AS FILED WITH THEAs filed with the Securities and Exchange Commission on July 31, 2001
--
Registration No. 333-63456
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SECURITIES AND EXCHANGE COMMISSION
ON SEPTEMBER 4, 1998.
REGISTRATION NO. 333-52335
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
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AMENDMENT NO.Amendment No. 1
TOto
FORM S-3
REGISTRATION STATEMENT
Under The Securities Act ofUNDER
THE SECURITIES ACT OF 1933
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IMPAC MORTGAGE HOLDINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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20371 IRVINE AVENUE
SANTA ANA HEIGHTS, CA 92707
MARYLAND (714) 556-0122 33-0675505
(STATE OR OTHER JURISDICTION OF (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) NUMBER, INCLUDING AREA CODE, OF REGISTRANTS' IDENTIFICATION NUMBER)
PRINCIPAL EXECUTIVE OFFICES)
JOSEPH(Exact Name of Registrant as Specified in Its charter)
Maryland 33-0675505
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1401 Dove Street
Newport Beach, California 92660
(949) 475-3600
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Joseph R. TOMKINSON
CHIEF EXECUTIVE OFFICER
IMPAC MORTGAGE HOLDINGS, INC.
20371 IRVINE AVENUE
SANTA ANA HEIGHTS,Tomkinson
Chief Executive Officer
Impac Mortgage Holdings, Inc.
1401 Dove Street
Newport Beach, California 92660
(949) 475-3600
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copies to:
Thomas J. Poletti, Esq.
Kirkpatrick & Lockhart LLP
10100 Santa Monica Blvd., 7/th/ Floor
Los Angeles, CA 92707
(714) 556-0122
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
THOMAS J. POLETTI, ESQ.
KATHERINE J. BLAIR, ESQ.
DAVID M. TAMMAN, ESQ.
FRESHMAN, MARANTZ, ORLANSKI,
COOPER & KLEIN
9100 WILSHIRE BOULEVARD, 8TH FLOOR
BEVERLY HILLS, CALIFORNIA 90212
TELEPHONE90067
Telephone: (310) 273-1870
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME
TO TIME AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.552-5000
Facsimile: (310) 552-5001
Approximate date of commencement of proposed sale to public: From time
to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box:box. [_]
If any of the securities being registered on the Formthis form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: [X]box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering:offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering:offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box:box. [_]
CALCULATION OF REGISTRATION FEE
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PROPOSED
PROPOSED MAXIMUM
TITLECALCULATION OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE AMOUNT TO OFFERING PRICE OFFERING REGISTRATION REGISTERED BE REGISTERED PER SECURITY(1) PRICE(1) FEE(2)(3)
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===========================
Title of each class
of Proposed maximum
Proposed maximum
securities to be Amount to be offering price per
aggregate Amount of
registered Registered unit
offering price (1) registration fee
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- ---------------------------
Common Stock,
$.01$0.01 par value per share........ 1,990,147 $16.63 $33,096,145 $9,763.86*2,118,644 $6.68
$14,152,541.00 $3,538.14*
par share
================================================================================
===========================
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(1) Estimated solely for the purpose of calculating the registration fee pursuant toin
accordance with Rule 457(c), under the Securities Act of 1933, as
amended, and based on the average of the high and low salessale prices of
the Common Stockcommon stock reported as of June 14, 2001.
* A filing fee of in the amount of $3,538.14 was previously paid.
The Registrant hereby amends this registration statement on May 8, 1998such date or
dates as reported onmay be necessary to delay its effective date until the American
Stock Exchange.
(2) Pursuant to Rule 429 underRegistrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act 94,936 shares of Common
Stock are being carried forward from the Registrant's Registration
Statement No. 333-38517. Accordingly,1933, as amended, or until the registration fee of $754
associated withstatement
shall become effective on such securities was previously paid on October 23, 1997
upondate as the filing ofCommission, acting pursuant to said
Registration Statement.
(3) Paid by wire transfer to the Securities and Exchange Commission's account
at Mellon Bank.
* Previously Paid.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SUCH SECTION 8(A)Section 8(a), MAY DETERMINE.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THE
PROSPECTUS WHICH IS A PART OF THIS REGISTRATION STATEMENT IS A COMBINED
PROSPECTUS RELATING ALSO TO REGISTRATION STATEMENT NO. 333-38517.
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- -------------------------------------------------------------------------------may determine.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A+The information in this prospectus is not complete and may be changed. We may +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE+not sell these securities until the registration statement filed with the +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY+Securities and Exchange Commission is effective. This prospectus is not an +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT+offer to sell these securities and it is not soliciting an offer to buy these +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE.+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED SEPTEMBER 4, 1998
PROSPECTUS
[LOGO OFSubject to completion, dated July 31, 2001
2,118,644 Shares
IMPAC MORTGAGE HOLDINGS, INC.]
