been restructured, and settled a portion of our outstanding repurchase claims, while also reducing our operating costs and liabilities. In the first quarter of 2008, the Company entered into an agreement with a real estate marketing company to generate advisory fees. In November 2008, the Company and the real estate marketing company agreed to terminate the advisory services agreement and, as a result of the termination, the Company received a payment of approximately $37 million, inclusive of the $7.4 million receivable included in other assets in the consolidated balance sheet at September 30, 2008.

        One of our goals in this challenging market environment has been to align the costs of our operations to the cash flows from our long-term mortgage portfolio (residual interests in securitizations) and master servicing portfolio. The aggregate dividends on the outstanding Preferred Stock are approximately $14.9 million per year. Our Board believes that the Exchange Offer is in the best interests of our stockholders because the acceptance of such an offer would reduce the Company's continuing obligation to pay or accumulate quarterly dividends on the Preferred Stock, thereby allowing the Company to use or preserve cash for other purposes.

        The completion of the Exchange Offer will eliminate our obligation to pay accrued and unpaid dividends on the Preferred Stock and will make future dividends non-cumulative. We believe the elimination of the Preferred Stock and the related dividends will give us the enhanced balance sheet flexibility to operate and grow our business. We additionally believe that with an improved capital structure there are multiple business opportunities we can pursue to enhance stockholder value that have not previously been feasible due to our ongoing obligations under our trust preferred securities and our Preferred Stock. We further believe that this exchange could offer the current holders of Preferred Stock greater liquidity as holders of Common Stock and may have the effect of increasing stockholders' equity. By offering to exchange shares of Common Stock for the outstanding shares of Preferred Stock, we are offering holders of our Preferred Stock an interest in the class of our securities that will participate in any future growth of the Company.

Q:    What vote is required from the holders of Common Stock to approve the amendments to the Company's Charter modifying the terms of each series of Preferred Stock?

         A:    The amendments to the Company's Charter to modify the terms of each of our existing series of Preferred Stock requires the affirmative vote of holders of outstanding shares of Common Stock entitled to cast a majority of all the votes entitled to be cast on the proposal.

        Approval of Proposal No. 1 by the holders of Common Stock alone will not result in a modification of our Charter. Holders of 66²/3% of our Preferred Stock also must vote to approve or consent to the proposed amendments. We are seeking the approval of the holders of Preferred Stock to the proposed amendments in the consent solicitation that is a part of the Exchange Offer.

Q:    If Proposal No. 1 to modify the terms of the Company's Preferred Stock is approved, what will be the consequences to the Company?

         A:    In connection with seeking approval to amend the Company's Charter to modify the terms of the Preferred Stock, we are also conducting the Exchange Offer. The closing of the Exchange Offer and effectuating the exchange of the shares is subject to receiving approval of Proposal No. 1 from our holders of Common Stock. Shares of Preferred Stock that are exchanged for shares of Common Stock in the Exchange Offer will revert to the status of authorized but unissued shares of preferred stock. If all of the holders of Preferred Stock exchange their shares in the Exchange Offer, we will increase the number of outstanding shares of Common Stock by                        shares, or            %.

        The Common Stock issued will dilute the percentage ownership of the holders of Common Stock currently outstanding, and the potential for resale of the Common Stock could have an adverse effect on the trading price of our Common Stock.

Q:    If Proposal No. 1 to modify the terms of the Company's Preferred Stock is NOT approved, what will be the consequences to the Company?

         A:    If our stockholders do not approve the modification of the terms of the Preferred Stock, the Preferred Stock will remain issued and outstanding, and entitled to all of the rights associated with the Preferred Stock as further described in this proxy statement. Furthermore, the Exchange Offer will be terminated. The Preferred Stock ranks senior to our Common Stock with respect to the payment of distributions and the distribution of assets upon liquidation, dissolution or winding up. There are 2,000,000 and 4,470,600 shares of Series B Preferred Stock and Series C Preferred Stock outstanding, respectively. The holders of the Preferred Stock will continue to be entitled to the applicable dividend and liquidation preferences if this proposal is not approved by both the holders of Common Stock and the holders of Preferred Stock.

Q:    What are the general voting rights of the holders of Common Stock?

         A:    Each share of Common Stock is entitled to one vote, subject to the provisions of our Charter regarding restrictions on transfer ofcommon stock and will be fully paid and nonassessable upon issuance. Shares of Common Stock have no preference, conversion, exchange, redemption, appraisal, sinking fund, preemptive or cumulative voting rights.

Q:    What are the voting rights of the holders of Preferred Stock?

         A:    The Preferred Stock generally has no voting rights. However, if we do not pay dividends on any outstanding Preferred Stock for six or more quarterly periods (whether or not consecutive), holders of the Preferred Stock, voting separately as a class, will be entitled to elect two additional directors to the Company's Board to serve until all unpaid dividends have been paid or declared and set apart for payment, provided that any such directors, if elected, must not cause us to violate the corporate governance requirement of the NYSE that listed companies must have a majority of independent directors.

        In addition, the affirmative vote of holders of at least 66²/3% of the outstanding shares of Preferred Stock is required to (a) authorize or create, or increase the authorized or issued amount of, any class or series of capital stock ranking prior to the Preferred Stock with respect to the payment of distributions and the distribution of assets upon liquidation, dissolution or winding up or reclassify any of our authorized capital stock into such shares, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such shares; or (b) amend, alter or repeal any of the provisions of our Charter so as to materially and adversely affect the Preferred Stock, provided that any increase or decrease in the amount of the authorized preferred stock, including the Preferred Stock, or the creation or issuance of any additional preferred stock or other series of preferred stock that we may issue, or any increase in the amount of authorized shares of such series, in each case ranking on a parity with or junior to the preferred stock that we may issue with respect to the payment of distributions and the distribution of assets upon liquidation, dissolution or winding up, shall be deemed to not materially and adversely affect such terms of the Series B Preferred Stock and Series C Preferred Stock; or (c) enter into, approve, or otherwise facilitate a binding share exchange or reclassification involving the Preferred Stock that materially and adversely affects the Preferred Stock or a consolidation, merger or similar transaction unless in the case of a binding share exchange, reclassification, consolidation, merger or other similar transactions the shares of Preferred Stock remain outstanding and materially unchanged or, in the case of any such merger or consolidation with respect to which we are not the surviving or resulting entity, the shares are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, in each case with preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications, and terms or conditions of redemption of the Preferred Stock that are not individually or in the aggregate materially less favorable to the holders of the Preferred Stock.

Q:    Do the holders of Preferred Stock have any other rights?

         A:    Upon the voluntary or involuntary liquidation, dissolution or winding up of our affairs, each share of Preferred Stock will receive, before any payments are made to the holders of our Common Stock, $25.00 per share, plus in each case, a premium of $.50 per share up to but not including May 28, 2009, in the case of the Series B Preferred Stock, and $.50 per share up to but not including November 23, 2009, in the case of the Series C Preferred Stock, and accrued and unpaid dividends whether or not declared. If, upon any liquidation, dissolution or winding up of our affairs, the cash distributable among holders of Preferred Stock is insufficient to pay in full the liquidation preference of the Preferred Stock as described above, then our remaining assets (or the proceeds thereof) will be distributed among the holders of the Preferred Stock and any such other parity stock and in proportion to the amounts that would be payable on the Preferred Stock if all amounts payable thereon were paid in full. After payment of the full amount of the liquidating distributions, including the applicable premium, if any, to which they are entitled, the holders of the Preferred Stock will have no right or claim to any of our remaining assets. Our consolidation or merger with or into any other corporation, trust or entity, or the sale, lease or conveyance of all or substantially all of our assets or business, is not be deemed to constitute a liquidation, dissolution or winding up of us for purposes of the Preferred Stock.

Q:    Are holders of Preferred Stock entitled to dividends?

         A:    The holders of the Series B Preferred Stock and Series C Preferred Stock are entitled to cumulative quarterly dividends equal to 9.375% and 9.125% of the $25.00 liquidation preference per annum (equivalent to $2.34375 and $2.28125 per share), respectively, which is equal to an aggregate of $14.9 million per year. Dividends on the Preferred Stock accrue whether or not current payment of dividends is prohibited, whether or not we have earnings, whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. Accrued but unpaid dividends on the Preferred Stock accumulate as of the dividend payment date on which they first become payable. Although to date, the Company has paid all quarterly dividends on the Preferred Stock, we announced on December 10, 2008 that our Board will not declare, and we will not pay, a fourth quarter 2008 dividend on our Preferred Stock and that our Board approved the deferral of payments on our trust preferred securities dueeffected in December 2008 and January 2009. Pursuant to the terms of the trust preferred securities, we will be prohibited from paying dividends on our capital stock until such time as the obligations on the trust preferred securities are current. We are exploring the modification or elimination of the trust preferred obligations in order to decrease our payment obligations in some manner, which may include issuing additional shares of our Common Stock in connection with modifying or eliminating the trust preferred obligations; however, we can not assure you that we will be successful in modifying or eliminating these obligations.2008.

Q:    May the Company redeem the Preferred Stock?

         A:    We may not redeem the Series B Preferred Stock and Series C Preferred Stock prior to May 28, 2009 and November 23, 2009, respectively, except in limited circumstances to preserve our status as a REIT. On or after those dates, we may, at our option, redeem the Series B Preferred Stock and Series C Preferred Stock, as applicable, in whole or in part, at any time and from time to time, for cash at $25.00 per share, plus accrued and unpaid dividends, if any, to and including the redemption date. The Series B Preferred Stock and Series C Preferred Stock have a minimum liquidation preference of $25.00 per share, or an aggregate liquidation preference of approximately $161.8 million.

Q:    What happens if the Company does not declare and pay dividends to the holders of Preferred Stock?

         A:    Unless full cumulative dividends on the Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods and the then current dividend period: (i) no dividends (other than in shares of

Common Stock or in shares of any series of preferred stock that we may issue ranking junior to the preferred stock as to the payment of distributions and the distribution of assets upon liquidation) shall be declared or paid or set aside for payment; (ii) no distribution shall be declared or made upon shares of our Common Stock; and (iii) no shares of our Common Stock shall be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such shares) by us (except for transfers made pursuant to the provisions of our Charter relating to restrictions on ownership and transfers of our capital stock designed to ensure that we remain qualified as a REIT for federal income tax purposes).

Board Recommendations

Q:    How does the Board Recommend I vote on the proposal?

         A:    The Board recommends a vote FOR approval of the amendments to the Company's Charter to modify the terms of the Preferred Stock.

VOTING OF SHARES

Solicitation of Proxies

Our Board of Directors is soliciting the enclosed proxy. We will bear the cost of this solicitation of proxies. Solicitations will be made by mail. We may, in a limited number of instances, solicit proxies personally or by telephone. The Company has retained D.F. King & Co., Inc., a proxy solicitation firm, for assistance with the distribution of the materials to beneficial stockholders and the solicitation of proxies for the special meeting at a cost of approximately $20,000 and reimbursement of reasonable out-of-pocket expenses. We will reimburse banks, brokerage firms, other custodians, nominees and fiduciaries for reasonable expenses incurred in sending proxy materials to beneficial owners of our shares.common stock.

Annual Report

Our annual report to stockholders for the year ended December 31, 2008 will be concurrently provided to each stockholder at the time we send this proxy statement and the enclosed proxy and is not to be considered a part of the proxy-soliciting material.

Voting Requirements & Procedures

Your vote is important. YourIf you hold your shares as a record holder, your shares can be voted at the Meetingannual meeting only if you are present in person at the meeting or your shares are represented by proxy. Even if you plan to attend the Meeting, we urge you to vote by proxy in advance. Under Maryland law, a stockholderYou may authorize another person as proxy via electronic or telephonic means. Therefore,to vote your shares by using one of the following three methods: (1) you may vote by mail, by marking your proxy card, and then date, sign and return it in the postage-paid envelope provided; (2) you may direct your vote electronically by accessing the website located at www.voteproxy.com and following the on-screen instructionsinstructions; or (3) you may vote by calling the toll-free number listed on your proxy card. Please have your proxy card in hand when going online or calling.If you instruct the voting of your shares electronically or telephonically, you do not need to return your proxy cardcard..

If you choose to vote by mail, simply markhold your proxy card, and then date, sign and return it in the postage-paid envelope provided.

        Stockholders who hold their shares beneficially in street name through a nominee (such as a bank or stock broker), you may be able to vote by telephone or the Internet as well as by mail. You should follow the instructions you receive from your nominee to vote these shares. If you are a stockholder who owns shares through a

broker and attends the Meeting intending to vote at the Meeting, you should bring a letter from your broker identifying you as the beneficial owner of the shares and acknowledging that you will vote your shares.

Quorum; Voting Rights

Holders of our Common Stockcommon stock of record at the close of business on January 6,April 27, 2009 (the "Record Date") will be entitled to vote at the Meeting. There were 76,100,5247,618,146 shares of Common Stock,common stock, $0.01 par value per share, outstanding at that date. Each share of our Common Stockcommon stock is entitled to one vote and the presence, in person or by proxy, of holders of a majority of the outstanding shares of our Common Stockcommon stock is necessary to constitute a quorum for the Meeting.

Counting of Votes

If a proxy in the accompanying form is duly executed and returned, the shares represented by the proxy will be voted as directed. All properly executed proxies delivered pursuant to this solicitation and not revoked will be voted at the Meeting in accordance with the directions given. If you sign and return your proxy card without giving specific voting instructions, your shares will be voted FOR the proposalnominees to amend the Company's Charter to modify the termsour board of the Preferred Stock.directors. Representatives of our transfer agent will assist us in the tabulation of the votes.

Votes Required

The amendments to the Company's Charter to modify the terms of each of our existing series of Preferred Stock requires the affirmative vote of holders of outstanding shares of Common Stock entitled to cast a majorityplurality of all of the votes entitledcast at the Meeting (i.e. the six director-nominees who receive the greatest number of votes) at which a quorum is present is necessary for the election of a director. You may vote in favor of all nominees, withhold your vote as to be cast onall nominees or withhold your vote as to specific nominees. Ratification of the proposal, as well asappointment of our independent registered public accounting firm will require the affirmative

vote of the holders of 66²/3%a majority of the outstanding shares of the Preferred Stock, voting as a single class separate from the holders of Common Stock. We are not seeking the approval of the holders of the Preferred Stockvotes cast at the Meeting but are seeking that approval in the consent solicitation that is part of the Exchange Offer.Meeting.

Effect of Abstentions and Broker Non-Votes

An abstention is the voluntary act of not voting by a stockholder who is present at a meeting and entitled to vote. Abstentions will not be counted as votes cast and will have no effect on the outcome of the vote on the election of directors.

A broker non-vote occurs when a broker nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary power for that particular item and has not received instructions from the beneficial owner.

