligence or reckless disregard of their
duties under the Management Agreement. The Manager is a recently formed entity
and does not have significant assets. Consequently, there can be no assurance
that the Company would be able to recover any damages for claims it may have
against the Manager. The Company has agreed to indemnify the Manager, and its
managers, officers, equityholders and employees with respect to all expenses,
losses, damages, liabilities, demands, charges and claims arising from any
acts or omissions of the Manager made in good faith in the performance of its
duties under the Management Agreement.
RELATIONSHIPS WITH IMH
ORGANIZATIONAL TRANSACTIONS WITH IMH
In February 1997, Joseph R. Tomkinson, ICH's Chairman of the Board and Chief
Executive Officer, William S. Ashmore, ICH's President and Chief Operating
Officer, Richard J. Johnson, ICH's Executive Vice President, Chief Financial
Officer, Treasurer and Secretary, William D. Endresen, ICH's Senior Vice
President, Mary C. Glass-Schannault, ICH's Senior Vice President, and each of
James Walsh, Frank P. Filipps, Stephan R. Peers and Thomas J. Poletti, Directors
of ICH, and H. Wayne Snavely, purchased 76,800, 76,800, 62,400, 12,000, 12,000
and 12,000 shares of the Common Stock of ICH, respectively, at a per share price
of $.01. In addition, IMH purchased 299,000 shares of the Common Stock of ICH,
at a per share price of $.01.
In February 1997, IMH purchased all of the non-voting preferred stock of
ICCC, which represents 95% of the economic interest in ICCC (entitling the
holder to receive 95% of any dividend or distribution made by ICCC), for
$500,000. Each of Messrs. Tomkinson, Ashmore, Johnson and Endresen purchased
all of the outstanding shares of Common Stock of ICCC (500 shares at a per
share price of $1.00), which represent 5% of the economic interest in ICCC.
In March 1997, IMH lent ICH $15.0 million evidenced by a promissory note
bearing interest at the rate of 8% per annum which was convertible into shares
of non-voting convertible preferred stock of ICH at the rate of one share of
ICH Preferred Stock for each $5.00 principal amount of said note.
15
<PAGE>
In March 1997, IMH converted the aforementioned $15.0 million principal
amount promissory note into an aggregate of 3,000,000 shares of ICH Preferred
Stock. All ICH Preferred Stock automatically converted, upon the closing of
ICH's IPO, into shares of ICH Common Stock determined by multiplying the
number of shares of ICH Preferred Stock converted by a fraction, the numerator
of which was $5.00 and the denominator of which was $15.00, the IPO price per
share. Notwithstanding the foregoing, consistent with IMH's classification as
a REIT, IMH was not entitled to convert into ICH Common Stock more than that
number of shares of ICH Preferred Stock whereby IMH would have owned,
immediately after such conversion, greater than 9.8% of the outstanding ICH
Common Stock. Any shares of ICH Preferred Stock not converted into ICH Common
Stock upon the closing of the IPO automatically converted into shares of ICH
non-voting Class A Common Stock at the same rate as the ICH Preferred Stock
converted into ICH Common Stock on said date. Shares of ICH Class A Common
Stock converted into shares of ICH Common Stock on a one-for-one basis and
each such class of ICH Common Stock is entitled to cash dividends on a pro
rata basis. Upon any subsequent issuances of Common Stock by ICH or sales of
ICH Common Stock held by IMH, shares of ICH Class A Common Stock will
automatically convert into additional shares of ICH Common Stock, subject to
said 9.8% limitation.
In April 1997, IMH exchanged the 299,000 shares of ICH Common Stock held by
it for an equal number of shares of ICH Class A Stock.
Upon the closing of the IPO in August 1997, IMH contributed to ICH (the
"Contribution") 100% of the outstanding shares of non-voting preferred stock
of ICCC in exchange for 95,000 shares of ICH Class A Common Stock. As of March
31, 1998, IMH owned 719,789 shares of ICH Common Stock and 674,211 shares of
ICH Class A Common Stock.