DIVIDEND REINVESTMENT AND
COMMON STOCK
PURCHASE PLAN
The Dividend Reinvestment and Stock Purchase Plan (the "Plan") of Impac
Mortgage Holdings, Inc. (the "Company") (formerly, Imperial Credit Mortgage
Holdings, Inc.) provides holders of record and beneficial owners of shares of
Common Stock, $.01 par value, of the Company (the "Common Stock") with a simple
and convenient method of investing cash dividends in additional shares of stock
at a current 3% discount (subject to change) from the market price (as
determined in accordance with the Plan),This prospectus relates to the extent shares are acquired
directly from the Company. If the shares are acquired in open market
transactions by the Plan Administrator (as defined in Question 4), the discount
will not be available. Common Stock may also be purchased directly from the
Company on a monthly basis with optional cash payments made by participants in
the Plan at a current 1% discount (subject to change) from the market price (as
determined in accordance with the Plan). Each of the discounts is subject to
change (but will not vary from the range of 0% to 5%)offer and sale from time to time or
discontinuance at the Company's discretion afterby Impac
Funding Corporation, Inc., a reviewCalifornia corporation, (the "selling
stockholder"), of current market
conditions, the levelup to 2,118,644 shares of participation in the Plan and the Company's current
and projected capital needs. PARTICIPANTS MAY ASCERTAIN THE APPLICABLE DISCOUNT
RATE BY CONTACTING THE COMPANY'S INVESTOR RELATIONS DEPARTMENT AT (714) 438-
2100.
Brokers and nominees may reinvest dividends and make optional cash payments
on behalf of beneficial owners. Those holders of Common Stock who do not
participate in the Planour common stock.
The selling stockholder will receive cash dividends, as declared, inall of the usual
manner.
To enroll inproceeds from the Plan, simply completesale of the
enclosed Authorization Form and
return it in the envelope provided. Enrollment in the Plan is entirely
voluntary and participants in the Plan may terminate their participation atcommon stock, less any time. A broker, bankdiscounts, commissions or other nomineecompensation that it may
reinvest dividends and make optional
cash paymentspay to the underwriters, broker-dealers or other selling agents effecting the
sales. We will pay all the costs of registering the common shares under this
prospectus.
Our common stock is traded on behalf of beneficial owners. See Questions 6, 7 and 8.
Stockholders who are presently enrolled in the existing Impac Mortgage
Holdings, Inc. Dividend Reinvestment andAmerican Stock Purchase Plan will continue to
be enrolled inExchange under the Plan unless they notifysymbol
"IMH." On June 18, 2001, the Company otherwise. The Plan
amends and restates in its entiretylast reported sale price for the existing Impac Mortgage Holdings, Inc.
Dividend Reinvestment andcommon stock on
the American Stock Purchase Plan.
A participant in the Plan may obtain additional shares of Common Stock by (i)
reinvesting dividends on all or partExchange was $6.78 per share.
-------------
Your purchase of the sharescommon stock involves a high degree of Common Stock held byrisk.
See "Risk Factors" beginning at page 1.
-------------
Neither the participant, (ii) making optional cash paymentsSecurities and Exchange Commission nor any state securities
commission has approved or disapproved of not less than $50 and upthese securities offered or sold
under this prospectus, nor have these organizations determined that this
prospectus is truthful or complete. Any representation to $10,000 per month, whether or not dividends on shares held by the participant
are being reinvested, and (iii) making optional cash payments in excess of
$10,000 per month with the permission of the Company whether or not dividends
on shares held by the participant are being reinvested.
(Continued on next page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.contrary is a
criminal offense.
-------------
The date of this Prospectusprospectus is , 19982001.
(Continued from previous page)
Optional cash payments in excess of $10,000 may be made only pursuant to an
accepted request for waiver. It is expected that a portion of the shares of
Common Stock available for issuance under the Plan will be issued pursuant to
such waivers. The price to be paid for shares of Common Stock purchased under
the Plan in excess of $10,000 pursuant to the optional cash payment feature of
the Plan will be a price reflecting a discount of 0% to 5% (the "Waiver
Discount") (see Question 18) from the applicable Market Price (as defined in
Question 13). As of the date of this Prospectus, under the Plan, the price per
share purchased in excess of $10,000 will be at a 2.25% discount and shares
may be purchased either directly from the CompanyWe have not authorized any dealer, salesperson or on the open market. There
is no pre-established maximum limit applicable to optional cash payments that
may be made pursuant to accepted requests for waiver. Optional cash payments
that do not exceed $10,000 and the reinvestment of dividends in additional
shares of Common Stock will not be subject to the Waiver Discount.
Participants in the Plan may request that any or all of their shares held in
Plan accounts be sold by the Plan Administrator. See Question 28.
To the extent that shares of Common Stock issued hereunder are authorized
but previously unissued shares rather than shares acquired in the open market,
the Plan will raise additional capital for the Company. The Company currently
intends to issue such shares and, therefore, the Plan is expected to raise
capital for the Company. Each month a portion of the shares available for
issuance under the Plan may be purchased by owners of shares (including
brokers or dealers) who, in connection with any resales of such shares, may be
deemed to be underwriters within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"). See "Plan of Distribution." These sales will
be effected through the Company's ability to waive limits applicable to the
amounts which participants may invest pursuant to the Plan's optional cash
payment feature.
From time to time, financial intermediaries, including brokers and dealers,
may engage in positioning transactions in order to benefit from the discount
from market price of the Common Stock acquired through the reinvestment of
dividends under the Plan. Such transactions may cause fluctuations in the
trading volume of the Common Stock. Financial intermediaries which engage in
positioning transactions may be deemed to be underwriters within the meaning
of the Securities Act. See "Plan of Distribution."