        Abstentions and broker non-votes will be treated as present and entitled to vote for purposes of determining the presence of a quorum. However, abstentions and broker non-votes will have the same effect as a vote "against" the proposal to amend the terms None of the preferred stock.proposals are subject to broker non-votes.

Revocability of Proxy

Any proxy given may be revoked at any time prior to its exercise by notifying the Secretary of the CompanyImpac Mortgage Holdings, Inc. in writing of such revocation, by duly executing and delivering another proxy bearing a later date (including an Internet or telephone vote), or by attending and voting in person at the Meeting.

Interest of Executive Officers and Directors

None of the Company's executive officers or directors has any interest in any of the matters to be acted upon at the Annual Meeting, except, with respect to each director, to the extent that a director is named as a nominee for election to the Board of Directors.

Householding

        "Householding""Householding" is a program, approved by the Securities and Exchange Commission (the "SEC""SEC"), which allows companies and intermediaries (e.g.(e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports by delivering only one package of stockholder proxy materials to any household at which two or more stockholders reside. If you and other residents at your mailing address own shares of our Common Stockcommon stock in street name, your broker or bank may have notified you that your household will receive only one copy of our proxy materials. Once you have received notice from your broker that they will be "householding" materials to your address, "householding" will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in "householding" and would prefer to receive a separate proxy statement, or if you are receiving multiple copies of the proxy statement and wish to receive only one, please notify your broker if your shares are held in a brokerage account. If you hold shares of our Common Stockcommon stock in your own name as a holder of record, "householding" will not apply to your shares.

Postponement or Adjournment of Meeting

If a quorum is not present or represented, our bylaws permit the stockholders entitled to vote at the Meeting, present in person or represented by proxy, to adjourn the Meeting from time to time to a date not more than 120 days after the original record date without notice other than the announcement at the Meeting.

PROPOSAL NO. 1

ELECTION OF DIRECTORS

Our directors are elected annually to serve until the next annual meeting of stockholders and thereafter until their successors are elected and qualify. Accordingly, a board of six directors is to be elected at the Meeting, all of whom have been recommended for nomination by the members of the Corporate Governance and Nomination Committee of the Board. Our charter and bylaws currently provide for a variable number of directors with a range of between one and fifteen members. The size of our Board of Directors is set at six. No proxy may vote 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 our Board of Directors. We have been 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, prior to the voting, the proxy holders will refrain from voting for the unavailable nominee or will vote for a substitute nominee in the exercise of their best judgment.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES.

Information Concerning Director Nominees

Joseph R. Tomkinson has been Chairman of the Board since April 1998 and Chief Executive Officer and a Director of the Company since its formation in August 1995. Mr. Tomkinson was also an officer and director of a real estate investment trust investing in commercial mortgage assets and a specialty finance company until its sale. Mr. Tomkinson brings over 28 years of combined experience in real estate, real estate financing and mortgage banking.

William S. Ashmore has been President of the Company since August 1995 and a Director since July 1997. Mr. Ashmore also served as the Chief Operating Officer from August 1995 to May 2006. Mr. Ashmore has over 30 years of combined experience in real estate, asset liability management, risk management, and mortgage banking. Mr. Ashmore received a B.S. degree in Psychology from the University of California at Los Angeles in 1971 and a Master's degree in Social Psychology from California State University at Northridge in 1974.

James Walsh has been a Director of IMH since August 1995. Since January 2000, he has been Managing Director of Sherwood Trading and Consulting Corporation.

Frank P. Filipps has been a Director of IMH since August 1995. From April 2005 to July 2008, Mr. Filipps was Chairman and Chief Executive Officer of Clayton Holdings, Inc., a mortgage services company. From June 1999 to April 2005, Mr. Filipps was Chairman and Chief Executive Officer of Radian Group, Inc. (NYSE: RDN) and its principal subsidiary, Radian Guaranty, Inc., which were formed through a merger of Amerin and Commonwealth Mortgage Assurance Company. Mr. Filipps has been a director and a member of the compensation committee of the Board of Directors of Primus Guaranty, Ltd. (NYSE: PRS), a holding company primarily engaged in selling credit protection against investment grade credit obligations of corporate and sovereign entities, since September 2004. Mr. Flipps received a B.S. in Economics in 1969 from Rutgers University and a Master's degree in Corporate Finance and International Business in 1972 from New York University.

Stephan R. Peers has been a Director of IMH since October 1995. Since January 2005, Mr. Peers has been an independent financial advisor. From September 2001 to January 2005, Mr. Peers was a Managing Director of Sandler O'Neill & Partners, LP practicing corporate finance covering financial institutions. Mr. Peers has a B.S. in Engineering from Manhattan College in 1974, a M.S. in Engineering from Stanford University in 1975 and an MBA from Stanford University in 1979.

Leigh J. Abrams has been a Director of IMH since April 2001 and lead independent director since June 2005. Mr. Abrams became chairman of the board of Drew Industries Incorporated (NYSE: DW), which manufactures a wide variety of components for recreational vehicles and manufactured homes, in

January 2009. Prior to that, since August 1979, Mr. Abrams previously served as the President and Chief Executive Officer, from which he resigned in May 2008 and December 2008, respectivly. Mr. Abrams has served as a director of Drew Industries since August 1979. Mr. Abrams, a CPA, has over 35 years of experience in corporate finance, mergers and acquisitions, and operations. Mr. Abrams received a BBA in Accounting from Brauch College in 1964.

Executive Officers

The following table provides certain information regarding the executive officers of IMH, but who do not serve as directors of IMH:

Todd R. Taylor served as the Chief Accounting Officer of the Company from October 2007 until February 2008 when he was appointed to the position of Interim Chief Financial Officer. He was then appointed Chief Financial Officer and Executive Vice President in November 2008. Mr. Taylor joined IMH in October 2004 as the Senior Vice President, Controller and served in this position until he was promoted to Senior Vice President and Director of Accounting in June 2006. Mr. Taylor served as the Senior Vice President and Director of Accounting until October 2007 when he was promoted to Chief Accounting Officer. Prior to joining IMH, Mr. Taylor served as the Chief Financial Officer and Secretary for Primal Solutions, Inc. from August 2003 until October 2004. Mr. Taylor earned his B.A. degree in Business from California State University at Fullerton, and is a certified public accountant.

Ronald M. Morrison became General Counsel in July 1998 and was promoted to Executive Vice President in August 2001. In July 1998 he was also elected Secretary of IMH and in August 1998 he was elected Secretary of our mortgage operations and our warehouse lending operations.

Family Relationships

There are no family relationships between any of the directors or executive officers of IMH.

Corporate Governance and Board Matters

Vacancies

All directors are elected at each annual meeting of 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 vote of the remaining directors, unless such majority is less than a quorum. 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. Any vacancy in the number of directors created by an increase in the number of directors may be filled by a majority vote of the entire Board of Directors.

Board Member Independence

While we are not a listed company on the NYSE, for purposes of this proxy statement and pursuant to rules of the Securities and Exchange Commission, we have applied the listing standards of the NYSE in

determining the "independence" of the members of our Board of Directors. Based the listing standards of the NYSE and after reviewing the relationships with members of our Board, our Board of Directors has determined, with the assistance of the Corporate Governance and Nomination Committee that, with the exception of Mr. Tomkinson, our CEO, and Mr. Ashmore, our President, the members of the Board of Directors qualify as independent. The Governance and Nomination Committee reviews with the Board at least annually the qualifications of new and existing Board members, considering the level of independence of individual members, together with such other factors as the Board may deem appropriate, including overall skills and experience. The Governance and Nomination Committee also evaluates the composition of the Board as a whole and each of its committees to ensure the Company's on-going compliance with the independence standards of the NYSE.

In reviewing the independence of its Board members, the Board of Directors reviewed relationships with Messers. Filipps and Peers. From April 2005 to July 2008, Mr. Filipps was Chairman and Chief Executive Officer of Clayton Holdings, Inc., a mortgage services company. A subsidiary of Clayton provided loan due diligence services to IFC by analyzing a pool of loans that the Company was considering purchasing, and verified that the loans met the Company's internal mortgage underwriting standards. Clayton's subsidiary also confirmed that the information contained in the loan files was accurate and complete. Neither Clayton nor its subsidiary provided compliance or other consulting services for the Company. The Company engaged Clayton's subsidiaries prior to the commencement of Mr. Filipps' employment with Clayton and did not pay Mr. Filipps directly for any of these services. While the Company did not pay any fees to Clayton in 2008 or 2007, the Company paid $29 thousand in 2006 for the loan verification services, which amount did not exceed the 2% of the gross revenues of Clayton. Mr. Filipps was not paid a bonus and did not receive any other compensation from Clayton or its subsidiary as a result of the Company's dealings with Clayton or its subsidiaries. Mr. Filipps was not involved with the day-to-day business dealings between the Company and Clayton, and there did not appear to be any direct benefit to Mr. Filipps arising from this relationship.

The Board of Directors also reviewed and analyzed Stephan Peers' status as an independent director. In the fourth quarter of 2008, Mr. Peers was appointed to a special committee of the Board of Directors, which committee has focused on strategic goals of the Company and has required a large amount of time from Mr. Peers. The Board of Directors, however, believes that that Mr. Peers' service on the special committee has not jeopardized his status as an independent director as he is continuing to serve in the capacity as a director. Based on the above facts and circumstances, the Board of Directors has determined that Mr. Filipps and Peers continue to qualify as independent directors applying the standards of the NYSE.

None of the other non-employee directors currently have any material relationship with the Company, its parents or its subsidiaries (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company, its parents or its subsidiaries).

Attendance at Board and Committee Meetings

Our Board of Directors met seventeen times during 2008. Each director attended at least 75% of the aggregate of the total number of meetings held by the Board of Directors and a majority of the total number of meetings held by those committees of the Board of Directors on which such director served.

We encourage all directors to attend the annual meeting of stockholders. In 2008, three of our directors attended the annual meeting of stockholders.

Committees and Corporate Governance

The current standing committees of our Board of Directors are the Audit Committee, the Compensation Committee, and the Corporate Governance and Nomination Committee. Each of these committees has a written charter approved by our Board of Directors. The members of the committees and a description of the principal responsibilities of each committee are described below.

Our Board of Directors has adopted Corporate Governance Guidelines. The Corporate Governance Guidelines include items such as criteria for director qualifications, director responsibilities, committees of the board, director access to officers and employees, director compensation, orientation and continuing education, evaluation of the CEO, annual performance evaluation and management succession. The Board of Directors has chosen not to impose term limits with regard to service on the board in the belief that continuity of service and the past contributions of the board members who have developed an in-depth understanding of the Company and its business over time bring a seasoned approach to IMH's governance. Each director is to act on a good faith basis and informed business judgment in a manner such director reasonably believes to be in the best interest of the Company.

A copy of each committee charter and our Corporate Governance Guidelines can be found on our website at www.impaccompanies.com by clicking "Stockholder Relations" and then "Corporate Governance," and is available in print upon request to the Secretary of Impac Mortgage Holdings, Inc., 19500 Jamboree Road, Irvine, California 92612.

The Audit Committee

The Audit Committee of the Board of Directors consists of three directors, all of whom are independent pursuant to the Director Independence Standards of the NYSE and other SEC rules and regulations applicable to audit committees. The following directors are currently members of the Audit Committee: Frank P. Filipps, who serves as the chairman, Leigh J. Abrams, and Stephan R. Peers. The Board of Directors has determined that Frank P. Filipps qualifies as an audit committee financial expert, as such term is defined by Item 407(d)(5)(ii) of Regulation S-K of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). During 2008, the Audit Committee met twelve times.

The purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibility relating to: (i) the integrity of the Company's financial statements and financial reporting process and its system of internal accounting and financial controls, (ii) the performance of the internal audit function, (iii) the performance of the independent auditors, which would include an evaluation of the independent auditor's qualifications and independence, (iv) the Company's compliance with legal and regulatory requirements, including disclosure controls and procedures, and (v) the preparation of an Audit Committee report to be included in the Company's annual proxy statement.

The Compensation Committee

The Compensation Committee is responsible for (1) recommending to our Board of Directors the cash and non-cash compensation of our executive officers as defined in the rules promulgated under Section 16 of the Exchange Act, (2) evaluating the performance of our executive officers, (3) recommending to our Board of Directors the cash and non-cash compensation policies for our non-employee directors, (4) making recommendations to our Board of Directors with respect to incentive compensation and equity-based plans that are subject to Board approval, (5) recommending to the Board of Directors on whether the compensation discussion and analysis should be included in the proxy or Form 10-K, and (6) assisting our Board of Directors in evaluating potential candidates for executive officer positions with the Company. The Compensation Committee met ten times during 2008. During 2008, the Compensation Committee consisted of James Walsh (Chairman), Leigh J. Abrams and Stephan R. Peers.

The Corporate Governance and Nomination Committee

The Corporate Governance and Nomination Committee assists the Board of Directors in (1) identifying qualified individuals to become members of the Board of Directors, (2) determining the composition of the Board of Directors and its committees, (3) selecting the director nominees for the next annual meeting of stockholders, (4) monitoring a process to assess board, committee and management effectiveness, (5) aiding and monitoring management succession planning and (6) developing, implementing and monitoring policies and processes related to our corporate governance. During 2008, the Corporate Governance and Nomination Committee consisted of Stephan R. Peers (Chairman) and James Walsh. The committee met one time during 2008.

The Director Nomination Process.    The Corporate Governance and Nomination Committee has the authority to lead the search for individuals qualified to become members of the Company's Board of Directors and to select or recommend to the Board of Directors director nominees to be presented for stockholder approval. The committee will select individuals who have high personal and professional integrity, have demonstrated ability and sound judgment and were or are effective, in conjunction with other director nominees, in collectively serving the long-term interests of our stockholders. The committee may use its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The committee may meet to discuss and consider candidates' qualifications and then choose a candidate by majority vote.

Submission for Proxy Materials.    The Corporate Governance and Nomination Committee will consider nominees recommended in good faith by our stockholders as long as these nominees for the appointment to the Board of Directors meet the requirements set forth in our Corporate Governance Guidelines as follows: the Board of Directors will consist of a majority of directors who (1) qualify as "independent" directors within the meaning of the listing standards of the NYSE, as the same may be amended from time to time; (2) meet the applicable requirements to be "unaffiliated" as defined in the Company's Bylaws, as may be amended from time to time; and (3) are affirmatively determined by the Board to have no material relationship with the Company, its parents or its subsidiaries (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company, its parents or its subsidiaries). Possible candidates who have been suggested by stockholders are evaluated by the Corporate Governance and Nomination Committee in the same manner as are other possible candidates. Stockholders are hereby notified that if they wish their director-nominee(s) to be included in our proxy statement and form of proxy relating to the 2010 annual meeting of stockholders, they must submit, in writing, the candidate's name, credentials, contact information, along with the other information set forth below, and his or her written consent to be considered as a candidate, to our Secretary no later than January 18, 2010. If the date of next year's annual meeting is changed by more than 30 days from the date of this year's meeting, then the deadline is a reasonable time before we begin to print and mail proxy materials. Director nominations must comply with the proxy rules relating to stockholder proposals, in particular Rule 14a-8 under the Exchange Act, in order to be included in our proxy materials.