Prior to the Contribution, ICCC was allocated expenses of various
administrative services provided by IMH. The costs of such services were not
directly attributable to a specific division or subsidiary and primarily
included general corporate overhead, such as accounting and cash management
services, human resources and other administrative functions. These expenses
were calculated as a pro rata share of certain administrative costs based on
head count or relative assets and liabilities of the division or subsidiary,
which management believed was a reasonable method of allocation.
NON-COMPETE AGREEMENT AND RIGHT OF FIRST REFUSAL AGREEMENT
The Company's operations may be affected by the activities of IMH and IFC.
Pursuant to a non-compete agreement (the "Non-Compete Agreement") between IMH,
IFC, ICH and ICCC which became effective upon the closing of ICH's IPO, for a
period of the earlier of nine months from August 1997 or the date upon which
the Company accumulated (for investment or sale) $300.0 million of Commercial
Mortgages and/or CMBSs, neither IMH nor IFC would originate or acquire any
Commercial Mortgages; however, this Agreement did not preclude IMH (either
directly or through IFC) from purchasing any Commercial Mortgages or CMBSs
under the Right of First Refusal Agreement discussed below. The Non-Compete
Agreement terminated in March 1998. Subject to the Right of First Refusal
Agreement, as defined below, IMH, as a mortgage REIT, and IFC, as its conduit
operations, may compete with the operations of the Company.
It is anticipated that RAI will act as the Manager for other REITs, some of
which may have been or will be Affiliated REITs. In such an event, any
Affiliated REIT utilizing RAI as its Manager may be in competition with the
Company. In August 1997, RAI, ICH, ICCC, IMH and IFC entered into a ten-year
right of first refusal agreement (the "Right of First Refusal Agreement"). It
is expected that any Affiliated REIT utilizing RAI as its Manager will become
a party to the Right of First Refusal Agreement, but such event is outside the
control of the Company and there can be no assurance that any or all
Affiliated REITs (other than IMH) will actually become parties to the Right of
First Refusal Agreement. Pursuant to this Agreement, RAI agrees that any
mortgage loan or mortgage-backed security investment opportunity (an
"Investment Opportunity") which is offered to it on behalf of either the
Company, IMH or any Affiliated REIT will first be offered to that entity (the
"Principal Party") whose initial primary business as described in its initial
public offering documentation (the "Initial Primary Business") most closely
aligns with such Investment Opportunity. In addition, both IMH and
16
<PAGE>
IFC on the one hand and ICH and ICCC on the other agree that any Investment
Opportunity offered to either of them which falls outside the scope of its
Initial Primary Business should be offered to the Principal Party. Should the
Principal Party decline to take advantage of an Investment Opportunity offered
to RAI, RAI will make an independent evaluation of which REITs business is
more greatly enhanced by such Investment Opportunity. Should all of such REITs
decline such Investment Opportunity RAI may offer the Investment Opportunity
to any third party. Should the Principal Party decline to take advantage of an
Investment Opportunity offered to a REIT which is a party to the Right of
First Refusal Agreement, said REIT shall then be free to pursue the Investment
Opportunity. In such an event there can be no assurance that the Company will
be able to take advantage of any such Investment Opportunity or that any
competitive activity of IMH, IFC or any Affiliated REIT will not adversely
affect the Company's operations. In addition, the Company may become further
prejudiced by the Right of First Refusal Agreement to the extent that the
Company desires to pursue or pursues a business outside its Initial Primary
Business.
SUBMANAGEMENT AND SERVICING AGREEMENTS
RAI has entered into a Submanagement Agreement with IFC, the conduit
operations of IMH, to provide administrative services as required by the
Company including facilities and costs associated therewith, technology, human
resources, management information systems, general ledger accounts, check
processing and accounts payable as RAI deems necessary. IFC charges ICH and
ICCC for these services based upon usage which charges management believes are
reasonable. Total cost allocations IFC charged to ICH and ICCC for the year
ended December 31, 1997 were $525,000 and $456,000, respectively. For a
general description of the persons who are officers of the Manager and the
terms of the Management Agreement, see "--Relationships with the Manager."