This Prospectus relates to 2,085,083 shares of Common Stock offered hereby
and registered for sale under the Plan. Participants should retain this
Prospectus for future reference.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any jurisdiction to anyother person to whom it is unlawful to make such an offer or solicitation in such
jurisdiction. No person has been authorized to give any
information or to make
any representations other than thoserepresent anything not contained in this Prospectus in
connection with the offering made hereby, and if given or made, such
information or representationsprospectus. You
must not be relied uponrely on any unauthorized information. This prospectus does not offer
to sell or seek an offer to buy any shares in any jurisdiction where it is
unlawful. The information contained in this prospectus is correct only as having been
authorized byof
the Company. Neitherdate of this prospectus, regardless of the time of the delivery of this
Prospectus norprospectus or any sale made hereunder shall, under any circumstances, create any implication
that information herein is correct as of any time subsequent to the date
hereof.
2
TABLE OF CONTENTS
AVAILABLE INFORMATION....................................................... 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................. 4
IMPAC MORTGAGE HOLDINGS, INC................................................ 5
SUMMARY OF PLAN............................................................. 5
THE PLAN.................................................................... 7
PURPOSE..................................................................... 7
OPTIONS AVAILABLE TO PARTICIPANTS........................................... 7
ADVANTAGES AND DISADVANTAGES................................................ 8
ADMINISTRATION.............................................................. 9
PARTICIPATION............................................................... 9
PURCHASE AND PRICES OF SHARES............................................... 14
DIVIDENDS ON FRACTIONS...................................................... 20
CERTIFICATES FOR COMMON SHARES.............................................. 20
WITHDRAWALS AND TERMINATION................................................. 20
OTHER INFORMATION........................................................... 21
DIVIDENDS................................................................... 26
USE OF PROCEEDS............................................................. 26
PLAN OF DISTRIBUTION........................................................ 26
LEGAL OPINION............................................................... 27
EXPERTS..................................................................... 27
INDEMNIFICATION............................................................. 27
GLOSSARY.................................................................... 28
SCHEDULE A.................................................................. 30
3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")shares.
Certain information contained in this prospectus and in accordance
therewith, files periodicthe reports
and other information with the Securities
and Exchange Commission (the "Commission"). Reports, proxyincorporated herein constitute forward-looking statements and
other information concerning the Company can be inspected and copied, at
prescribed rates, at the public reference facilities of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
following regional offices of the Commission: New York (Seven World Trade
Center, Suite 1300, New York, New York 10048), and Chicago (Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511), and copies of such material can be obtained from the Public Reference
Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the
Commission. The address of the site is http://www.sec.gov. Reports, proxy
statements and other information concerning the Company also may be inspected
at the offices of the American Stock Exchange where the Company's Common Stock
is listed. This Prospectus does not contain all information set forth in the
Registration Statement and Exhibits thereto which the Company has filed with
the Commission under the Securities
Act and to which reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange Commission by
the Company are incorporated by reference in this Prospectus: (1) the
Company's Annual Report on Form 10-K, as amended, for the year ended December
31, 1997; (2) the Company's quarterly report on Form 10-Q for the three months
ended March 31, 1998; (3) the Company's quarterly report on Form 10-Q for the
three months ended June 30, 1998; (4) the Company's current report on Form 8-K
filed on January 16, 1998 and on Form 8-K/A filed on February 17, 1998; (5)
the Company's current report on Form 8-K filed on February 9, 1998, and on
Form 8-K/A filed on February 11, 1998; (6) the Company's current report on
Form 8-K filed on June 4, 1998; (7) the Company's current report on Form 8-K
filed on June 3, 1998 and (8) the section of the Company's Registration
Statement on Form S-11, filed with the Commission on October 25, 19961933 and as
amended by Amendment No. 1 filed with the Commission on November 4, 1996,
entitled "Description of Securities."
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequentof 1934. These forward-looking statements can
be identified by the use of forward-looking terminology including, but not
limited to, "may," "will," "expect," "intend," "should," "anticipate,"
"estimate," or "believe" or comparable terminology. Our actual results may
differ materially from those contained in the forward-looking statements.
Purchasers of our common shares should not place undue reliance on these
forward-looking statements, which speak only as of the date of this
Prospectus and prior
to the terminationprospectus.
Table of the offering of the securities offered hereby shall be
deemed incorporated by reference into this Prospectus and to beContents
Page
----
Summary............................................................. i
Risk Factors........................................................ 1
Use of Proceeds..................................................... 15
Selling Security Holder and Plan of Distribution.................... 15
Description of Capital Stock........................................ 16
Material Federal Income Tax Consequences............................ 18
Legal Matters....................................................... 26
Experts............................................................. 26
Where You Can Find More Information................................. 27
SUMMARY
We are a part hereof
from the date of filing such documents.
Any statement contained inmortgage real estate investment trust, commonly known as a document incorporated or deemed to be
incorporated by reference herein shall be modified or superseded for purposes
of this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute part of this Prospectus.