Submission for Consideration at Annual Meeting.    Stockholders who wish to submit a director-nominee for consideration at the next annual meeting, but who do not wish to submit the nominee for inclusion in our proxy statement, must, in accordance with our Bylaws, deliver the information no earlier than the 90th day prior to the first anniversary of this annual meeting, nor later than the 60th day prior to the first anniversary of this annual meeting. In the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from the first anniversary of the preceding year's annual meeting, then notice must be delivered not earlier than the 90th day prior to such annual meeting and no later than the close of business on the later of the 60th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made. If the number of directors to be elected to the Board of Directors is increased and there is no public announcement

naming all of the nominees for director or specifying the size of the increased Board of Directors made by us at least 70 days prior to the first anniversary of the preceding year's annual meeting, a stockholder's nomination will be deemed timely, but only with respect to nominees for any new positions created by such increase, if it is delivered to our Secretary not later than the close of business on the tenth day following the day on which public announcement is first made by us. Public announcement means disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable news service or in a document that we publicly file with the SEC pursuant to Section 13, 14 or 15(d) of the Exchange Act.

The proposing stockholder must provide (1) as to each person whom the stockholder proposes to nominate for election or reelection as a director (a) all information relating to such person that is required to be disclosed pursuant to Regulation 14A under the Exchange Act and (b) such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected, and (2) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made, (a) the name and address of such stockholder, as it appears on our books, and of such beneficial owner and (b) the number of shares of each class of our stock that are owned beneficially and of record by such stockholder and such beneficial owner.

Code of Business Conduct and Ethics.

We have adopted a Code of Business Conduct and Ethics. This code of ethics applies to our directors, executive officers and employees. This code of ethics is publicly available in the corporate governance section of the stockholder relations page of our website located at www.impaccompanies.com and in print upon request to the Secretary at Impac Mortgage Holdings, Inc., 19500 Jamboree Road, Irvine, California, 92612. If we make amendments to the code of ethics or grant any waiver that the SEC requires us to disclose, we will disclose the nature of such amendment or waiver on our website.

Stockholder Communication with Our Board of Directors.

Stockholders who wish to contact any of our directors either individually or as a group may do so by writing them c/o Ronald M. Morrison, Secretary, Impac Mortgage Holdings, Inc., 19500 Jamboree Road, Irvine, California 92612, by telephone at (949) 475-3942 or by email tormorrison@impaccompanies.com specifying whether the communication is directed to the entire board or to a particular director. Stockholder letters are screened, which includes filtering out improper or irrelevant topics such as solicitations, by Company personnel, based on criteria established and maintained by our Corporate Governance and Nomination Committee.

Compensation of Board Members

The compensation of the Company's non-employee directors is described below.

Board Fees.    The Company's non-employee directors are paid the following fees: (i) an annual fee of $40,000; (ii) a meeting fee of $2,500; (iii) for services on the Audit Committee, the Compensation Committee and the Corporate Governance Committee, fees of $2,500, $1,000 and $1,000, respectively, per meeting; (iv) an annual fee payable to the chairperson of each of the Audit Committee, the Compensation Committee and the Corporate Governance Committee of $20,000, $5,000 and $5,000, respectively; and (v) an annual fee payable to the lead independent director of $10,000.

Equity Awards.    Non-employee directors typically receive an annual equity award of options to purchase 4,000 shares of the Company's common stock (the "Director Stock Options"), or instead, at the election of the individual director, a number of shares of restricted Company common stock equal in value to the number of Director Stock Options (based on the binomial value of the Director Stock Options) not taken by such director. No dividend equivalent rights will be issued with respect to the

Director Stock Options granted, although the existing dividend equivalent rights on prior option grants continue to be retained.

Special Services.    From time to time, the Company's non-employee directors may be asked to engage in special director services, whether or not a committee of the board has been formed for such purpose. Such services have included and may include strategic reviews, strategic transaction oversight, independent major litigation oversight and like matters involving substantially greater commitments of time from the relevant directors. In such circumstances, the Committee and Board have determined that the directors engaged in such efforts shall receive a fee of $25,000 per quarter for the duration of such service, and any designated director or committee chair appointed shall receive a quarterly fee of $50,000. Such fees shall be paid whether or not the matter concludes in a transaction or other specific result and may be adjusted upward or downward based on the amount of work required and any other criteria the Committee and Board deem appropriate. Stephan Peers was paid $150,000 in 2008 in connection with services on a special committee of the board. Set forth below is the compensation earned for our non-employee directors during 2008. Messrs. Tomkinson and Ashmore received no additional compensation for their services as directors.

DIRECTOR COMPENSATION FOR 2008

(1)

Represents the dollar amount recognized for financial reporting purposes for the fiscal year ended December 31, 2008, in accordance with SFAS 123(R) (disregarding estimates of forfeitures), and includes amounts from restricted stock awards granted in 2006 and vested in 2008. In August 2006, each director, except Mr. Rose, received a restricted stock award of 310 shares that vests in equal installments over three years. During 2008, a total of 103 shares of the restricted stock award vested leaving 103 unvested shares as December 31, 2008.

(2)

Represents the dollar amount recognized for financial reporting purposes for the fiscal year ended December 31, 2008, in accordance with SFAS 123(R) (disregarding estimates of forfeitures), and includes amounts from option awards granted in 2008 and prior thereto. See Note 13 to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2008 for a discussion of the relevant assumptions used in calculating these amounts. The grant date fair value of the 2008 option awards for each of Messrs. Walsh, Filipps, Peers and Abrams was $20,060. The aggregate number of option awards outstanding at December 31, 2008 for each of Messer. Walsh, Filipps, and Peers was 17,375 and 16,250 for Mr. Abrams. These awards generally vest annually over a three-year period from the date of grant and expire after four years. On April 28, 2009, each director gave notice of the surrender of 14,000 options and the Board accepted and approved the cancellation of the options, leaving 3,375 options for each of Messers. Walsh, Filipps, and Peers and 2,250 options for Mr. Abrams, all of which have attached DERs.

(3)

Fees paid to Mr. Peers include $150,000 in connection with his service on a special committee of the board.

(4)

William E. Rose did not stand for re-election as a director and his term expired immediately prior to the annual stockholder meeting held in July 2008.

PROPOSAL NO 1:
MODIFY TERMS OF PREFERRED STOCKEXECUTIVE COMPENSATION

        InCOMPENSATION DISCUSSION AND ANALYSIS

Overview of Compensation Policies and Objectives

The Compensation Committee of our Board of Directors administers the policies governing our executive compensation program. All issues pertaining to executive compensation are reviewed and approved by the Compensation Committee and, where appropriate, approved by our Board of Directors. The Committee focuses on designing our executive compensation program to achieve the following objectives in a market competitive manner:

•

Align the interests of executive officers with those of our stockholders by tying long-term incentive compensation to financial and operations performance and ultimately to the creation of stockholder value.



•

Attract and retain high caliber executives by offering total compensation that is competitive with that offered by similarly situated companies and rewarding outstanding personal performance.



•

Reflect our corporate goals and objectives.

Since 2007, and 2008, managementthe Company has been seriously challengedsignificantly affected by concerns over declining home prices and the unprecedented turmoilgeneral economic environment. These concerns have led to deterioration in the value and quality of the Company's loans held-for-sale and long-term mortgage market, includingportfolio, as evidenced by the following: significant increases in delinquencies, foreclosures and foreclosures;credit losses. Existing conditions are unprecedented and inherently involve significant increasesrisks and uncertainty to the Company. In response to the overall market conditions beginning in credit-related losses; declines2007, the Company discontinued several businesses and continues to adjust its business strategies to adapt to the current business environment. During 2008, the Company's employees reduced from 827 to 127. Due to the uncertainty of both the general economy and with ongoing business operations, the Company has not established new incentive programs for Joseph R. Tomkinson, our CEO, and William S. Ashmore, our President, and other executive officers of Impac. Currently, the Compensation Committee's goal is to provide executive management incentive compensation that will motivate them in originations; tightening of warehouse creditthe near future to successfully implement the Company's short-term strategies and to preserve, and generate interest income on, the virtual eliminationmortgage portfolio and to initiate and generate net earnings from new mortgage-related fee based businesses.

Compensation Decision-Making

General Background.    We rely upon our judgment in making compensation decisions, after reviewing the performance of the Company, including its short- and long-term strategies, current economic and market conditions, and carefully evaluating an executive's performance during the year against established goals, leadership qualities, operational performance, business responsibilities, and career with the Company, current compensation arrangements and long-term potential to enhance stockholder value. Our main objective in establishing compensation arrangements is to set criteria that are consistent with the Company's business strategies. Generally, in evaluating performance, we review the following criteria:

•

strategic goals and objectives, such as acquisitions, dispositions or joint ventures;



•

individual management objectives for loan securitizations. As a result, we discontinued certain operations, resolved and terminated all but one of our reverse repurchase lines, which has recently been restructured, and settled a portion of our outstanding repurchase claims, while also reducing our operating costs and liabilities. As a result of this uncertain market and the decrease in our assets and estimated taxable income, we have not declared a dividend on shares of our Common Stock since March 31, 2007.

        On January     , 2009, the Board approved amendmentssome executives that relate to the Company's Charter to modify the terms of our Preferred Stock as described in this proxy statement. The Board directed that a proposal to approve these amendments be submitted to the holders of Common Stock for their consideration at a special meeting, and to the holders of the Preferred Stock, voting as a single class separate from the holders of Common Stock, in a consent solicitation. The proposed amended text of the affected provisions of our Charter is set forth in Annex A and Annex B to this proxy statement, marked to show changes against the current text of the Charter. The proposed amendments would make the following changes to the provisions of the each of the Series B Preferred Stock and Series C Preferred Stock:

1.

make dividends non-cumulative and eliminate any accrued but unpaid dividends for all dividend periods ended before the effective date of the amendments;strategies;



2.•

eliminate the provisions prohibiting the payment of dividends on junior stock and prohibiting the purchase or redemption of junior or parity stock if full cumulative dividendsachieving specific operational goals for all past dividend periods are not paid or declared and set apart for payment;



3.

eliminate any premiums payable upon the liquidation, dissolution or winding up of the Company;



4.

eliminate the provision prohibiting the Company from electing to redeem the Preferred Stock prior to the fifth year anniversary of the issuance of the applicable Preferred Stock;



5.

eliminate the provision prohibiting the Company from redeeming less than all of the outstanding Preferred Stock if full cumulative dividends for all past dividend periods have not been paid or declared and set apart for payment;



6.

eliminate the right of holders of the Preferred Stock to elect two additional directors if Preferred Stock dividends have been in arrears for six or more quarterly periods; and



7.

eliminate the right of holders of the Preferred Stock to consent to or approve the authorization or issuance of preferred stock senior to the Preferred Stock.

        Under Maryland law and our Charter, the approval of Proposal No. 1 requires the affirmative vote of holders of outstanding shares of Common Stock entitled to cast a majority of all the votes entitled to be cast on the proposal, and the vote or consent of the holders of 66²/3% of the outstanding shares of the Preferred Stock, voting as a single class separate from the holders of Common Stock. At the Meeting, the Company is seeking the approval of the holders of the Company's Common Stock to amend our Charter to modify the terms of the Series B Preferred Stock and Series C Preferred Stock. The Company will require that the holders of the Preferred Stock consent to the modifications to the terms of each series of Preferred Stock as a condition to tendering their shares in the Exchange Offer. We are not seeking the approval of the holders of the Preferred Stock at the Meeting, but are seeking that approval in the consent solicitation that is part of the Exchange Offer.




        If Proposal No. 1 is approved by holders of Common Stock at the Meeting, the amendments to modify the terms of each series of our Preferred Stock will not become effective with respect to any series unless it is also approvedparticular business led by the requisite consent of the holders of Preferred Stockexecutive officer, including portfolio management and Articles of Amendment setting forth the amendments are filed with the State Department of Assessmentsportfolio earnings; and Taxation of Maryland. At any time before or after our stockholders approve the proposed amendments, our Board may determine to make less than all of the modifications described above to the terms of any or all of our series of Preferred Stock. If this occurs, we will file Articles of Amendment that include only the modifications that our Board determine to make. Even if some or all of the provisions of the proposed amendments are approved by our stockholders as required by Maryland law and our Charter, we will not file Articles of Amendment to amend our Charter to modify any of the terms of our Preferred Stock unless a sufficient number of holders of Preferred Stock have tendered their Preferred Stock to allow us to complete the Exchange Offer.

        The Company's Series B Preferred Stock and Series C Preferred Stock are currently quoted on the over-the-counter pink sheets.

Effects of the Proposed Amendments on the Company's Preferred Stock

        In addition to the effects described above, the paragraphs below describe the effects of the proposed amendments to the Company's Charter to modify the terms of the Series B Preferred Stock and Series C Preferred Stock. Only holders of the Company's Preferred Stock who do not tender their shares in the Exchange Offer will remain holders of such Preferred Stock after the proposed modifications are approved by our stockholders and become effective. A majority of our Board may determine to make less than all of the modifications described herein to the terms of any or all of the Series B Preferred Stock and Series C Preferred Stock, so the amendments, when they take effect, may not have all of the effects described in this proxy statement. The following summary of the effects of the proposed amendments does not purport to be complete and is subject to and qualified in its entirety by reference to the text of the amendments, as set forth in its entirety in Annex A and Annex B.

Reduction of Voting Rights

        Currently, our Charter provides that, whenever dividends on any series of Preferred Stock is in arrears for six or more quarterly periods, whether or not consecutive, the Preferred Stock, voting as a single class together with any other series of preferred stock ranking on a parity with the Preferred Stock as to the payment of distributions and the distribution of assets upon liquidation ("Parity Preferred") upon which like voting rights have been conferred and are exercisable, will be entitled to elect two additional directors. The term of these two additional directors will end, and the number of directors will automatically decrease by two, at such time as all dividends accumulated on shares of the Preferred Stock or any Parity Preferred have been paid in full or declared and set apart for payment.

        Our Charter provides that, as long as shares of either series of the Preferred Stock remain outstanding, without the approval of holders of 66²/3% of the outstanding shares of the Preferred Stock, voting as a single class together with any Parity Preferred that we may issue upon which like voting have been conferred and are exercisable, we may not:

1.

authorize or create, or increase the authorized or issued amount of, any class or series of capital stock ranking prior to such series of Preferred Stock with respect to payment of distributions and the distribution of assets upon liquidation, dissolution or winding up or reclassify any authorized capital stock of the company into any such shares, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such shares;




2.•

subjectsupporting our corporate values by promoting compliance with internal ethics policies and legal obligations.