ICCC acts as a servicer of Commercial Mortgages acquired on a "servicing-
released" basis by the Company in its Long-Term Investment Operations pursuant
to the terms of a Servicing Agreement which became effective in February 1997.
ICCC subcontracts all of its servicing obligations under such loans to
independent third parties pursuant to sub-servicing agreements.
CREDIT ARRANGEMENTS
ICCC maintains an uncommitted warehouse financing facility with an interest
rate indexed to the prime rate with IMH of which $8.5 million was outstanding
on the warehouse line at December 31, 1997. The largest aggregate balance
outstanding during the year ended December 31, 1997 was $8.5 million. Interest
expense recorded by ICCC related to warehouse financing due to IMH for the
year ended December 31, 1997 was $262,000.
During 1997, ICH maintained a warehouse financing facility with IWLG, a
wholly owned subsidiary of IMH, until ICH obtained warehouse financing
facilities with third-party lenders. The interest rate on the warehouse
financing facility was 8.50% per annum and the highest balance outstanding
during the year ended December 31, 1997 was $16.6 million. Interest expense
recorded by ICH related to finance receivables due to IWLG for the year ended
December 31, 1997 was $453,000. As of December 31, 1997, ICH did not maintain
a warehouse facility with IWLG.
In August 1997, ICH entered into a revolving credit arrangement with IMH
whereby ICH agreed to advance to IMH up to a maximum amount of $15.0 million.
The agreement expires on August 8, 1998. Advances under the revolving credit
arrangement are at an interest rate and maturity to be determined at the time
of each advance (typically, prime plus 1%) with interest and principal paid
monthly. During 1997, the largest aggregate amount outstanding under the
credit arrangement was $12.6 million at an interest rate of 9.5%. As of
December 31, 1997, there were no amounts outstanding under the credit
arrangement. Interest income recorded by ICH related to such advances to IMH
was approximately $68,000.
In August 1997, ICH entered into a revolving credit arrangement with IMH
whereby IMH agreed to advance to ICH up to maximum amount of $15.0 million.
The agreement expires on August 8, 1998. Advances under the
17
<PAGE>
revolving credit arrangement are at an interest rate and maturity to be
determined at the time of each advance (typically, prime plus 1%) with
interest and principal paid monthly. During 1997, the largest aggregate amount
outstanding under the credit arrangement was $15.0 million at an interest rate
of 9.5%. As of December 31, 1997, ICH's outstanding borrowings under the
credit arrangement was $9.1 million. Interest expense recorded by ICH related
to such borrowings from IMH was approximately $55,000.
In October 1997, ICH entered into a revolving credit arrangement with IFC
whereby ICH would advance to IFC up to a maximum amount of $15.0 million.
Advances under the revolving credit arrangement were evidenced by an unsecured
promissory note and at an interest rate and maturity determined at the time of
each advance (typically, prime plus 1%) with interest and principal paid
monthly. The largest balance outstanding under the revolving credit
arrangement during the year ended December 31, 1997 was $2.0 million at an
interest rate of 9.5%. The revolving credit arrangement expired in December
1997 and as of December 31, 1997 there were no amounts outstanding.
PURCHASE OF COMMERCIAL MORTGAGES
In February 1997, ICCC brokered ICH's purchase of $7.3 million and $10.2
million of condominium conversion loans which were financed with $16.6 million
in borrowings under a warehouse lending facility provided by a subsidiary of
IMH (see "--Credit Arrangements") and $900,000 in borrowings from IMH. All of
the condominium conversion loans were purchased from IFC and $7.3 million of
such mortgage loans were originated by a company with which William D.
Endresen was an affiliate. IMH owns all of the outstanding non-voting
preferred stock of IFC, which represents 99% of the economic interest in IFC,
and Messrs. Tomkinson, Johnson and Ashmore own 100% of the common stock of IFC
representing 1% of the economic interest. As of March 31, 1998, Messrs.