Any person receiving a copy of this Prospectus may obtain without charge,
upon request, a copy of any of the documents incorporated by reference herein,
except for the exhibits to such documents. Written requests should be
addressed to Investor Relations, Impac Mortgage Holdings, Inc., 20371 Irvine
Avenue, Santa Ana Heights, California 92707. Telephone requests may be
directed to Investor Relations at (714) 438-2100.
4
IMPAC MORTGAGE HOLDINGS, INC.
Impac Mortgage Holdings, Inc. is a specialty finance companyREIT,
which, together with itsour subsidiaries and related companies, primarily
operates three businesses: (1) the Long-Term Investment Operations,our long-term investment operations, (2) the Conduit Operations,our
mortgage operations, and (3) the
Warehouse Lending Operations. The Long-Term Investment Operationsour warehouse lending operations. Our long-term
investment operations invests primarily in non-conforming residential mortgage
loans and securities backed by such loans. The Conduit OperationsOur mortgage operations purchases
or originates and sells orand securitizes primarily non-conforming residential
mortgage loans. Non-conforming residential mortgage loans are residential
mortgages that generally do not qualify for purchase by government-sponsored
agencies such as the Federal National Mortgage Association and the Warehouse Lending OperationsFederal
Home Loan Mortgage Corporation. Our warehouse lending operations provides
warehouse and repurchase financing to originators of mortgage loans. The Company is organizedWe have
elected to be taxed as a real estate investment trust ("REIT")REIT for federal income tax purposes, which generally
allows itus to pass through qualified income to stockholders without payment of federal
income tax at the corporate level.
On February 21, 2001 and March 30, 2001, the selling shareholder purchased a
total of 400,000 shares of our Series C 10.5% Cumulative Convertible Preferred
Stock from LBP, Inc. (OTC Bulletin Board: LBPI.OB). The Company'sshares offered under
this prospectus were issued pursuant to the conversion of the preferred stock.
Our principal executive officeoffices are located at1401 Dove Street, Newport
Beach, California, 92660. Our telephone number is located(949) 475-3600.
In this prospectus, the terms "Company," "we," "us," and "our" refer to
Impac Mortgage Holdings, Inc., a Maryland corporation. The term "IFC" or
"selling stockholder" refers to Impac Funding Corporation, a California
corporation. Unless the context otherwise indicates, "common stock" refers to
the common stock, par value $0.01 per share, of Impac Mortgage Holdings, Inc.
i
RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
consider the following factors carefully before deciding to purchase shares of
our common stock. Additional risks not presently known to us or that we
currently deem immaterial may also impair our business operations.
Inability to Generate Liquidity May Adversely Affect Our Operations
If we cannot generate sufficient liquidity, we will be unable to continue
our operations, grow our asset base and pay dividends. We have traditionally
derived our liquidity from three sources:
. financing facilities provided to us by others to acquire mortgage assets;
. whole loan sales and securitizations of acquired mortgage loans; and
. our issuance of equity securities.
However, we cannot assure you that any of these alternatives will be
available to us, or if available, that we will be able to negotiate favorable
terms. If we cannot raise cash by selling debt and equity securities, we may
be forced to sell our assets at 20371 Irvine
Avenue, Santa Ana Heights, California 92707.
SUMMARY OF PLANunfavorable prices or discontinue various
business activities. Our inability to access the capital markets could have a
negative impact on our earnings and ability to pay dividends.
Margin Calls on Financing Facilities May Adversely Affect Our Operations
Prior to the fourth quarter of 1998, we generally had no difficulty in
obtaining favorable financing facilities or in selling acquired mortgage
loans. However, during the fourth quarter of 1998 the mortgage industry
experienced substantial turmoil as a result of a lack of liquidity in the
secondary markets. At that time, investors expressed unwillingness to purchase
interests in securitizations due in part to:
. higher than expected credit losses on many companies' securitization
interests, and
. the widening of returns expected by institutional investors on
securitization interests over the prevailing Treasury rate.
As a result, many mortgage loan originators, including our company, were
unable to access the securitization market on favorable terms, which resulted
in some companies declaring bankruptcy. Originators, like our company, were
required to sell loans on a whole loan basis and liquidate holdings of
mortgage-backed securities to repay financing facilities. However, the large
amount of loans available for sale on a whole loan basis affected the pricing
offered for these loans which in turn reduced the value of the collateral
underlying the financing facilities. Therefore, many providers of financing
facilities initiated margin calls. Margin calls resulted when our lenders
evaluated the market value of the collateral securing our financing facilities
and required us to provide them with additional equity or collateral to secure
our borrowings.
Our financing facilities were short-term borrowings and due to the turmoil
in the mortgage industry during the latter part of 1998 many traditional
providers of financing facilities were unwilling to provide facilities on
favorable terms, or at all. If we cannot renew or replace maturing borrowings,
we may have to sell, on a whole loan basis, the loans securing these
facilities which, depending upon market conditions, may result in substantial
losses.
1
Dependence on Securitizations for Liquidity
We rely significantly upon securitizations to generate cash proceeds to repay
borrowings and to create credit availability. Any reduction in our ability to
complete securitizations may require us to utilize other sources of financing,
which may be on less than favorable terms. In addition, gains on sales from our
securitizations represent a significant portion of our earnings.