Our executive compensation program and policies depends on the position and responsibilities for each executive officer but remain consistent with our objectives. We seek to achieve an appropriate mix between guaranteed and at-risk compensation, as well as a balance between cash and equity compensation. Our mix of compensation elements is designed not only to reward past performance, but also to proactively encourage long-term future performance through a combination of cash and equity incentive awards. Although these criteria continue to generally form a basis of the Compensation Committee's decision-making, the events during the past year have altered how the Committee determines compensation for the near future. Due to the change in the Company's business and the economic environment, the function of our executive officers changed from one of seeking growth to one of business survival.

Given this dramatic change in our business operations, the criteria that are used to evaluate performance have also adjusted. Prior to and during a short period of 2008, key financial measurements such as taxable net income (loss), return on equity, common equity distributions, total assets, book value per common share were factors that we used in making compensation decisions. However, in light of the change in our business strategies, the Compensation Committee's focus in 2008 was to provide incentive to the executive officers to ensure the survival of the Company.

Role of Management, Consultants and Peers Groups

In reviewing and making compensation decisions of other executive officers, the Committee has in the past and may in the future consult with the Company's Chief Executive Officer, Joseph R. Tomkinson, President, William S. Ashmore and other executive officers. These officers review the performance of the other executive officers, provide annual recommendations for individual management objectives, and provide input on strategic initiatives. Mr. Tomkinson has also been given authority to negotiate employment terms for executive that report to him within certain parameters as approved by the Compensation Committee.

In some cases, prior to 2008 we have reviewed reports from consultants to assist us in determining appropriate compensation arrangements for executive officers. We also have reviewed publicly available compensation of peer companies with which we compete in various business segments. These companies have included Countrywide Home Loans, IndyMac Bancorp, NovaStar Financial, Inc., Arbor Realty Trust Inc., American Home Mortgage Investment Corp., Annaly Mortgage Management, Inc., Anworth Mortgage Asset Corporation, Capstead Mortgage Corp., Hanover Capital Mortgage Holdings Inc., MFA Mortgage Investments, Inc., Redwood Trust, Inc., Saxon Capital, Inc., and Thornburg Mortgage Asset Corporation., some of which are no longer operating businesses. We believe that prior to 2008, the salaries of our Chief Executive Officer and President fell within the median of the amounts awarded by the peer group companies to their respective officers.

Although the Compensation Committee has explored the use of compensation consultants, and has used compensation consultants in the past, it did not use or rely on reports of compensation consultants during 2008 in connection with determining appropriate compensation and arrangements for Messrs. Tomkinson, Ashmore, Taylor and Morrison due to the uncertainty of the current business environment and the unprecedented interruption of the Company's business model.







Elements of our Executive Compensation Program

Historically and for 2008, our executive compensation program consisted of the following elements:

(1)

base salary;



(2)

quarterly and annual cash-based incentive compensation;



(3)

discretionary bonuses;



(4)

stock- based plans and equity awards;



(5)

fringe benefits including standard employee health, welfare and retirement benefits; and



(6)

severance benefits.

We do not have formal policies relating to the allocation of total compensation among the various elements. However, both management and the Committee believe that the more senior the position an executive holds, the more influence they have over our financial performance. Prior to 2008, it was believed that a greater amount of an officer's compensation should be at-risk based on the Company's performance.

Upon the expiration of the previous 5-year employment agreements with Messrs. Tomkinson and Ashmore as of December 31, 2007 and the change in the mortgage market and the Company's business operations, the Compensation Committee began to analyze the most appropriate mix of compensation for these executive officers. Because the market continued to deteriorate during 2007 and 2008 and had materially changed since the previous employment contracts were approved, the Compensation Committee believes that short-term contracts would be more appropriate in this current market environment. In 2007 and 2008, the Company entered into new employment agreements with the current executive officers and developed new terms, which they believe take into account the current economic environment and the Company's operations. These employment agreements are described below under "Employment Agreements."

Base Salary

The Committee typically sets an executive's base salary with the objective of attracting and retaining highly qualified individuals for the relevant position and rewarding individual performance. When setting and adjusting individual executive salary levels, the Committee considers the relevant established salary range, the executive officer's responsibilities, experience, potential, individual performance, and contribution to the Company. The Committee also considers other factors such as our overall corporate budget for annual merit increases, unique skills, demand in the labor market and succession planning.

In determining the current base salaries for Messrs. Tomkinson and Ashmore, the Compensation Committee considered whether goals and standards should be established. After review of the mortgage market, the efforts needed to succeed in the current market and the need to retain management to ensure the continuation and success of the Company, the Compensation Committee determined that their current salaries remain in place, without any automatic adjustment and that there be no bonus incentives in place for the next two years (2008 and 2009). These shorter agreement terms allow Messrs. Tomkinson and Ashmore a period of time to implement new strategies and goals for the Company and will provide the Compensation Committee the ability to re-evaluate their base salaries in light of the Company's success in the market that will exist at that time. This same approach was also taken for Messers. Taylor and Morrison. Mr. Taylor's base salary was increased as a result of his appointments as interim and then Chief Financial Officer.







Quarterly and Annual Cash-Based Incentive Compensation

Historically, we have used cash-based incentive compensation to emphasize and reward the attainment of certain annual or quarterly financial goals and corporate or individual performance metrics. The objective was to select performance metrics that provide a meaningful measure of our success in implementing our short-term business strategies that yield long-term benefits, such as increasing or maintaining the amount of mortgage loans in the Company's long-term mortgage portfolio, credit quality and portfolio earnings and increasing taxable income and distributions to stockholders.

As discussed above, the change in the mortgage market and related business caused the Compensation Committee to change for 2008 its view of incentive compensation that is based on those factors. Instead, for Messrs. Tomkinson and Ashmore, as the Company is focusing on long-term success through an adverse market, the Compensation Committee believes that quarterly and annual cash-based incentive compensation based on financial performance is no longer appropriate. As such, cash-based incentive compensation was eliminated for Messrs. Tomkinson and Ashmore, Mr. Taylor receives bonuses based on internal management objectives and Mr. Morrison receives a discretionary bonus.

Performance Metrics.    For the first half of 2008 and prior to that time, annual cash incentive awards were typically driven by a combination of taxable net income, return on equity, and production goals. Based on these performance metrics, contractual incentive compensation was directly tied to the Company's financial performance and the Company's success in achieving its goal of providing income for distribution to our stockholders. However, starting in 2008, due to the upheaval in the mortgage markets, these performance metrics were no longer used to determine cash incentive compensation.

We believe that these performance metrics in the past had contributed to our success in meeting our strategic objectives of maintaining and growing our overall business and contributed to the Company's goal to generate consistent and reliable income for distribution to our stockholders primarily from the earnings of our former operating businesses. However, these performance metrics are no longer suitable in the current market and are no longer applicable given that the Company is revoking its REIT status. As such, we currently focus on the accomplishment of individual performance objectives to measure an executive officer's success.

For 2008, in light of the Company's financial condition, neither Mr. Tomkinson nor Mr. Ashmore received any bonus compensation. However, based on the accomplishment of individual management objectives, Mr. Taylor received incentive compensation. Mr. Taylor's incentive compensation, which was initially limited to 50% of his base salary and then increased to 65% in light of his additional responsibilities when he was appointed as Chief Financial Officer in November 2008, is determined and paid on a quarterly basis. In 2008, it was based on internal company goals such as establishing an adequate control environment, and timely filing SEC reports. His 2009 performance objectives have also included completion of annual budgeting and company transactions. Mr. Morrison's bonus compensation is completely discretionary and may be based on his overall annual performance. As a result of the Company's financial condition, Mr. Taylor waived his bonus compensation for the fourth quarter of 2008 and Mr. Morrison waived half of his annual bonus.

Stock-Based Plans and Equity Awards

We believe that long-term performance is aided by the use of stock-based awards which create an ownership culture amongst our executive officers that fosters beneficial, long-term performance by the Company. We have established an equity incentive plan to provide our employees, including our executive officers, as well as our directors and consultants, with incentives to help align their interests with the interests of stockholders. The Compensation Committee believes that the use of stock-based







awards promotes our overall executive compensation objectives and expects that stock options will continue to be a significant source of potential compensation for our executives. A substantial majority of our awards are non qualified stock option grants with time-based vesting, and in some cases, in the past, with dividend equivalent rights whereby the participant receives cash payments based on dividends paid on the Company's common stock. In the past, we have granted stock options with performance-based vesting and awards of restricted stock with time-based vesting, and since stock dividends were one of the components that we typically use to measure our performance, we have also granted stock options with DERs and restricted stock awards to align the long-range interest of our executive officers with the interests of our stockholders. However, since the first quarter of 2007, the Company has not declared any cash or stock dividends on its common stock.

The Committee believes granting stock options to our executive officers encourages the creation of long-term value for our stockholders and promotes employee retention and stock ownership, all of which serve our overall compensation objectives. The amount of stock options, DERs or restricted stock that is granted to an officer is determined by taking into consideration the officer's position with IMH, overall individual performance, our performance and an estimate of the long-term value of the award considering current base salary and any cash bonus awarded. Other than the individual limit of 500,000 shares awarded during any fiscal year, we do not have any limit on the amount of options or awards that may be granted to any executive officer. The Compensation Committee determines the appropriate criteria for granting awards to executive officers, which generally includes individual performance, our strategic goals and our financial condition. The exercise price of any stock option issued by us will be the last quoted price on the Pink Sheets on the grant date. The Compensation Committee generally has issued awards under the Company's equity incentive plan once a year.

2008 Grants

The Company made option grants to the executive officers in February 2008 to further incentivize them as the mortgage market continued to deteriorate. Messrs. Tomkinson and Ashmore received the largest awards of 200,000 options each in order to incentivize them to remain with the Company and implement new business strategies. In order to promote retention and provide incentive to build the Company's business, the 2008 option grants vest after two years and expire at the end of five years from the date of grant. Since the time of the 2008 option grants, the price of the Company's common stock has continued to decline so that all outstanding options have prices that are more than the current trading price, which means that all the options are "underwater." On April 28, 2009, each executive officer gave notice of the surrender of their 2008 option grants and the Board accepted and approved the cancellation of the options. Since we do not intend to rely as heavily on cash incentive compensation, we believe that we will continue to award more options in the future to individuals.

Fringe Benefits

Health Benefits

During 2008, we provided the following benefits to all of our U.S. salaried employees, including the Named Executive Officers: medical, dental and prescription coverage, company-paid short- and long- term disability insurance, and paid vacation and holidays.

Retirement Benefits

We maintain the Impac Companies 401(k) Savings Plan for all full time employees, including the executive officers, with at least six months of service. The 401(k) Plan provides that each participant may contribute up to 25% of salary pursuant to certain exceptions, amend, alterrestrictions. The Company contributes to the participant's plan account at the end of each plan year 50% of the first 4% of salary contributed by a







participant. Subject to the rules for maintaining the tax status of the 401(k) Plan, an additional company contribution may be made at our discretion, as determined by the Board of Directors. Contributions made by us to the plan for the years ended December 31, 2008 and 2007 were approximately $200,000 and $487,000, respectively.

Severance

Currently, all the executive officers are entitled to certain severance benefits under the terms of each officer's respective employment agreement, which are on file with the SEC. Severance benefits are intended to ease the consequences of an unexpected or repealinvoluntary termination of employment and give the executive an opportunity to find new employment. The severance payments for the executive officers are currently for an 18 month period, and in the case of Mr. Taylor, 12 months. Although the current employment terms for Messrs. Tomkinson and Ashmore are for 2 years, their severance payments periods are also 18 months as the Committee believes that this period is reasonable in light of their positions, value to the Company and length of service. We do not provide for change of control payments. Please see the discussion below entitled "Potential Payments upon Termination and Change-in Control" for a further description of severance payments for each Named Executive Officer.

Perquisites

The Committee typically prefers to compensate our executive officers in cash and equity rather than with perquisites and does not view perquisites as a significant element of our total compensation structure. Executive officers usually receive a car allowance.

Tax and Accounting Implications

Deductibility of Executive Compensation

Under Section 162(m) of the Internal Revenue Code, publicly-held corporations may not take a tax deduction for compensation in excess of $1 million paid to any of the provisionsexecutive officers named in the Summary Compensation Table during any fiscal year. There is an exception to the $1 million limitation for performance-based compensation meeting certain requirements, including compensation 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 Charter, so as to materially and adversely affect any preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications, or terms or conditions of redemption of the series of Preferred Stock or the holders thereof; or



3.

subject to certain exceptions, enter into, approve, or otherwise facilitate a binding share exchange or reclassification involving any series of Preferred Stock that materially and adversely affects any of the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications, or terms or conditions of redemption of such series of Preferred Stock or a consolidation, merger or similar transaction involving the Company.

        The proposed amendments apply to each series of Preferred Stock and would eliminate all of the voting rights of the Preferred Stock described above, except for the right to approve certain amendments to our Charter. If approved, the proposed amendments would eliminate the right of holders of Preferred Stock to become involved in management of the Company by electing directors upon the Company's failure to pay dividends.

        After the effectiveness of the proposed amendments, the sole voting right of holders of any series of Preferred Stock will be to approve any amendment, alteration or repeal of any provision of the Company's Charter, whether by merger or consolidation or otherwise (each, an "Event"), so as to materially and adversely affect any right, preference, privilege or voting power of that series of Preferred Stock or the holders thereof. The occurrence of an Event will not be considered to materially and adversely affect the rights of the holders of any series of Preferred Stock if shares of the series (or shares issued by a surviving entity in substitution for the series) remain outstanding with their terms materially unchanged (taking into account that upon the occurrence of an Event, the Company may not be the surviving entity). In addition, an increase in the number of authorized or outstanding shares of that series of Preferred Stock, or the authorization, creation, issuance or increase in the authorized or outstanding number of shares of any class or series of stock ranking senior to, on a parity with or junior to that series of Preferred Stock, will also not be considered to materially and adversely affect the rights of the holders of that series of Preferred Stock.

Modifications to Dividend Rights

        Currently, the Company's Charter provides that dividends on each existing series of Preferred Stock accrue and are cumulative, and holders of each series of Preferred Stock are entitled to receive full cumulative dividends accrued on outstanding shares of each series of Preferred Stock for all past dividend periods (and any partial portion of the then-current dividend period) upon the occurrence of certain events, including the redemption of such shares or the Company's liquidation or dissolution. The Company must pay or declare and set apart for payment full cumulative dividends accrued for all past dividend periods on shares of each series of Preferred Stock before the Company may pay dividends on, or redeem or repurchase, shares of Common Stock, Parity Preferred or shares of stock ranking junior to the series of Preferred Stock with respectstockholders prior to the payment of distributions andsuch remuneration. Plus, performance objectives must be established in the distribution of assets upon liquidation ("Junior Preferred"). On December 10, 2008 we announced that our Board will not declare, and we will not pay, a fourth quarter 2008 dividend on our Preferred Stock.