Tomkinson, Ashmore and Johnson owned 100% of the common stock of IFC.
In March 1997, ICH purchased a $10.1 million CMBSs from IFC which was
financed by a promissory note with ICII of which Mr. Tomkinson is a director.
In March 1997, the promissory note was repaid with cash from IMH's $15.0
million investment. Concurrently therewith, the Company repaid the $900,000
owed to IMH in connection with its purchase of condominium conversion loans.
RELATIONSHIPS WITH AFFILIATES
GENERAL
With a view toward protecting the interests of ICH's stockholders, the
Bylaws of ICH provide that a majority of the Board of Directors (and at least
a majority of each committee of the Board of Directors) must not be
"Affiliates" of RAI, as that term is defined in the Bylaws, and that the
investment policies of ICH must be reviewed annually by the Unaffiliated
Directors. Such policies and restrictions thereon may be established from time
to time by the Board of Directors, including a majority of the Unaffiliated
Directors. In addition, any transaction between ICH and any Affiliated Person
requires the affirmative vote of a majority of the Unaffiliated Directors.
Moreover, approval, renewal or termination of the Management Agreement
requires the affirmative vote of a majority of the Unaffiliated Directors. The
Management Agreement may be terminated by ICH upon 60 days' notice. Any such
termination or failure to extend by ICH without cause shall result in the
payment of a termination or non-renewal fee to the Manager determined by an
independent appraisal. See "--Relationships with the Manager--Management
Agreement."
Many of the affiliates of IMH, RAI and ICCC have interlocking executive
positions and share common ownership. Joseph R. Tomkinson, ICH's Chairman of
the Board and Chief Executive Officer, is the Chief Executive Officer and
Chairman of the Board of IMH, a one-third owner of RAI and an owner of 25% of
the common stock of ICCC. William S. Ashmore, ICH's President and Chief
Operating Officer, is the President
18
<PAGE>
and a Director of IMH, a one-third owner of RAI and an owner of 25% of the
common stock of ICCC. Richard J. Johnson, ICH's Executive Vice President,
Chief Financial Officer, Treasurer and Secretary, is Executive Vice President,
Chief Financial Officer, Treasurer and Secretary of IMH, a one-third owner of
RAI and a 25% owner of the common stock of ICCC. William D. Endresen, ICH's
Senior Vice President, is an owner of 25% of the common stock of ICCC. Mary
Glass-Schannault, ICH's Senior Vice President, is a Senior Vice President of
IMH and IFC. Each of James Walsh, Frank P. Filipps and Stephan R. Peers,
Directors of ICH, are Directors of IMH. In addition, since Messrs. Tomkinson,
Ashmore, Johnson and Endresen own all of the outstanding shares of voting
stock of ICCC, they have the right to elect all directors of ICCC and the
ability to control the outcome of all matters for which the consent of the
holders of the common stock of ICCC is required. Ownership of 100% of the
common stock of ICCC entitles the owners thereof to an aggregate of 5% of the
economic interest in ICCC.
RELATED PARTY COST ALLOCATIONS
The Company was charged expenses for certain services and costs that
primarily include human resources, data processing, professional services and
accounting functions. These expenses were primarily charged based on a pro
rata allocation of certain IFC employees' time spent working on Company
related business, which management believes is reasonable, and included a 15%
service charge which is included in the terms of the management agreement with
RAI. The related party allocations for the period January 15, 1997
(commencement of operations) through December 31, 1997 totaled $981,000.
Management believes the related party expenses allocated to the Company and
included in its results of operations for the period from January 15, 1997
(commencement of operations) through December 31, 1997 approximate what the
expenses would have been if the Company had operated as an unaffiliated entity
of IMH and its affiliates.