Several factors could affect our ability to complete securitizations of our
mortgages, including:
. conditions in the securities markets;
. credit quality of the mortgage loans originated or purchased by our
mortgage operations;
. volume of our mortgage loan originations and purchases; and
. ability to obtain credit enhancement.
If we are unable to profitably securitize a significant number of our
mortgage loans in a particular financial reporting period, then it could result
in lower income or a loss for that period. As a result of turmoil in the
securitization market during the latter part of 1998, many mortgage lenders,
including our company, were required to sell mortgage loans on a whole loan
basis under adverse market conditions in order to generate liquidity. Many of
these sales were made at prices lower than our carrying value of the mortgage
loans and we experienced losses. We cannot assure you that we will be able to
continue to profitably securitize or sell our loans on a whole loan basis, or
at all.
Gains on sales from our securitizations have historically represented a
substantial portion of our earnings. Our ability to complete securitizations is
dependent upon general conditions in the securities and secondary markets and
the credit quality of the mortgage loans. In addition, delays in closing sales
of our loans increases our risk by increasing the warehousing period for the
loans, further exposing our company to credit risk.
The Plan provides ownersmarket for first loss risk securities, which are securities that take the
first loss when mortgages are not paid by the borrowers, is generally limited.
In connections with our securitizations, we will endeavor to sell all
securities subjecting us to a first loss risk. If we cannot sell these
securities, then we may be required to hold them for an extended period,
subjecting us to a first loss risk.
We May Not Pay Dividends to Stockholders
REIT provisions of Common Stock with a convenientthe Internal Revenue Code require us to distribute to our
stockholders substantially all of our taxable income. These provisions restrict
our ability to retain earnings and attractive
method of investing cash dividends (in some cases,renew capital for our business activities.
We may decide at a future time not to be treated as a REIT, which would cause
us to be taxed at the corporate level and to cease paying regular dividends.
Also, to date a portion of our dividends to stockholders consisted of
distributions by our mortgage operations subsidiary to our long-term investment
operations entity. However, our mortgage operations was not, and is not,
required under the REIT provisions to make these distributions. Since we are
trying to retain earnings for future growth, we may not cause our mortgage
operations subsidiary to make these distributions in the future. This would
materially affect the amount of dividends, if any, paid by us to our
stockholders.
2
Our Borrowings and Substantial Leverage May Cause Losses
Risks of Use of Collateralized Mortgage Obligations
To grow our investment portfolio, we borrow a substantial portion of the
market value of substantially all of our investments in mortgage loans and
mortgage-backed securities. We currently prefer to use collateralized mortgage
obligations as financing vehicles to increase our leverage, since mortgage
loans held for collateralized mortgage obligation collateral are retained for
investment rather than sold in a secondary market transaction. Retaining
mortgage loans as collateralized mortgage obligation collateral exposes our
operations to greater credit losses than the use of securitization techniques
that are treated as sales. In creating a collateralized mortgage obligation, we
make a cash equity investment to fund collateral in excess of the amount of the
securities issued. If we experience credit losses on the pool of loans subject
to the collateralized mortgage obligation greater than we expected, the value
of our equity investment decreases and we would have to adjust the value of the
investment in our financial statements.
Cost of Borrowings May Exceed Return on Assets
The cost of borrowings under our financing facilities corresponds to a
referenced interest rate plus or minus a margin. The margin varies depending on
factors such as the nature and liquidity of the underlying collateral and the
availability of financing in the market. We will experience net interest losses
if the returns on our assets financed with borrowed funds fail to cover the
cost of our borrowings.
Default Risks Under Financing Facilities
If we default under our collateralized borrowings, our lenders could force us
to liquidate the collateral. If the value of the collateral is less than the
amount borrowed, we could be required to pay the difference in cash. If we were
to declare bankruptcy, some of our reverse repurchase agreements may obtain
special treatment and our creditors would then be allowed to liquidate the
collateral without any delay. On the other hand, if a lender with whom we have
a reverse repurchase agreement declares bankruptcy, we might experience
difficulty repurchasing our collateral, or enforcing our claim for damages, and
it is possible that our claim could be repudiated and we could be treated as an
unsecured creditor. If this occurs, our claims would be subject to significant
delay and we may receive substantially less than our actual damages.
Risk of Lack of Return of Investment on Liquidation
We have pledged a substantial portion of our assets to secure the repayment
of collateralized mortgage obligations issued in securitizations, our financing
facilities or other borrowings. We will also pledge substantially all of our
current and future mortgage loans to secure borrowings pending their
securitization or sale. The cash flows we receive from our investments that
have not yet been distributed, pledged or used to acquire mortgage loans or
other investments may be the only unpledged assets available to our unsecured
creditors and you if our company were liquidated.
Interest Rate Fluctuations May Adversely Affect Our Operating Results
Our operations, each as a mortgage loan originator and warehouse lender, may
be adversely affected by rising and falling interest rates. Higher interest
rates may discourage potential borrowers from refinancing mortgages, borrowing
to purchase homes or seeking second mortgages. This may decrease the amount of
mortgages available to be acquired by our mortgage operations and decrease the
demand for warehouse financing
3
provided by our warehouse lending operations to originators of mortgage loans.