        Upon the effectivenessfirst 90 days of the proposed amendments,performance period. To maintain flexibility in compensating executives in a manner designed to promote varying corporate goals, the Preferredcompensation committee has not adopted a policy requiring all compensation to be deductible under 162(m). However, the Compensation Committee considers deductibility under Section 162(m) with respect to compensation arrangements for executives, and to the extent applicable, intends to qualify for the exception under 162(m). The incentive compensation under the new Employment Agreements with each of Messrs. Tomkinson and Ashmore and our 2001 Stock will no longer havePlan are structured with the rightintent to receive dividends accrued during any past dividend period, including any dividend period ended beforemeet the proposed amendments become effective, and any dividends accrued during past dividend periods will no longer be payable upon redemption of shares of any series of Preferred Stock or upon liquidation or dissolutioncompensation deduction under Section 162(m).

The Compensation Committee regularly reviews our compensation programs to determine the deductibility of the Company. The proposed amendmentsfuture compensation paid or awarded pursuant thereto and will seek guidance with respect to changes to our existing compensation program that will enable IMH to continue to attract and retain key individuals while optimizing the deductibility to IMH of amounts paid as compensation. However, this policy does not rule out the possibility that compensation may be approved that may not qualify for the compensation deduction if, in light of all applicable circumstances, it would eliminate eachbe in the best interests of the other restrictions described above and allow the Company for such compensation to declare and pay dividends on shares of Common Stock, Parity Preferred or Junior Preferred, or redeem, repurchase or make other paymentsbe paid.

Nonqualified Deferred Compensation

On October 22, 2004, the American Jobs Creation Act of 2004 was signed into law, changing the tax rules applicable to holdersnonqualified deferred compensation arrangements. While the final regulations are not yet effective, we believe we are operating in good faith compliance with statutory provisions that were effective on January 1, 2005. When the regulations are finalized, we will assess the impact on our compensation programs and make appropriate amendments.

Accounting for Share-Based Compensation

Beginning on January 1, 2006, we began accounting for our stock option awards in accordance with the requirements of Common Stock, Parity PreferredFASB Statement 123R, "Share-Based Payments." Before we grant stock-based compensation awards, we consider the accounting impact of the award as structured and under various other scenarios in order to analyze the expected financial statement impact of the award.

Compensation Committee Report (1)

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis, or Junior Preferred without payingCD&A, contained in this Proxy Statement. Based on this review and discussion, the Compensation Committee has recommended to the board of directors that the CD&A be included in this Proxy Statement.

Compensation Committee




James Walsh (Chairman)
Leigh J. Abrams
Stephan R. Peers

(1)

The material in this report is not "soliciting material," is not deemed "filed" with the Securities and Exchange Commission, and is not to be incorporated by reference into any filing of Impac Mortgage Holdings, Inc. under the Securities Act or setting apartthe Exchange Act.

Compensation Committee Interlocks and Insider Participation

During 2008, our compensation committee consisted of Messrs. Walsh, Abrams and Peers. During the fiscal year, no member of the compensation committee was, an officer or employee of IMH, nor was any member of the compensation committee formerly an officer of IMH. No member of the Compensation Committee during our 2008 fiscal year was part of a "compensation committee interlock" as described under SEC rules. In addition, none of our executive officers served as a director or compensation committee member of another entity that would constitute a "compensation committee interlock."

2008 Summary Compensation Table

The following table presents compensation earned by our executive officers for paymentthe years ended December 31, 2008, 2007 and 2006 (the "Named Executive Officers"). The compensation of Messrs. Tomkinson, Taylor, Ashmore and Morrison is based on each of their employment agreements in effect during 2008, which are further described below under "Employment Agreements."

Summary Compensation Table for 2008

(1)

Represents the dollar amount recognized for financial reporting purposes in accordance with SFAS 123(R) (disregarding estimates of forfeitures). See Note 13 to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2008 for a discussion of the relevant assumptions used in calculating these amounts. The amounts expensed in 2007 reflect a reversal of the expense recognized in prior periods for Messrs. Tomkinson and Ashmore's performance based options, which are described on footnote (1) to the table entitled "Outstanding Equity Awards at December 31, 2008," since the performance goals for 2007 related to those options were not met. The fair value of each performance based option was measured on the date of grant using the same assumptions used to value the service based options, and initially assumed that the performance goals would be achieved. If the goals are not met, no compensation cost is recognized and any dividends on shares of any series of Preferred Stock. The proposed amendments would also allowrecognized compensation cost is reversed. Since the performance goals for those options were not met, the Company reversed all previous expense recorded for those performance based options and is no longer recognizing any further expense related to repurchase less than allthose options.

(2)

With respect to 2008, includes a car allowance, employer (IMH) 401(k) contributions, and insurance benefits provided by the Company, each of which is set forth in the sharesfollowing table:

All Other Compensation

(3)

Up until November 2008, Mr. Taylor's incentive compensation was up to 50% of any serieshis base salary and then was increased to 65% when he was appointed as Chief Financial Officer. However, Mr. Taylor waived his incentive bonus for the fourth quarter of Preferred Stock,2008.

(4)

Mr. McCormick joined the Company in November 2006, and was not a Named Executive Officer in 2006. He departed the Company as of March 31, 2008.

Grants of Plan-Based Awards for 2008

The following table sets forth non-equity plan awards and the grants of options to the named executive officers during 2008.

GRANTS OF PLAN-BASED AWARDS FOR 2008

(1)

Pursuant to his employment agreement, Mr. Taylor received an incentive bonus of up to 50% of his base salary, or redeem or repurchase sharesup to $140,000, until November 2008 and thereafter was eligible to receive up to 65% of another series of preferred stock, without declaring and paying or setting apart for payment any dividends on the other outstanding shares of Preferred Stock.

his base salary. The proposed amendments will not change the other terms of the Preferred Stock relating to dividends, including the base rate at which dividends accrue, the payment dates for dividends or provisions of our Charter that require us, if we pay less than the full amount of dividends for any dividend period, to pay dividends among the holders of each series of the Preferred Stock pro rata,bonus is paid quarterly based on the respective amountsachievement of unpaid dividends thatmutually agreed management by objectives ("MBOs"). The bonus is prorated if all MBOs are payable on each such share of Preferred Stock and Parity Preferred for such period.

Modifications to Liquidation Rights

        The Company's Charter requires it, upon any voluntary or involuntary liquidation, dissolution or winding upnot attained, but there is no bonus if at least 50% of the Company, to pay toMBOs are not obtained. Mr. Taylor waived his incentive bonus for the holdersfourth quarter of each series of2008. The target amount is the Preferred Stock, the $25.00 liquidation preference per share, an amount equal to any accruedreceived for 2008.

(2)

These options vested over a two year period and unpaid dividends toterminated five years after the date of payment, and a premium of $0.50 per share up to but not including Maygrant. On April 28, 2009, the executive officers gave notice of the surrender of these options and the Board accepted and approved the cancellation of the options.

(3)

All options were canceled in connection with Mr. McCormick's departure from the Company.

Outstanding Equity Awards at December 31, 2008

The following table sets forth the outstanding stock options for each of our named executive officers as of December 31, 2008. As of April 27, 2009, the Company's common stock was quoted at $0.51, which means that all the options set forth below are "underwater."

OUTSTANDING OPTION AWARDS AT DECEMBER 31, 2008

(1)

On August 18, 2006, the Compensation Committee of the Board of Directors approved performance criteria for the 22,500 performance based options granted to each of Joseph R. Tomkinson and William S. Ashmore. The awards vested in one-third increments if the Company meets specified estimated taxable income targets over each of the three 12-month periods ending June 30, 2009. The options expired four years from the date of grant. If a portion of an award did not vest, the failure of that portion to vest would not affect the vesting of earlier or subsequent portions. On April 28, 2009, the executive officer gave notice of the surrender of these options and the Board accepted and approved the cancellation of the options.

(2)

These awards were granted on 8/12/2005, vested over a three year period and terminated four years after the date of grant. On April 28, 2009, the executive officer gave notice of the surrender of these options and the Board accepted and approved the cancellation of the options.

(3)

These awards were granted on 8/18/2006, vested over a three year period and terminated four years after the date of grant. On April 28, 2009, the executive officer gave notice of the surrender of these options and the Board accepted and approved the cancellation of the options.

(4)

These awards, which include DERs, were granted on 3/27/2001, vested on the grant date and terminate ten years after that date.

(5)

These awards, which include DERs, were granted on 12/18/2001, vested on the grant date and terminate ten years after that date.

(6)

These awards, which include DERs, were granted on 6/22/2004, vested on the grant date and terminate ten years after that date.

(7)

These awards were granted on 9/27/2007, vested over a three year period and terminated four years after the date of grant. On April 28, 2009, the executive officer gave notice of the surrender of these options and the Board accepted and approved the cancellation of the options.

(8)

These awards were granted on 2/12/2008, vested over a two year period and terminated five years after the date of grant. On April 28, 2009, the executive officer gave notice of the surrender of these options and the Board accepted and approved the cancellation of the options.

Option Exercise and Stock Vested for 2008

There were no option exercises or stock vesting during 2008 for the Named Executive Officers.

Employment Agreements

Joseph R. Tomkinson, Chief Executive Officer, and William S. Ashmore, President

On June 11, 2008, Messrs. Tomkinson and Ashmore executed new employment agreements, effective as of April 1, 2008 (the "Employment Agreements"). Each of the Employment Agreements has a term from January 1, 2008 through December 31, 2009, unless terminated earlier, and automatically renew for an additional two years unless the Company provides notice of non-renewal between July 15 and August 15, 2009.

Base Salary, Discretionary Bonus and Other Compensation.    Mr. Tomkinson's and Mr. Ashmore's base salary is $600,000 and $500,000 per year, respectively, with no automatic adjustments, and each officer is eligible to receive cash or stock bonuses in the casesole discretion of the Series B Preferred Stock,Board of Directors. Messrs. Tomkinson and $0.50 per share up to but including November 23, 2009, in the case of the Series C Preferred Stock. The proposed amendments would eliminate the rightAshmore are also eligible to receive upon liquidationpaid vacation, an annual car allowance of $12,000, and participate in health and other benefit plans and will be reimbursed for reasonable and necessary business and entertainment expenses. Each officer is prohibited, without approval from the amountBoard of Directors, from receiving compensation, directly or indirectly, from any accrued and unpaid dividends and any premiums, although holders of the Preferred Stock would still be entitled to receive the liquidation preference per share.

Modifications to Optional Redemption Provisions

        Our Charter prohibits us from electing to redeem shares of each series of Preferred Stock prior to the applicable fifth year anniversary of the issuance of each series of Preferred Stock and, after such dates, permits us to redeem shares of each series of Preferred Stock for a redemption price equal to the $25.00 liquidation preference per share, plus all accrued and unpaid dividends to and including the date fixed for redemption without interest. Our Charter requires us to declare and pay, or set apart for payment, all cumulative dividends for all past dividend periods on each series of Preferred Stock before we redeem less than all of the outstanding shares of that series of Preferred Stock. Further, unless full cumulative dividends on all shares of any series of Preferred Stock shall have been, or contemporaneously are, declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, no shares of that series of Preferred Stock shall be redeemed unless all outstanding shares of that series of Preferred Stock are simultaneously redeemed. The proposed amendments would allowcompanies with whom the Company to complete the Exchange Offeror any of its affiliates has any financial, business, or affiliated relationship.

Severance Compensation.    If Mr. Tomkinson's or Mr. Ashmore's employment is terminated for any reason, other than without paying accrued dividends on any shares of Preferred Stock, including any shares that will remain outstanding following the completion of the Exchange Offer.

        The proposed amendments would also allow the Company to elect to redeem any number of shares of any series of Preferred Stock, at any time, for a redemption price equal to the liquidation preference per share, without payingcause or declaring and setting apart for payment any accrued but unpaid dividends on the redeemed shares of Preferred Stock or paying or declaring and setting apart for payment any dividends to holders of any other series of preferred stock. If the redemption date for shares of any series of Preferred Stock falls after the record date but before the payment date of any dividend declared by the Company on that series of Preferred Stock, holders of any redeemed shares of such series of Preferred Stockgood reason, each will be entitled to receive his base salary prorated through the dividend whentermination date, any expense reimbursement due and asowing for reasonable and necessary business and entertainment expenses, and accrued vacation benefits. If termination is due to death or the executive officer is declared legally incompetent, then such officer will also receive six additional months of his base salary. If either officer is terminated without cause or resigns with good reason, he will also receive 18 months of his base salary, along with health benefits, to be paid out over an 18 month period. Termination with cause includes conviction of a crime of dishonesty or a felony with certain penalties, substantial failure to perform duties after notice, willful misconduct or gross negligence, or material breach of the employment agreement. Good reason includes material changes to employee's duties, relocation, without his prior written consent, of the place of principal performance of such executive's responsibilities and duties to a location more than 65 miles away, the Company's material breach of the employment agreement and failure by the Company.Company to obtain from any acquirer of the Company an agreement to assume the employment agreement. Each executive officer has agreed not to compete with the Company during the 18 months that severance payments are made, provided that the agreement not to compete will be waived if the executive officer foregoes the severance compensation.

Change of Control.    The proposed amendmentsEmployment Agreements will not change the existing procedures for redemptionbe terminated by merger, an acquisition by another entity, or by transferring of any series of the Preferred Stockall or the requirement that, if we redeem less thansubstantially all of the sharesCompany's assets. In the event of any series of Preferred Stock, we will redeem shares of such series pro rata among the holders of that

seriessuch change of control, the surviving entity or transferee would be bound by the employment agreements.

Guarantees.    Because IMH will receive direct and indirect benefits from the performance of each officer under the Employment Agreements, IMH entered into guaranties also effective as of April 1, 2008, in proportionfavor of each officer. Under the terms of each guaranty, IMH promises to pay any and all obligations owed to the officers in the event of default by IFC.

Todd R. Taylor, Chief Financial Officer

Effective October 1, 2007, IMH and Todd R. Taylor entered into an employment agreement, which terminates on October 1, 2009, unless terminated earlier.