CREDIT ARRANGEMENTS
ICCC has entered into warehouse line agreements with ICH which provide up to
an aggregate of $900.0 million to finance ICCC's operations as needed. Terms
of the warehouse line agreements require that the Commercial Mortgages be held
by an independent third party custodian, which gives the Company the ability
to borrow against the collateral as a percentage of the fair market value of
the Commercial Mortgages. The borrowing rates on the warehouse line agreements
are at prime which was 8.50% at December 31, 1997. The margins on the
warehouse line agreement are up to 90% of the fair market value of the
collateral. Management believes that the warehouse line agreements will be
sufficient to handle the Company's liquidity needs. During
1997, the highest aggregate amount outstanding under the credit arrangements
was $95.7 million. As of December 31, 1997, amounts outstanding on ICCC's
warehouse line with ICH were $95.7 million. Interest expense recorded by ICCC
related to warehouse lines with ICH for the year ended December 31, 1997 was
$2.4 million.
On December 31, 1997, the Company financed its 50% interest, through its
ownership in Dove, in a commercial office building located in Newport Beach,
California with a loan for $5.2 million from ICCC. During 1997, the highest
amount outstanding under the loan was $5.2 million. Terms of the loan are for
25 years at an adjustable rate of 9.0% with current monthly principal and
interest payments of $44,000. ICCC recorded loan fees of $71,000 on the loan.
During the normal course of business, ICH may advance or borrow funds on a
short-term basis with affiliated companies. Advances to affiliates are
reflected as "Due From Affiliates" while borrowings are reflected as "Due To
Affiliates" on the Company's balance sheet. These short-term advances and
borrowings bear interest at a fixed rate of 8.00% per annum. Interest income
recorded by ICH related to short-term advances due from affiliates was
$268,000 for the year ended December 31, 1997. Interest expense recorded by
ICH related to short-term advances due to affiliates was $45,000 for the year
ended December 31, 1997.
19
<PAGE>
During the normal course of business, ICCC may advance or borrow funds on a
short-term basis with affiliated companies. Advances to affiliates are
reflected as "Due From Affiliates" while borrowings are reflected as "Due To
Affiliates" on ICCC's balance sheet. These short-term advances and borrowings
bear interest at a fixed rate of 8.00% per annum. Interest income recorded by
ICCC related to short-term advances due from affiliates was $16,000 for the
year ended December 31, 1997. Interest expense recorded by ICCC related to
short-term advances due to affiliates was $113,000 for the year ended December
31, 1997.
CASH AND CASH EQUIVALENTS
As of December 31, 1997, IMH had $12.5 million of cash and cash equivalents
on deposit with Southern Pacific Bank ("SPB"), formerly Southern Pacific
Thrift and Loan Association, a subsidiary of ICII of which Joseph R. Tomkinson
is a director.
PURCHASE OF COMMERCIAL MORTGAGES
During 1997, ICH purchased $58.5 million of adjustable rate Commercial
Mortgages from ICCC at a net premium of $111,000.
During the period January 15, 1997 to December 31, 1997, Bankers Capital
Resource, of which Mr. Endresen's brother is a principal, brokered an
aggregate of approximately $4.1 million of loans to ICCC. ICCC has paid to
Bankers Capital Resource broker fees of $41,000 for that period.
STOCK COMPENSATION EXPENSE
Stock compensation expense of $2,697,000 represents the difference between
the price at which ICH issued 300,000 shares of common stock to directors and
officers of IMH and ICH on February 3, 1997 ($.01 per share) and the estimated
fair value for financial reporting purposes of such shares as determined by
the Company's management, as of February 3, 1997 ($9.00 per share). Fair value
was based primarily on management's projection of the Company's future cash
flow and net earnings, as well as the lack of liquidity of the shares at the
date of issuance and the uncertainty of certain future events regarding the
development of the Company's business and organization structure including,
but not limited to, obtaining independent financing for the organization and
purchase of Commercial Mortgages, funding and closing Commercial Loans, and
developing a pipeline of future Commercial Loan originations.