If short-term interest rates exceed long-term interest rates, there is a higher
risk of increased loan prepayments, as borrowers may seek to refinance their
mortgage loans at lower long-term interest rates. Increased loan prepayments
could lead to a reduction in the number of loans we service, the fees we
receive for loan servicing and our loan servicing income.
We are subject to the risk of rising mortgage interest rates between the time
we commit to purchase mortgages at a fixed price and the time we sell or
securitize those mortgages. An increase in interest rates will generally result
in a decrease in the market value of mortgages that we have committed to
purchase at a fixed price, but have not yet sold or securitized.
Risks of Repricing of Assets and Liabilities
Our principal source of revenue is net interest income or net interest
spread, which is the difference between the interest we earn on our interest
earning assets and the interest we pay on our interest bearing liabilities. The
rates we pay on our borrowings are independent of the rates we earn on our
assets and may be subject to more frequent periodic rate adjustments.
Therefore, we could experience a decrease in net interest income or a net
interest loss because the interest rates on our borrowings could increase
faster than the interest rates on our assets. If our net interest spread
becomes negative, we will be paying more interest on our borrowings than we
will be earning on our assets and we will be exposed to a risk of loss.
Additionally, the rates paid on our borrowings and the rates received on our
assets may be based upon different indices (i.e., LIBOR, U.S. Treasuries,
etc.). If the index used to determine the rate on our borrowings increases
faster than the index used to determine the rate on our assets, we will
experience a declining net interest spread which will have a negative impact on
our profitability and may result in losses.
Risks of Adjustable Rate Mortgages
A significant portion of the mortgage assets held by our long-term investment
operations are adjustable rate mortgages or bear interest based upon short-term
interest rate indices. We generally fund these mortgage assets with borrowings.
To the extent that there is a difference between the interest rate index used
to determine the interest rate on our adjustable rate mortgage assets and the
interest rate index used to determine the borrowing rate for our related
financing, our business may be negatively impacted.
Interest Rate Caps
Adjustable rate mortgages typically have interest rate caps, which limit
interest rates charged to the borrower during any given period. Our borrowings
are not subject to similar restrictions. In a period of rapidly increasing
interest rates, the interest rates we pay on our borrowings could increase
without limitation, while the interest rates we earn on our adjustable rate
mortgage assets would be capped. If this occurs, our net earnings could be
significantly reduced or we could suffer a net interest loss.
Payment Caps
Some of our adjustable rate mortgages may be subject to payment caps meaning
some portion of the interest accruing on the mortgage is deferred and added to
the principal outstanding. Our borrowings do not have similar provisions. This
could cause us to receive less cash on our adjustable rate assets than the
interest due on our related borrowings. Also, the increased principal amount
outstanding as a result of interest deferral may result in a higher rate of
defaults on these loans.
4
Our Quarterly Operating Results May Fluctuate
Our results of operations, and more specifically our earnings, may
significantly fluctuate from quarter to quarter based on several factors,
including:
. changes in the amount of loans we originate;
. between our cost of funds on borrowings and the average interest rates
earned on our loans;
. inability to complete or decisions not to complete significant bulk whole
loan sales or securitizations in a particular quarter; and
. generally affecting the mortgage loan industry.
A delay in closing a particular mortgage loan sale or securitization would
also increase our exposure to interest rate fluctuations by lengthening the
period during which our variable rate borrowings under our warehouse facilities
are outstanding. If we were unable to sell a sufficient number of mortgage
loans at a premium during a particular reporting period, our revenues for that
period would decline, which could have a material adverse affect on our
operations. As a result, our stock price could also fluctuate.
Our Share Prices Have Been and May Continue to be Volatile
Historically, the market price of our common stock has been volatile. During
2000, our stock reached a high of $4.38 and a low of $1.83. On June 1, 2001,
the closing sale price was $5.75. The market price of our common stock is
likely to continue to be highly volatile and could be significantly affected by
factors including:
. availability of liquidity in the securitization market;
. loan sale pricing;
. calls by warehouse lenders or changes in warehouse lending rates;
. unanticipated fluctuations in our operating results;
. prepayments on mortgages;
. valuations of securitization related assets;
. cost of funds; and
. general market conditions.
In addition, significant price and volume fluctuations in the stock market
have particularly affected the market prices for the common stocks of mortgage
REIT companies such as ours. These broad market fluctuations have adversely
affected and may continue to adversely affect the market price of our common
stock. If our results of operations fail to meet the expectations of securities
analysts or investors in a future quarter, the market price of our common stock
could also be materially adversely affected.
Prepayments of Mortgage Loans May Adversely Affect Our Operations
Mortgage prepayments generally increase when fixed mortgage interest rates
fall below the then-current interest rates on outstanding adjustable rate
mortgage loans. Prepayments on mortgage loans are also affected by the terms
and credit grades of the loans and general economic conditions. Most of our
adjustable rate mortgages and those backing mortgage-backed securities are
originated within six months of the time we purchased the
5
mortgages and generally bear initial interest rates which are lower than their
"fully-indexed" amount (the applicable index plus the margin). If we acquire
these mortgages at a premium and they are prepaid prior to or soon after the
time of adjustment to a fully-indexed rate, we would not have received interest
at the fully-indexed rate during such period. This means we would lose the
opportunity to earn interest at that rate over the expected life of the
mortgage. Also, if prepayments on our adjustable rate mortgage loans increase
when interest rates are declining, our net interest income may decrease if we
cannot reinvest the prepayments in mortgage assets bearing comparable rates.