Base Salary, Bonus Incentive and Other Compensation.    Pursuant to the current terms of the employment agreement, Mr. Taylor receives a base salary of $300,000 per year, subject to cost of living increases, and he is also eligible to receive incentive bonus of up to 65% of his base salary paid quarterly based on the achievement of mutually agreed management by objectives ("MBOs"). The bonus is prorated if all MBOs are not attained, but not eligible if at least 50% of the MBOs are not obtained. Mr. Taylor is also eligible to receive an annual car allowance of $6,000, paid vacation and to participate in health and other benefit plans. Mr. Taylor is prohibited, without prior approval of the Board of Directors, from receiving compensation, directly or indirectly from any companies with whom IMH or any of its affiliates has any financial, business or affiliated relationship.

Severance Compensation.    If Mr. Taylor's employment is terminated for any reason, other than by the Company for good reason, Mr. Taylor will receive his base salary and accrued vacation benefits prorated through the termination date. If Mr. Taylor is terminated by IMH (for any reason) or resigns with good reason, he will receive 12 months of his base salary and health benefits, to be paid out proportionally over a 12 month period. Good reason includes material changes to employee's duties and the Company's material breach of the employment agreement, including reduction of base salary, without employee's consent. Unless Mr. Taylor foregoes the severance compensation, he has agreed not to compete with the Company for 12 months after termination by the Company or if he resigns for good reason.

Change of Control.    The employment agreement will not be terminated by merger, an acquisition by another entity, or by transferring of all or substantially all of the Company's assets. In the event of any such change of control, the surviving entity or transferee, will be bound by the employment agreement.

Ronald M. Morrison, Executive Vice President and General Counsel

Effective June 1, 2006, the Company and Ronald M. Morrison entered into an employment agreement, which expires on May 31, 2009, unless terminated earlier.

Base Salary, Discretionary Bonus and Other Compensation.    Pursuant to the terms of the employment agreement, Mr. Morrison receives a base salary of $385,000 per year and he is eligible to receive an annual discretionary bonus of up to 50% of his base salary. Mr. Morrison is also eligible to receive an annual car allowance of $6,000 and paid vacation. Mr. Morrison is prohibited, without prior approval of the Board of Directors, from receiving compensation, directly or indirectly, from any companies with whom IFC or any of its affiliates has any financial, business or affiliated relationship.

Severance Compensation.    If Mr. Morrison's employment is terminated for any reason, other than without cause or good reason, Mr. Morrison will receive his base salary, bonus incentive compensation and accrued vacation benefits prorated through the termination date. If Mr. Morrison is terminated

without cause or resigns with good reason, he will receive, in addition to his base salary, bonus incentive compensation and accrued vacation benefits prorated through the termination date, 18 months of his base salary along with health benefits, to be paid out proportionally over an 18 month period. Termination with cause includes conviction of a crime of dishonesty, a felony with certain penalties, disbarment or suspension of his license to practice law for more than 30 days, substantial failure to perform duties after notice, willful misconduct or gross negligence, or material breach of the employment agreement. Good reason includes material changes to employee's duties, relocation of the Company's business by more than 65 miles without employee's consent, the Company's material breach of the employment agreement or, in the event of a change of control, the acquiring company fails to assume the agreement. Mr. Morrison has agreed not to compete with the Company or any of its affiliates during the 18 months that severance payments are made, provided that the agreement not to compete will be waived if Mr. Morrison foregoes the severance compensation.

Change of Control.    The employment agreement will not be terminated by merger, an acquisition by another entity, or by transferring of all or substantially all of the Company's assets. In the event of any such change of control, the surviving entity or transferee, will be bound by the employment agreement.

Guaranty.    Because IMH will receive direct and indirect benefits from the performance of Mr. Morrison under the employment agreement, IMH entered into a guaranty in favor of Mr. Morrison. Under the terms of the guaranty, IMH promises to pay any and all obligations owed to Mr. Morrison in the event of default by IFC. The employment agreement will not be terminated by merger, an acquisition by another entity, or by transferring all or substantially all of IFC's assets. In the event of any such change of control, the surviving entity or transferee, will be bound by the employment agreement.

Potential Payments upon Termination and Change-in-Control

Based on the termination provisions of their applicable employment agreements, if each Named Executive Officer was terminated without cause or resigned for good reason as of December 31, 2008, they would have received the following aggregate payments:

Continuation of Benefits

(1)

Represents dollar value of health insurance benefit that would be paid by the Company during the continuation period.

None of the Named Executive Officers would receive payments upon a change-on-control.

Equity Compensation Plan Information

Our current stock plan consists of our 2001 Stock Option, Deferred Stock and Restricted Stock Plan, which was approved by our stockholders on July 25, 2001. Our 2001 Stock Plan authorizes our Board of Directors to grant awards that include incentive stock options as defined under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), non-qualified stock options, deferred stock, non-vested stock and dividend equivalent rights.

The following table summarizes our equity compensation plan information as of December 31, 2008 with respect to outstanding awards and shares remaining available for issuance under our equity compensation plans.

(1)

The 2001 Stock Plan contains a provision whereby on January 1st of each year the maximum number of shares of stock may be increased by an amount equal to the lesser of (a) 3.5% of the total number of shares of stock outstanding on such anniversary date, and (b) a lesser amount as determined by the Board of Directors; provided, further, that of such amount the maximum aggregate number of ISOs shall be increased on January 1st of each year to the lesser of (a) 3.5% of the total number of shares of stock outstanding on such anniversary date, and (b) 3.5% of the total number of shares of stock outstanding on the effective date of the plan. Pursuant to this provision, subsequent to December 31, 2008, the number of shares heldauthorized for issuance under the 2001 Stock Plan increased by 266,634. On April 28, 2009, an aggregate of 581,000 options were cancelled becoming available again for future issuance so that as of that date, there was a total of 901,048 shares reserved for future issuance.

Stock Option, Deferred Stock and Restricted Stock Plans

2001 Stock Plan

Our 2001 Stock Option, Deferred Stock and Restricted Stock Plan (the "2001 Stock Plan") provides for the grant of Incentive Stock Options that meet the requirements of Section 422 of the Code, Non-qualified Stock Options, deferred stock and restricted stock awards and dividend equivalent rights.

1995 Stock Plan

The 1995 Stock Option, Deferred Stock and Non-vested stock Plan expired in August 2005. As of March 31, 2009, options to purchase 67,500 shares were outstanding. In the event of a change in control, all stock options will fully vest and the value of all such stockholdersawards will be cashed out by payment of cash or by lot or by any other equitable mannerproperty, as determined by the Board.Administrator, on the basis of a "change of control price."

Benefits401(k) Plan

During 2008, we participated in the Impac Companies 401(k) Savings Plan for all full time employees with at least six months of service, which is designed to be tax deferred in accordance with the Company

provisions of Section 401(k) of the Internal Revenue Code. The 401(k) Plan provides that each participant may contribute from 1% to 25% of his or her salary pursuant to certain restrictions or up to $15,500 annually for 2008. We will not be ablecontribute to complete the Exchange Offer unlessparticipant's plan account at the proposed amendments to our Charter to modify the termsend of each plan year 50% of the Preferred Stock described above, and set forth in Annex A and Annex Bfirst 4% of salary contributed by a participant. Under the 401(k) Plan, employees may elect to this proxy statement, are approved by holdersenroll on the first day of a majorityany month, provided that they have been employed for at least six months. Subject to the rules for maintaining the tax status of the outstanding shares401(k) Plan, an additional company contribution may be made at our discretion, as determined by the Board of Common Stock entitled to vote and by holders of 66²/3% of the outstanding shares of the Preferred Stock, voting as a single class separate from the holders of the Common Stock.

Directors. The Board believes there will be significant adverse consequencesdiscretionary contributions made to the Company if the proposed amendments described above are not approved by either the holders of Common Stock or Preferred Stock. Future dividends payable to the holders of Series B Preferred Stockplan vest over a three year period. We recorded approximately $200,000 for matching and Series C Preferred Stock would likely represent a significant reduction in our cash, making it difficult for us to satisfy other continuing obligations. Plus, we would most likely not be able to raise additional capital if we cannot pay dividends on the Preferred Stock or satisfy our outstanding obligations. On December 10, 2008 we announced that our Board will not declare, and we will not pay, a fourth quarter 2008 dividend on our Preferred Stock and that our Board approved the deferral of payments on our trust preferred securities. As a result, we would not be able to accomplish our goals, rebuild our business, and, given the limited opportunities available in the financial market, we would be required to change our current plan of operations, which we cannot determine at this time but could include a wind down of the Company.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR PROPOSAL 1, TO APPROVE AMENDMENTS TO THE COMPANY'S CHARTER TO MODIFY THE TERMS OF EACH SERIES OF THE COMPANY'S PREFERRED STOCK. PROXIES WILL BE VOTED FOR SUCH APPROVAL UNLESS INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN THE PROXY.discretionary contributions during 2008.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee of our Board of Directors is responsible for providing independent, objective oversight of our accounting functions and internal control over financial reporting. The Audit Committee is currently comprised of three directors. The Audit Committee operates under a written audit committee charter, which was amended and restated and approved by the Board of Directors on January 26, 2009.

Management is responsible for our internal control over financial reporting and financial reporting process. Squar, Milner, Peterson, Miranda & Williamson, LLP, or Squar Milner, the independent registered public accounting firm, is responsible for performing an independent audit of our consolidated financial statements, as well as the effectiveness of our internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States) and to issue separate reports thereon. The Audit Committee's responsibility is to monitor and oversee these management processes and related independent audits.

In connection with these responsibilities, the Audit Committee met with management and Squar Milner to review and discuss the December 31, 2008 financial statements. The Audit Committee also discussed with Squar Milner the matters required by Statement on Auditing Standards ("SAS") No. 61 (Communication with Audit Committees) as may be modified or supplemented.

In addition, the Audit Committee also received written disclosures and the letter from Squar Milner required by Public Company Accounting Oversight Board Ethics and Independence Rule 3526, which superseded Independence Standards Board ("ISB") Standard No. 1 (Independence Discussions with Audit Committees) and ISB Interpretations 00-1 and 00-2, which requires the written disclosure of all relationships between us and our independent registered public accounting firm that, in the independent registered public accounting firm's professional judgment, may reasonably be thought to bear on independence and confirmation that, in its professional judgment, it is independent of the Company that it is auditing.

The Audit Committee has also reviewed the non-audit fees described below and has concluded that the amount and nature of those fees is compatible with maintaining Squar Milner's independence.

Based on the Audit Committee's discussions with management, review of Squar Milner's letter and discussions with Squar Milner, the Audit Committee has recommended to the Board of Directors that the audited financial statements be included in our annual report on Form 10-K for the fiscal year ended December 31, 2008, for filing with the SEC.

INFORMATION REGARDING INDEPENDENT PUBLIC AUDITOR

Changes in Certifying Accountant

We engaged Squar Milner as our independent registered public accounting firm on November 17, 2008 upon our dismissal of our previous independent registered public accounting firm, Ernst & Young LLP. The decision to dismiss Ernst & Young LLP and engage Squar Milner was approved by the Company's Audit Committee.

The reports of Ernst & Young on the financial statements of the Company for the years ended December 31, 2007 and 2006 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.

During the period from January 1, 2006 through the date of Ernst & Young's dismissal, there have been no disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) with Ernst & Young on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Ernst & Young would have caused it to make reference to the subject matter of such disagreements in their reports on the financial statements for such years. Further, there have been no reportable events (as described in Item 304(a)(1)(v) of Regulation S-K), except for the following: a) as previously disclosed by the Company in its Annual Report on Form 10-K for the year ended December 31, 2007, Ernst & Young reported that the Company did not maintain effective internal control over financial reporting as of December 31, 2007 because of the effect of a material weakness in controls related to the Company's financial statement close process that existed as of December 31, 2007; and b) as previously disclosed by the Company in its Annual Report on Form 10-K for the year ended December 31, 2006, Ernst & Young reported that the Company did not maintain effective internal control over financial reporting as of December 31, 2006 because of the effect of a material weakness in controls over the preparation, review, presentation and disclosure of amounts included in the Consolidated Statements of Cash Flows.

Neither the Company nor anyone acting on its behalf consulted with Squar Milner during the period from January 1, 2006 through the date of Ernst & Young's dismissal regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or (ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).

A representative of Squar Milner is expected to be present at the meeting, will have the opportunity to make a statement and is expected to be available to answer appropriate questions.

Principal Accountant Fees and Services

In November 2008, we engaged Squar, Milner, Peterson, Miranda & Williamson, LLP as the Company's new independent registered public accounting firm to audit our financial statements for the year ending December 31, 2008. Ernst & Young LLP served as our independent auditors for our financial statements for the year ended December 31, 2007. The following table sets forth the aggregate fees billed to us by

Squar Milner for the year ended December 31, 2008 and by Ernst & Young LLP for the year ended December 31, 2007.

(1)

During the year ended December 31, 2008, audit-related fees include fees for an examination under section 1122 of Regulation AB for loan servicing as well as a separate examination of certain requirements of our master servicing policies and procedures. All other fees include fees for consultation relating to our internal control over financial reporting.

(2)

During the year ended December 31, 2007, audit-related fees include fees for structured finance assistance, audit of 401(k) plan and audit of master servicing policies and procedures. Tax fees included fees for preparation of tax returns and for tax consulting.

Pre-Approval Policies and Procedures for Audit and Non-Audit Services

The Audit Committee pre-approves all auditing services and permitted non-audit services, including the fees and terms thereof, to be performed by our independent registered public accounting firm, subject to the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which are approved by the Audit Committee prior to the completion of the audit. The Audit Committee may form and delegate authority to subcommittees consisting of one or more members of the Audit Committee when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of such subcommittee to grant pre-approvals shall be presented to the full Audit Committee at its next scheduled meeting. In pre-approving the services in 2008 and 2007 under audit related fees, tax fees or all other fees, the Audit Committee did not rely on the de minimis exception to the SEC pre-approval requirements.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors, executive officers, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership of such securities with the SEC. Directors, executive officers and greater than 10% beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.

To our knowledge, based solely on review of the copies of such reports furnished to us during the fiscal year ended December 31, 2008, all Section 16(a) filing requirements applicable to our executive officers, directors and greater than ten percent stockholders were satisfied by such persons.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There have been no transactions since the beginning of the Company's last fiscal year, nor are there any currently proposed transactions, in which the Company was or is a participant and in which any related person (as defined in the SEC's rules) had or will have a direct or indirect material interest.

Policies and Procedures

Pursuant to our Code of Business Conduct and Ethics, directors and officers must notify the General Counsel or the Chairman of our Audit Committee of the existence of any actual or potential conflict of interest. The Audit Committee, as described in its charter, reviews reports and disclosures of insider and affiliated party transactions or other conflicts of interest.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information known to us with respect to beneficial ownership of our Common Stockcommon stock as of the Record DateApril 28, 2009 (taking into account cancellation of certain outstanding options) by (i) each director, (ii) each named executive officer,Named Executive Officer, (iii) each person known to us to beneficially own more than five percent of our Common Stock,common stock, and (iv) all directors and executive officers as a group. Unless otherwise indicated in the footnotes to the table, the beneficial owners named have, to our knowledge, sole voting and investment power with respect to the shares beneficially owned, subject to community property laws where applicable.