Stock compensation expense of $25,000 represents the difference between the
price at which ICCC issued 500 shares of Common Stock to directors and
officers of IMH and ICH on February 10, 1997, and the net book value, which
the Company's management believes approximated the fair value of the 5%
economic interest in ICCC purchased by the common shareholders.
OTHER TRANSACTIONS
In April 1997, ICH, as a stand-alone entity, entered into a warehouse line
agreement to provide up to $200.0 million to finance the Company's businesses.
Terms of the warehouse line of credit require that the Commercial Mortgages be
held by an independent third party custodian, which gives the Company the
ability to borrow against the collateral as a percentage of the fair market
value of the Commercial Mortgages. The borrowing rates are expressed in basis
points over one-month LIBOR, depending on the type of collateral provided by
the Company. The margins on the warehouse line agreement are based on the type
of mortgage collateral used and generally range from 85% to 88% of the fair
market value of the collateral. The warehouse line agreement was guaranteed by
IMH until the closing of the IPO.
Thomas J. Poletti, a Director of ICH, is a partner in the law firm Freshman,
Marantz, Orlanski, Cooper & Klein, which is counsel to the Company and IMH.
Mr. Poletti owns 12,000 shares of the Company's Common Stock and options to
purchase 10,000 shares of Common Stock.
20
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company with
respect to beneficial ownership of the Company's Common Stock as of June 1,
1998 by (1) each person known to the Company to beneficially own more than
five percent of the Company's Common Stock, (2) each Director, (3) the
Company's executive officers, and (4) all Directors and executive officers as
a group. Unless otherwise indicated in the footnotes to the table, the
beneficial owners named have, to the knowledge of the Company, sole voting and
investment power with respect to the shares beneficially owned, subject to
community property laws where applicable.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
SHARES SHARES
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED OWNED (1)
------------------------ ------------ -------------
<S> <C> <C>
Impac Mortgage Holdings, Inc.(1)(2).............. 719,789 9.8%
Joseph R. Tomkinson(3)........................... 110,800 1.4
William S. Ashmore(3)............................ 86,133 1.1
Richard J. Johnson(3)............................ 73,185 *
William D. Endresen(4)........................... 28,666 *
Mary C. Glass-Schannault(3)...................... 17,775 *
James Walsh(5)................................... 17,000 *
Frank P. Filipps(5).............................. 17,000 *
Stephan R. Peers(5).............................. 18,500 *
Thomas J. Poletti(5)............................. 17,000 *
Timothy R. Busch(5).............................. 5,000 *
All Directors and Executive Officers as a group
(10 persons).................................... 391,059 5.3%
</TABLE>
- --------
* less than 1%
(1) Excludes 674,211 shares of ICH non-voting Class A Common Stock owned by
IMH. Such shares automatically convert into shares of Common Stock of ICH
upon any issuances of Common Stock by ICH or sales of ICH Common Stock
held by IMH; provided, however, that the shares of ICH Class A Common
Stock will not convert into shares of ICH Common Stock whereby IMH would
own, immediately after such conversion, greater than 9.8% of ICH's
outstanding Common Stock.
(2) IMH's address is 20371 Irvine Avenue, Santa Ana Heights, California
92707.
(3) Includes options to purchase 3,333 shares of Common Stock of ICH
exercisable in August 1998.
(4) Includes options to purchase 16,666 shares of Common Stock of ICH
exercisable in August 1998.
(5) Includes options to purchase 5,000 shares of Common Stock of ICH
exercisable in August 1998.
21
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has selected and appointed KPMG Peat
Marwick LLP to act as the Company's independent accountants for the year
ending December 31, 1998. In recognition of the important role of the
independent accountants, the Board of Directors has determined that its
selection of such accountants should be submitted to the stockholders for
review and ratification on an annual basis.
KPMG Peat Marwick LLP has examined the financial statements of the Company
since its inception. Management is satisfied with their performance to date.