We generally acquire mortgages on a "servicing released" basis, meaning we
acquire both the mortgages and the rights to service them. This strategy
requires us to pay a higher purchase price or premium for the mortgages. If our
mortgage loans that we acquired at a premium prepay faster than originally
projected, generally accepted accounting principles require us to write down
the remaining capitalized premium amounts at a faster speed than was originally
projected, which would decrease our future interest income.
Value of Our Portfolio of Mortgage-Backed Securities May be Adversely Affected
We invest in mortgage-backed securities known as "interest-only," "principal-
only," residual interest and subordinated securities. These securities are
generally created through our own securitizations. Investments in residual
interest and subordinated securities are much riskier than investments in
senior mortgage-backed securities because these subordinated securities bear
all credit losses prior to the related senior securities. On a percentage
basis, the risk associated with holding residual interest and subordinated
securities is greater than holding the underlying mortgage loans directly due
to the concentration of losses in the subordinated securities.
We estimate future cash flows from these securities and value them utilizing
assumptions based in part on projected discount rates, mortgage loan
prepayments and credit losses. If our actual experience differs from our
assumptions we would be required to reduce the Market Price (as definedvalue of these securities. The
market for our asset-backed securities is extremely limited and we cannot
assure you that we could sell these securities at their reported value, or at
any value or that we could recoup our initial investment.
We also bear the risk of loss on any mortgage-backed securities we purchase
in Question 13)the secondary mortgage market. If third parties have been contracted to
insure against these types of losses, we would be dependent in part upon the
creditworthiness and without paymentclaims paying ability of the insurer and the timeliness of
reimbursement in the event of a default on the underlying obligations. The
insurance coverage for various types of losses is limited, and we bear the risk
of any brokerage
commission or service charge), and investing optional cash paymentslosses in additional shares of Common Stock. See Question 22 regarding brokerage
commissions. Asexcess of the datelimitation or outside of the insurance coverage.
In addition, we may not obtain our anticipated yield or we may incur losses
if the credit support available within certain mortgage-backed securities is
inadequate due to unanticipated levels of losses, or due to difficulties
experienced by the credit support provider. Delays or difficulties encountered
in servicing mortgage-backed securities may cause greater losses and,
therefore, greater resort to credit support than was originally anticipated,
and may cause a rating agency to downgrade certain classes of our securities.
We Undertake Additional Risks by Acquiring and Investing in Mortgage Loans
Risk of Failure to Obtain Credit Enhancements
We do not obtain credit enhancements such as mortgage pool or special hazard
insurance for all of our mortgage loans and investments. Borrowers may obtain
private mortgage insurance, but we only require this Prospectus,insurance in limited
circumstances. During the pricetime we hold mortgage loans for investment, we are
subject to
be paid for
shares6
risks of Common Stock purchased underborrower defaults and bankruptcies and special hazard losses that are
not covered by standard hazard insurance. If a borrower defaults on a mortgage
loan that we hold, we bear the Plan will be a price reflecting (i)
a discountrisk of 3% (subject to change) from the Market Price for the
reinvestmentloss of cash dividendsprincipal to the extent sharesthere is
any deficiency between the value of the related mortgaged property and the
amount owing on the mortgage loan. In addition, since defaulted mortgage loans
are purchased directlynot considered eligible collateral under our borrowing arrangements, we
bear the risk of being required to own these loans without the use of borrowed
funds until they are ultimately liquidated.
Greater Risks from Non-Conforming Mortgage Loans
Non-conforming residential mortgage loans are residential mortgages that do
not qualify for purchase by government sponsored agencies such as the Company, (ii) no discount (subjectFederal
National Mortgage Association and the Federal Home Loan Mortgage Corporation.
Our operations may be negatively affected due to change) from theour investments in non-
conforming loans or securities evidencing interests in such loans. Credit risks
associated with non-conforming mortgage loans are greater than conforming
mortgage loans. The interest rates we charge on non-conforming loans are often
higher than those charged for conforming loans. The purchase market priceof non-
conforming loans has typically provided for higher interest rates in order to
compensate for the reinvestment of cash dividends or the investment of optional cash
payments,lower liquidity. Due to the extent shares are purchasedlower level of liquidity in the
non-conforming loan market, we may realize higher returns upon securitization
of loans than would be realized upon securitization of conforming loans.
However, lower levels of liquidity may cause us to hold loans or other
mortgage-related assets supported by these loans. By doing this, we assume the
potential risk of increased delinquency rates and/or credit losses as well as
interest rate risk. Additionally, the combination of different underwriting
criteria and higher rates of interest leads to greater risk including higher
prepayment rates and higher delinquency rates and/or credit losses.
Second Mortgages Entail Greater Risks
Our security interest in the property securing second mortgages is
subordinated to the interest of the first mortgage holder. If the value of the
property is equal to or less than the amount needed to repay the borrower's
obligation to the first mortgage holder upon foreclosure, all or a portion of
our second mortgage loan will not be repaid.