*

Less than 1%

(1)

Except as otherwise noted, all named beneficial owners can be contacted at 19500 Jamboree Road, Irvine, California 92612.

(2)

Based on a Schedule 13G filed on February 14, 2008, Mr. Gutfleish is the managing member of two limited liability companies, which manage one or more private investment funds that hold the Company's shares. Mr. Gutfleish has shares voting and investment power over the shares. The address for Mr. Gutfleish is c/o Elm Ridge Capital Management, LLC, 3 West Main Street, 3^rd Floor, Irvington, New York 10533.

(3)

Based on a Schedule 13D filed on January 10, 2008, the shares are also beneficially owned by Kelly Capital, LLC, which owns all of the outstanding membership interests of Kelly Capital Investments, LLC, and Michael Kelly, whose trust owns the membership interests of Kelly Capital, LLC. The address is c/o Kelly Capital, LLC, 225 Broadway, 18^th Floor, San Diego, CA 92101.

(4)

Includes (i) options to purchase 390,00024,000 shares that are exercisable or exercisable within 60 days of January 6,April 28, 2009 and (ii) 285,20528,521 shares held in trust with Mr. Tomkinson as trustee.

(5)(3)

Includes (i) options to purchase 350,00020,000 shares that are exercisable or exercisable within 60 days of January 6, 2008April 28, 2009 and (ii) 79,6657,967 shares held in trust with Mr. Ashmore as trustee.

(6)(4)

Includes options to purchase 100,41610,000 shares that are exercisable or exercisable within 60 days of January 6, 2008.

April 28, 2009.

(7)(5)

Includes options to purchase 89,1663,375 shares that are exercisable or exercisable within 60 days of January 6, 2008.

April 28, 2009.

(8)(6)

Includes options to purchase 74,9993,375 shares that are exercisable or exercisable within 60 days of January 6, 2008.

April 28, 2009.

(9)(7)

Includes options to purchase an aggregate of 1,405,4133,375 shares that are exercisable or exercisable within 60 days of January 6, 2008.April 28, 2009.

(8)

Includes options to purchase an aggregate of 2,250 shares that are exercisable or exercisable within 60 days of April 28, 2009.

(9)

Includes options to purchase an aggregate of 66,375 shares that are exercisable or exercisable within 60 days of April 28, 2009.

STOCKHOLDER PROPOSALS

Proposals to be Included in Proxy Statement

Stockholders are hereby notified that if they wish a proposal to be included in our proxy statement and form of proxy relating to the 20092010 annual meeting of stockholders, they must deliver a written copy of their proposal no later than February 11, 2009.January 18, 2010. If the date of next year's annual meeting is changed by more than 30 days from the date of this year's meeting, which was held on July 10, 2008, then the deadline is a reasonable time before we begin to print and mail proxy materials. Proposals must comply with the proxy rules relating to stockholder proposals, in particular Rule 14a-8 under the Securities Exchange Act of 1934, as amended, in order to be included in our proxy materials.

Proposals to be Submitted for SpecialAnnual Meeting

Stockholders who wish to submit a proposal for consideration at our special2010 annual meeting of stockholders, mustbut who do not wish to submit the proposal for inclusion in our proxy statement pursuant to Rule 14a-8 under the Exchange Act, must, in accordance with our bylaws, deliver a copy of their proposal no later than the close of business on the 60^th day prior to the Companyfirst anniversary of this annual meeting, nor earlier than the 90^th day prior to the first anniversary of this annual meeting. Any stockholder submitting a proposal must provide a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial holder, if any, on whose behalf the proposal is made. The stockholder and the beneficial owner, if any, on whose behalf the proposal is made must provide their name and address as it appears on the books of the company and the class and number of shares of the company which are beneficially owned and of record. Furthermore, such stockholder must promptly provide any other information reasonably requested by the Company.

In the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from the first anniversary of the preceding year's annual meeting, then notice must be delivered not earlier than the 90^th day prior to such annual meeting and not later than the close of business on the later of the 60^th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made. Public announcement means disclosure in a reasonable time before we beginpress release reported by the Dow Jones News Service, Associated Press or comparable news service or in a document publicly filed by the company with the SEC pursuant to print and send this proxy statement to our stockholders.Section 13, 14 or 15(d) of the Exchange Act.

Mailing Instructions

In each case, proposals should be delivered to 19500 Jamboree Road, Irvine, California 92612, Attention: RonRonald M. Morrison, Secretary. To avoid controversy and establish timely receipt by us, it is suggested that stockholders send their proposals by certified mail return receipt requested.

INCORPORATION BY REFERENCE

        The SEC allows us to "incorporate by reference" information into this Proxy Statement, which means that we can disclose important information to you by referring you to other documents that we have filed separately with the SEC and are delivering to you with the copy of this Proxy Statement. The information incorporated by reference is deemed to be part of this Proxy Statement. This Proxy Statement incorporates by reference the following documents:

(i)

Annual Report on Form 10-K for the year ended December 31, 2007, filed with the SEC on May 21, 2008; and



(ii)

Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008, filed with the SEC on November 12, 2008.

WHERE YOU CAN FIND MORE INFORMATION

        We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available over the Internet at the SEC's web site at www.sec.gov. You may also read and copy any of our SEC filings at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information on the Public Reference Room and its copy charges.

        Our Internet website address is www.impaccompanies.com. We make available free of charge, through our Internet website, under the "Investors—Investor Information—SEC Filings" section, our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and any amendments to those reports that we file or furnish pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The information contained in or accessible from our Internet website is not part of this Proxy Statement.

        We filed a Schedule TO pursuant to Rule 13e-4 under the Exchange Act to furnish certain information about the Exchange Offer and Consent Solicitation. You may obtain copies of the Schedule TO (and any amendments to those documents) in the manner described above.

        We have not authorized anyone to give any information or make any representation about the proposals that is different from, or in addition to, that contained in this Proxy Statement. Therefore, you should not rely on any other information. The information contained in this Proxy Statement speaks only as of the date of this Proxy Statement unless the information specifically indicates that another date applies.

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 proxy holders 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



Ronald M. Morrison, Secretary

		By Order of the Board of Directors
		Ronald M. Morrison, Secretary

Dated: ,April 30, 2009
Irvine, California

ANNEX A

Amendment to the Company's Charter
Series B Preferred Stock

IMPAC MORTGAGE HOLDINGS, INC.

Articles of AmendmentArticles SupplementaryPROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
9.375% Series B Cumulative Redeemable Preferred StockTO BE HELD ON JULY 21, 2009

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

        The undersigned stockholder(s) of Impac Mortgage Holdings, Inc., a MarylandDelaware corporation, (the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that:

        FIRST:Under a power contained in Article VIacknowledges receipt of the ArticlesNotice of AmendmentAnnual Meeting of Stockholders and RestatementProxy Statement dated April 30, 2009, and hereby appoints Todd R. Taylor and Ronald M. Morrison, or either of them acting singly in the absence of the Corporation,other, with full power of substitution, as amendedattorneys-in-fact and supplemented (the "Charter"), the Board of Directors by duly adopted resolutions classifiedproxies for, and designated 7,500,000 shares of authorized but unissued Preferred Stock (as defined in the Charter) as shares of 9.375% Series B Cumulative Redeemable Preferred Stockaccepted for record by the State Department of Assessmentsname and Taxation of Maryland on May 26, 2004 (the "Articles Supplementary") and forming a partplace of, the charterundersigned, and hereby authorizes each of them to represent and to vote all of the Corporation (the "Charter") shall be amended as follows:withshares which the following preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption, which, upon any restatement of the Charter, shall become part of Article VI of the Charter, with any necessary or appropriate renumbering or relettering of the sections or subsections hereof.

1.The Articles Supplementary shall be amended and restated and replaced as follows:

Series B Preferred Stock

        (1)   DESIGNATION AND NUMBER. A series of preferred stock, designated the "9.375% Series B Cumulative Redeemable Preferred Stock" (the "Series B Preferred Stock"),undersigned is hereby established. The number of shares of the Series B Preferred Stock shall be7,500,000.2,000,000.

        (2)   RANK. The Series B Preferred Stock shall, with respect to the payment of distributions and the distribution of assets upon liquidation, dissolution or winding up of the Corporation, rank (a) senior to all classes or series of Common Stock, to the Series A Junior Participating Preferred Stock (as defined in the Charter) and to all equity securities of the Corporation the terms of which specifically provide that such equity securities rank junior to such Series B Preferred Stock; (b) on a parity with all equity securities issued by the Corporation the terms of which specifically provide that such equity securities rank on parity with the Series B Preferred Stock; and (c) junior to all equity securities issued by the Corporation the terms of which specifically provide that such equity securities rank senior to the Series B Preferred Stock. The term "equity securities" shall not include convertible debt securities.

        (3)   DIVIDENDS.

        (a)   Holders of the then outstanding shares of Series B Preferred Stock shall be entitled to receive, when and as authorized by the Board of Directors, out of funds legally available for the payment of dividends,cumulative preferentialcash dividendsvote at the rateAnnual Meeting of 9.375%Stockholders of the $25.00 liquidation preference per annum (equivalentImpac Mortgage Holdings, Inc. to a fixed annual amount of $2.34375 per share). Such dividends shallnotbe cumulativefrom the first dateheld on which any Series B Preferred Stock is issuedand shallJuly 21, 2009, at 9:00 a.m., if declared, be payable quarterlyin arrearson March 31, June 30, September 30,Pacific Daylight Time, and December 31 of each year or, if not a business day, the prior preceding business day (each, a "Dividend Payment Date"). Any dividend payable on the Series B Preferred Stock for any partial dividend period will be computed on the basis of a 360-day year consisting of twelve 30-day months (it being understood that the dividend payable on June 30, 2004 will be for less than the full dividend period). Dividends will be payable to holders of record as they appear in the stock records of the Corporation at the close of business on the applicable record date, which shall be the first day of the calendar month on which the applicable Dividend Payment Date falls or on such other date designated

by the Board of Directors of the Corporation for the payment of dividends that is not more than 60 nor less than 10 days prior to such Dividend Payment Date (each, a "Dividend Record Date").

        (b)   No dividends on shares of Series B Preferred Stock shall be declared by the Corporation or paid or set apart for payment by the Corporation at such time as the terms and provisions of any agreement of the Corporation, including any agreement relating to its indebtedness, prohibit such declaration, payment or setting apart for payment or provide that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law.

        (c)   Notwithstanding the foregoing, dividends on the Series B Preferred Stock shall accrue whether or not the terms and provisions set forth in Section 3(b) hereof at any time prohibit the current payment of dividends, whether or not the Corporation has earnings. whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. Accrued but unpaid dividends on the Series B Preferred Stock will accumulate as of the Dividend Payment Date on which they first become payable.The Corporation shall not be obligated to pay any unpaid dividend accrued on or prior to the effective date of these Articles of Amendment.

        (d)   Except as provided in Section 3(e) below, unless full cumulative dividends on the Series B Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the paymentadjournments thereof, is set apart for payment for all past dividend periods and the then current dividend period, no dividends (other than in shares of Common Stock or in shares of any series of preferred stock making junior to the Series B Preferred Stock as to the payment of distributions and the distribution of assets upon liquidation) shall be declared or paid or set aside for payment nor shall any other distribution be declared or made upon the Common Stock, or any preferred stock of the Corporation ranking junior to or on a parity with the Series B Preferred Stock as to the payment of distributions and the distribution of assets upon liquidation, nor shall any shares of Common Stock, or any shares of preferred stock of the Corporation ranking junior to or on a parity with the Series B Preferred Stock as to the payment of distributions and the distribution of assets upon liquidation be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or nude available for a sinking fund for the redemption of any such shares) by the Corporation (except by conversion into or exchange for other capital stock of the Corporation ranking junior to the Series B Preferred Stock as to the payment of distributions and the distribution of assets upon liquidation and except for transfers made pursuant to the provisions of Article VII of the Charter).Intentionally Omitted.

        (e)   When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) on the Series B Preferred Stock and the shares of any other series of preferred stock ranking on a parity as to dividends with the Series B Preferred Stock, all dividends declared upon the Series B Preferred Stock and any other series of preferred stock ranking on a parity as to dividends with the Series B Preferred Stockin that respective quartershall be declared pro rata so that the amount of dividends declared per share of Series B Preferred Stock and such other series of preferred stock shall in all cases bear to each other the same ratiothat accrued dividends per share on the Series B Preferred Stock and such other series of preferred stock (which shall not include any accrual in respect of unpaid dividends for prior dividend periods if such preferred stock does not have a cumulative dividend) bear to each otherin that respective quarter.. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on Series B Preferred Stock whichmay be in arrearsis declared but unpaid.

        (f)    Any dividend payment made on shares of the Series B Preferred Stock shall first be credited against the earliestaccrueddeclared but unpaid dividend due with respect to such shares which remains payable. Holders of the Series B Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or stock in excess offull cumulativedividends on the Series B Preferred Stockwhich have been declared as described above.

        (4)   LIQUIDATION DISTRIBUTION.

        (a)   Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of shares of Series B Preferred Stock then outstanding are entitled to be paid out of the assets of the Corporation, legally available for distribution to its stockholders, the sum of(a)a liquidation preference of $25.00 per share, (b) an amount equal to any accrued and unpaid dividends (whether or not declared) to the date of payment and (c) the applicable premium (expressed in dollar amount) per share during the applicable periodmatters as set forth in the table below, before any distributionNotice of assetsAnnual Meeting of Stockholders and Proxy Statement, receipt of which is made to holders of Common Stock or any series of preferred stock of the Corporation that ranks junior to the Series B Preferred Stock as to liquidation rights:.

        (b)   In the event that, upon any such voluntary or involuntary liquidation, dissolution or winding up, the available assets of the Corporation are insufficient to pay the amount of the liquidating distributions on all outstanding shares of Series B Preferred Stock and the corresponding amounts payable on all shares of other classes or series of capital stock of the Corporation ranking on a parity with the Series B Preferred Stock in the distribution of assets, then the holders of the Series B Preferred Stock and all other such classes or series of capital stock shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled.hereby acknowledged.

        (c)   After payment of the full amount of the liquidating distributions to which they are entitled, the holders of Series B Preferred Stock will have no right or claim to any of the remaining assets of the Corporation.

        (d)   Written notice of any such liquidation, dissolution or winding up of the Corporation, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than 30 nor more than 60 days prior to the payment date stated therein, to each record holder of the Series B Preferred Stock at the respective addresses of such holders as the same shall appear on the stock transfer records of the Corporation.