The affirmative vote of a majority of the shares voting on this proposal is
required for its adoption. In view of the difficulty and the expense involved
in changing independent accountants on short notice, if the proposal is not
approved, it is contemplated that the appointment of KPMG Peat Marwick LLP for
1998 may be permitted to stand, unless the Board of Directors finds other
compelling reasons for making a change. Disapproval of this Proposal will be
considered as advice to the Board of Directors to select other independent
accountants for the following year. Representatives of KPMG Peat Marwick LLP
are expected to be present at the Annual Meeting and will have the opportunity
to make a statement if they desire to do so. They will also be available to
respond to appropriate questions.
STOCKHOLDERS' PROPOSALS
Stockholders' proposals intended to be presented at the Company's next
Annual Meeting of Stockholders to be held in 1999 must be received at the
Company's principal executive offices no later than February 15, 1999, in
order to be considered for inclusion in the proxy statement and form of proxy
relating to that meeting.
OTHER BUSINESS
The Board of Directors does not know of any other matter to be acted upon at
the meeting. However, if any other matter shall properly come before the
meeting, the proxyholders named in the proxy accompanying this Proxy Statement
will have authority to vote all proxies in accordance with their discretion.
By Order of the Board of Directors
/s/ Richard J. Johnson
-----------------------------
Richard J. Johnson, Secretary
Dated: June 15, 1998
Santa Ana Heights, California
22
<PAGE>
1651-PS-98
<PAGE>
ICH47 7 DETACH HERE
PROXY
IMPAC COMMERCIAL HOLDINGS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON JULY 23, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY
The undersigned Stockholder of Impac Commercial Holdings, Inc. (the
"Company"), a Maryland corporation, hereby appoints Joseph R. Tomkinson and
Richard J. Johnson, or either of them, each with full power of substitution, as
proxies of the undersigned to attend the Annual Meeting of Stockholders of the
Company, to be held at the Sutton Place Hotel, 4500 MacArthur Boulevard, Newport
Beach, California 92660, on the 23rd day, July, 1998, at 9:00 A.M. Pacific Time,
and any adjournment or postponement thereof, and to cast on behalf of the
undersigned the number of votes the undersigned would be entitled to cast if
personally present at the meeting on the following matters set forth on the
reverse side. The undersigned hereby acknowledges receipt of the Notice of
Annual Meeting of Stockholders and of the accompanying Proxy Statement and
revokes any proxy heretofore given with respect to such meeting.
THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH SUCH INSTRUCTIONS AS MAY BE
GIVEN ON THE REVERSE SIDE OF THIS PROXY CARD. IT IS UNDERSTOOD, HOWEVER, THAT
THE PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND RATIFICATION OF THE
APPOINTMENT OF CERTIFIED PUBLIC ACCOUNTANTS AND IN THE DISCRETION OF THE PROXY
HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT OR POSTPONEMENT UNLESS CONTRARY INSTRUCTIONS ARE SPECIFIED. THE
SPACES FOR YOUR VOTES AND SIGNATURE ARE SET FORTH ON THE REVERSE SIDE. PLEASE
VOTE, SIGN AND RETURN PROMPTLY.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE>
ICH47 2 DETACH HERE
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES AND FOR
THE OTHER PROPOSAL.
1. Election of Directors
Nominees: Joseph R. Tomkinson, James Walsh, Frank P. Filipps, Stephen
R. Peers, Thomas J. Poletti, Timothy R. Busch
FOR WITHHELD
[_] [_]
[_] _____________________________________________
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. To ratify the appointment of KPMG Peat Marwick [_] [_] [_]
LLP as independent accountants for the year
ending December 31, 1998.
3. In their discretion, upon any and all such other matters as may
properly come before the meeting or any adjournment or postponement
thereof.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [_]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS. JOINT OWNERS SHOULD EACH SIGN.
TRUSTEES, EXECUTORS, ETC. SHOULD INDICATE CAPACITY IN WHICH THEY ARE
SIGNING.
Signature:_______________ Date:________ Signature:_______________ Date:________