        (e)   The consolidation or merger of the Corporation with or into any other corporation, trust or entity or of any other corporation with or into the Corporation, or the sale, lease or conveyance of all or substantially all of the assets or business of the Corporation, shall not be deemed to constitute a liquidation, dissolution or winding up of the Corporation.

        (5)   REDEMPTION.

        (a)   Right of Optional Redemption.    The Series B Preferred Stockis not redeemable prior to the fifth year anniversary of the issuance of the Series B Preferred Stock,has no stated maturity and will not be subject to any sinking fund or mandatory redemption.However, inIn order to ensure that the Corporation continues to qualify as a real estate investment trust ("REIT") for federal income tax purposes, the Series B Preferred Stock will be subject to the provisions of Article VII of the Charter. Pursuant to Article VII, and without limitation of any provisions of such Article VII, Series B Preferred Stock, together with other equity stock of the Corporation, owned by a stockholder in excess of the Aggregate Stock Ownership Limit (as defined in the Charter) will automatically be transferred to a Trust (as defined in the Charter) for the benefit of a Charitable Beneficiary (as defined in the Charter).On and after the fifth year anniversary of the issuance of the Series B Preferred Stock, theThe Corporation, at its option and upon not less than 30 nor more than 60 days' written notice, may redeem shares of the Series B Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus all accrued and unpaid dividends thereon to and including the date fixed for redemption (except as provided in Section 5(c) below), without interestTHIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED IN A TIMELY MANNER, WILL BE VOTED AT THE ANNUAL MEETING AND AT ANY ADJOURNMENTS THEREOF IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). If less than all of the outstanding Series B Preferred Stock is to be redeemed, the Series B Preferred Stock to be redeemed shall be selected pro rata (as nearly as may be practicable without creating fractional shares) or by any other equitable method determined by the Corporation.IF NO SPECIFICATION IS MADE, THE PROXY WILL BE VOTED "FOR" ELECTION OF THE NOMINEES LISTED IN PROPOSAL 1, AND IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS NAMED AS PROXIES HEREIN ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING.

        (b)   Limitations on Redemption.Unless full cumulative dividendson all shares of Series B Preferred Stock shall have been, or contemporaneously are, declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, no shares of Series B Preferred Stock shall be redeemed unless all outstanding shares of Series B Preferred Stock are simultaneously redeemed, and the Corporation shall not purchase or otherwise acquire directly or indirectly any shares of Series B Preferred Stock (except by exchange for capital stock of the Corporation ranking junior to the Series B Preferred Stock as to the payment of distributions and the distribution of assets upon liquidation); provided, however, that the foregoing shall not prevent such action by the Board of Directors or its designees pursuant to Article VII in order to ensure that the Corporation remains qualified as a REIT for federal income tax purposes or the purchase or acquisition of shares of Series B Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series B Preferred Stock.Intentionally Omitted.PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.

        (c)   Rights to Dividends on Shares Called for Redemption.Immediately prior to any redemption of Series B Preferred Stock, the Corporation shall pay, in cash, any accumulated(continued, and unpaid dividends to and including the redemption date, unless a redemption date falls after a Dividend Record Date and prior to the corresponding Dividend Payment Date, in which case each holder of Series B Preferred Stock at the close of business on such Dividend Record Date shall be entitled to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the redemption of such shares before such Dividend Payment Date. Except as provided above, theThe Corporation will make no payment or allowance fordeclared andunpaid dividends, whether or not in arrears, on Series B Preferred Stock which is redeemed.

        (d)   Procedures for Redemption.

        (i)    Notice of redemption will be mailed by the Corporation, postage prepaid, not less than 30 nor more than 60 days prior to the redemption date, addressed to the respective holders of record of the Series B Preferred Stock to be redeemed at their

respective addresses as they appear on the stock transfer records of the Corporation. No failure to give such notice or any defect thereto or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of Series B Preferred Stock except as to the holder to whom notice was defective or not given.

        (ii)   In addition to any information required by law or by the applicable rules of any exchange upon which Series B Preferred Stock may be listed or admitted to trading, such notice shall state: (A) the redemption date; (B) the redemption price; (C) the number of shares of Series B Preferred Stock to be redeemed;and (D) the place or places where the Series B Preferred Stock is to be surrendered for payment of the redemption price; and (E) that dividends on the shares to be redeemed will cease to accrue on such redemption date. If less than all of the Series B Preferred Stock held by any holder is to be redeemed, the notice mailed to such holder shall also specify the number of shares of Series B Preferred Stock held by such holder to be redeemed.

        (iii)  If notice of redemption of any shares of Series B Preferred Stock has been given and if the funds necessary for such redemption have been set aside by the Corporation in trust for the benefit of the holders of any shares of Series B Preferred Stock so called for redemption, then, from and after the redemption date,dividends will cease to accrue on such shares of Series B Preferred Stock,such shares of Series B Preferred Stock shall no longer be deemed outstanding and all rights of the holders of such shares will terminate, except the right to receive the redemption price. Holders of Series B Preferred Stock to be redeemed shall surrender such Series B Preferred Stock at the place designated in such notice and.uponUpon surrender in accordance with said notice of the certificates for shares of Series B Preferred Stock so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such shares of Series B Preferred Stock shall be redeemed by the Corporation at the redemption price plus any accrued and unpaid dividends payable upon such redemption. In case less than all the shares of Series B Preferred Stock represented by any such certificate are redeemed, a new certificate or certificates shall be issued representing the unredeemed shares of Series B Preferred Stock without cost to the holder thereof.

        (iv)  The deposit of funds with a bank or trust corporation for the purpose of redeeming Series B Preferred Stock shall be irrevocable except that:

        (A)  the Corporation shall be entitled to receive from such bank or trust corporation the interest or other earnings, if any, earned on any money so deposited in trust, and the holders of any share redeemed shall have no claim to such interest or other earnings: and

        (B)  any balance of monies so deposited by the Corporation and unclaimed by the holders of the Series B Preferred Stock entitled thereto at the expiration of two years from the applicable redemption dates shall be repaid, together with any interest or other earnings thereon, to the Corporation, and after any such repayment, the holders of the shares entitled to the funds so repaid to the Corporation shall look only to the Corporation for payment without interest or other earnings.

        (e)   Application of Article VII.    The shares of Series B Preferred Stock are subject to the provisions of Article VII of the Charter, including, without limitation, the provision for the redemption of shares transferred to the Trust (as defined in such Article). For this purpose, the market price of the Series B Preferred Stock shall equal $25.00 per share, plus all accrued and unpaid dividends on the shares of Series B Preferred Stock.

        (f)    Status of Redeemed Shares.    Any shares of Series B Preferred Stock that shall at any time have been redeemed or otherwise acquired by the Corporation shall, after such redemption or acquisition, have the status of authorized but unissued preferred stock, without designation as to series until such shares are once more classified and designated as part of a particular series by the Board of Directors.

        (6)   VOTING RIGHTS.

        (a)   Holders of the Series B Preferred Stock will not have any voting rights, except as set forth below.

(b)Whenever dividends on any shares of Series B Preferred Stock or any series of preferred stock ranking on parity as to payment of dividends with the Series B Preferred Stock shall be in arrears for six or more quarterly periods, whether or not consecutive (a "Preferred Dividend Default"), the holders of such shares of Series B Preferred Stock (voting separately as a class with any other classes or all other series of our preferred stock ranking on a parity with the Series B Preferred Stock as to the payment of distributions and the distribution of assets upon liquidation ("Parity Preferred"), upon which like voting rights have been conferred and are exercisable), will be entitled to vote for the election of a total of two additional directors of the Corporation, provided that any such directors, if elected, shall not cause the Corporation to violate the requirement of Section 303A.02 of the New York Stock Exchange Listed Company Manual, or any successor provision thereto, that the Corporation have a majority of independent directors (the "Preferred Stock Directors"), and the number of directors on the Board of Directors shall increase by two, at a special meeting called by the holders of record of at least 20% of the Series B Preferred Stock or the holders of any other series of Parity Preferred so in arrears (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of stockholders in which event such meeting shall be held at such next annual or special meeting of stockholders), and at each subsequent annual meeting until all dividends accumulated on such shares of Series B Preferred Stock and any series of preferred stock ranking on parity as to payment of dividends with the Series B Preferred Stock for the past dividend periods and the dividend for the then current dividend period shall have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment.

(c)f and when all accumulated dividends and the dividend for the then current dividend period on the Series B Preferred Stock and any series of preferred stock ranking on parity as to payment of dividends with the Series B Preferred Stock shall have been paid in full or set aside for payment in full, the holders of shams of Series B Preferred Stock shall be divested of the voting rights set forth in Section 6(b) hereof (subject to revesting in the event of each and every subsequent Preferred Dividend Default) and, if all accumulated dividends and the dividend for the current dividend period have been paid in full or set aside for payment in full on all other series of Parity Preferred upon which like voting rights have been conferred and are exercisable, the term of office of each Preferred Stock Director so elected shall terminate and the number of directors on the Board of Directors shall decrease by two. Any Preferred Stock Director may be removed at any time with or without cause by the vote of, and shall not be removed otherwise than by the vote of, the holders of record of a majority of the outstanding shares of the Series B Preferred Stock when they have the voting rights set forth in Section 6(b) (voting separately as a class with the Parity Preferred upon which like voting rights have been conferred and are exercisable). So long as a Preferred Dividend Default shall continue, any vacancy in the office of a Preferred Stock Director may be filled by written consent of the Preferred Stock Director remaining in office, or, if none remains in office, by a vote of the holders of recordof amajority of the outstanding shares of Series B Preferred Stock when they have the voting rights set forth in Section 6(b) (voting separately as a class

with all other series of Parity Preferred upon which like voting rights have been conferred and are exercisable). The Preferred Stock Directors shall each be entitled to one vote per director on any matter.

        (db) So long as any shares of Series B Preferred Stock remain outstanding, the Corporation shall not, without the affirmative vote or consent of the holders of at least two-thirds of the shares of the Series B Preferred Stock outstanding at the time, given in person or by proxy, either in writing or at a meeting (voting separately as a class with all series of Parity Preferred that the Corporation may issue upon which like voting rights have been conferred and are exercisable), (i) authorize or create, or increase the authorized or issued amount of, any class or series of capital stock ranking prior to the Series B Preferred Stock with respect to payment of distributions and the distribution of assets upon liquidation, dissolution or winding up, or reclassify any authorized capital stock of the Corporation into any such shares, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such shares; (ii) amend, alter or repeal any of the provisions of the Charter, so as to materially and adversely affect any preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications, or terms or conditions of redemption of the Series B Preferred Stock or the holders thereof; provided, however, that any increase or decrease in the number of the authorized preferred stock (subject to the limit that the number of authorized share of preferred stock shall not be decreased below the number issued and outstanding at such time), including the number of Series B Preferred Stock (subject to the limit that the number of authorized shares of Series B Preferred Stock shall not be decreased below the number issued and outstanding at such time), or the creation or issuance of any additional Series B Preferred Stock or other series of preferred stock that the Corporation may issue, or any increase in the amount of authorized shares of such series, in each case rankingsenior to oron a parity with or junior to the Series B Preferred Stock that the Corporation may issue with respect to the payment of distributions and the distribution of assets upon liquidation, dissolution or winding up, shall be deemed not to materially and adversely affect such preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications, or terms or conditions of redemption; or (iiiii) enter into, approve, or otherwise facilitate a binding share exchange or reclassification involving the Series B Preferred Stock that materially and adversely affects any of the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications, or terms or conditions of redemption of the Series B Preferred Stock or a consolidation, merger or similar transaction involving the Corporation unless in the case of a binding share exchange, reclassification, consolidation, merger or other similar transactions the shares of Series B Preferred Stock remain outstanding with preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications, or terms or conditions of redemption materially unchanged or, in the case of any such merger or consolidation with respect to which the Corporation is not the surviving or resulting entity, the shares are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent, in each case with preferences, conversion or other rights, voting powers, restrictions, limitation as to dividends or other distributions, qualifications, or terms or conditions of redemption of the Series B Preferred Stock that are not individually or in the aggregate materially less favorable to the holders of the Series B Preferred Stock than the preferences, conversion or other rights, voting powers, restrictions, limitation as to dividends or other distributions, qualifications, or terms or conditions of redemption of the Series B Preferred Stock as described herein.

        (ec) The foregoingvoting provisionsprovision 6(b)will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be

effected, all outstanding shares of Series B Preferred Stock shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption.

        (7)   CONVERSION. The Series B Preferred Stock is not convertible into or exchangeable for any property or securities of the Corporation.

        SECOND: The7,500,0002,000,000 shares of Series B Preferred Stock have been classified and designated by the Board of Directors under the authority contained in the Charter.

        THIRD:TheseThe foregoing amendments to the Charter were advised Articles Supplementary have been approved by the Board of Directorsand approved by the stockholders asin the manner and by the vote required by lawand the Charter.

        FOURTH: The undersigned President of the Corporation acknowledges these ArticlesSupplementaryof Amendment to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned Secretary and President acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties of perjury.

[SIGNATURE PAGE FOLLOWS)

        IN WITNESS WHEREOF, the Corporation has caused theseAmended and RestatedArticles Supplementary to be signed in its name and dated, on its behalf by its President and attested to by its secretary on this    day of                        ,2004.2008.reverse side)

ANNEX B

Amendment to the Company's Charter
Series C Preferred Stock

THIS PROXY IS BEING SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS ATHAT YOU VOTE "FOR" THE NOMINEES LISTED IN PROPOSAL 1 TO AMEND THE COMPANY'S CHARTER TO MODIFY THE TERMS OF THE SERIES B PREFERRED STOCK AND SERIES C PREFERRED STOCK.

1. PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY INUSING THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HEREHERE. ý

This proxy, when properly executed, will be voted inINSTRUCTION: To withhold authority to vote for any individual nominee(s), mark "FOR ALL EXCEPT" and check the manner directed herein by the undersigned stockholder(s).box next to each nominee(s) you wish to withhold, as shown here: ý

If no other indication is made, the proxies shall vote "FOR" Proposal 1 to amend the Company's Charter to modify the termsEach of the Series B Preferred Stock and Series C Preferred Stock.persons named as proxies herein are authorized, in such person's discretion, to vote upon such other matters as may properly come before the Annual Meeting, or any adjournments thereof.

A vote "FOR" Proposal 1 is recommended by the Board of Directors.

WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE ENCOURAGED TO COMPLETE, DATE, SIGN AND RETURN THIS PROXY IN THE ACCOMPANYING ENVELOPE OR BY VOTING BY TELEPHONE OR OVER THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE PROXY CARD.

To change the address on your account, please check
the box at right and indicate your new address in the
address space above. Please note that changes to the
registered name(s) on the account may not be submitted
via this method.o

Please check here if you plan to attend the meeting.                                  o

Note:

Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.