Geographic Concentration of Mortgage Loans Has Higher Risks
We do not set limitations on the open market, (iii) a 0% to
5% discount, which is currently at 1%, (subject to change) from the Market
Price for the investmentpercentage of optional cash paymentsour mortgage asset portfolio
composed of up to $10,000,properties located in any one area (whether by state, zip code or
other geographic measure). Concentration in any one area increases our exposure
to the extent purchased directly from the Company,economic and (iv)natural hazard risks associated with that area. We estimate
that a discount of 0% to 5%
(the "Waiver Discount") from the Market Price for the investment of optional
cash payments that exceed $10,000. Eachhigh concentration of the discounts is subjectloans included in securitizations in which we
hold subordinated interests are secured by properties in California. Certain
parts of California have experienced an economic downturn in past years and
have suffered the effects of certain natural hazards.
Potential Losses Related to change
(but will not vary from the range of 0% to 5%) from time to time or
discontinuance at the Company's discretion after a review of current market
conditions, the level of participation in the Plan and the Company's current
and projected capital needs. PARTICIPANTS MAY ASCERTAIN THE APPLICABLE
DISCOUNT RATE BY CONTACTING THE COMPANY'S INVESTOR RELATIONS DEPARTMENT AT
(714) 438-2100. In addition, Participants are currently responsible for their
share of brokerage commissions incurredRecourse Obligations
Mortgage-backed securities issued in connection with our securitizations have
been non-recourse to us, except in the case of a breach of standard
representations and warranties made by us when the loans are securitized. While
we have recourse against the sellers of mortgage loans, we cannot assure you
that they will honor their obligations. We also engaged in bulk whole loan
sales pursuant to agreements that provide for recourse by the purchaser against
us. In some cases, the remedies available to a purchaser of mortgage loans from
us are broader than those available to us against those who sell us these
loans. If a purchaser exercises its rights against us, we may not always be
able to enforce whatever remedies we may have against our sellers.
7
We Undertake Additional Risks in Providing Warehouse Financing
As a warehouse lender, we lend money to mortgage bankers on a secured basis
and we are subject to the risks associated with lending to mortgage banks,
including the risks of fraud, borrower default and bankruptcy, any of which
could result in credit losses for us. Our claims as a secured lender in a
bankruptcy proceeding may be subject to adjustment and delay.
Value of our Mortgage Servicing Rights is Subject to Adjustment
When we purchase loans that include the associated servicing rights, the
allocated cost of sharesthe servicing rights is reflected on our financial
statements as mortgage servicing rights. To determine the fair value of these
servicing rights, we use assumptions to estimate future net servicing income
including projected discount rates, mortgage loan prepayments and credit
losses. If actual prepayments or defaults with respect to loans serviced occur
more quickly than we originally assumed, we would have to reduce the carrying
value of our mortgage servicing rights. We do not know if our assumptions will
prove correct.
Our Operating Results Will be Affected by the Results of Our Hedging
Activities
To offset the risks associated with our mortgage operations, we enter into
transactions designed to hedge our interest rate risks. To offset the risks
associated with our long-term investment operations, we attempt to match the
interest rate sensitivities of our adjustable rate mortgage assets held for
investment with the associated financing liabilities. Our management
determines the nature and quantity of the hedging transactions based on
various factors, including market conditions and the expected volume of
mortgage loan purchases. We do not limit management's use of certain
instruments in such hedging transactions. While the Company believes that it
is properly hedging its interest rate risk, the accounting for such hedging
activities do not generally qualify for hedge accounting under accounting
principles generally accepted in the United States of America and FAS 133. The
effect of the Company's hedging strategy may result in some volatility in its
quarterly earnings as interest rates go up or down. The volatility in earning
is a result of the Company marking to market its hedges but not being allowed
to mark to market the underlying loans related to the hedges in place. While
the Company believes it is properly hedging its interest rate risk, we cannot
assure you that our hedging transactions will offset our risks of losses.
Reduction in Demand for Residential Mortgage Loans and Our Non-Conforming Loan
Products May Adversely Affect Our Operations
The availability of sufficient mortgage loans meeting our criteria is
dependent in part upon the size and level of activity in the residential real
estate lending market and, in particular, the demand for non-conforming
mortgage loans, which is affected by:
. interest rates;
. national economic conditions;
. residential property values; and
. regulatory and tax developments.
If our mortgage loan purchases decrease, we will have:
. decreased economies of scale;
. higher origination costs per loan;
8
. reduced fee income;
. smaller gains on the open market. However,sale of non-conforming mortgage loans; and
. an insufficient volume of loans to effect securitizations which requires
us to accumulate loans over a longer period.
Our Delinquency Ratios and Our Performance May be Adversely Affected by the
BoardPerformance of DirectorsParties Who Sub-Service our Loans
We contract with third-party sub-servicers for the sub-servicing of all our
loans, including those in our securitizations, and our operations are subject
to risks associated with inadequate or untimely servicing. Poor performance by
a sub-servicer may result in greater than expected delinquencies and losses on
our loans. A substantial increase in our delinquency or foreclosure rate could
adversely affect our ability to access the capital and secondary markets for
our financing needs. Also, with respect to loans subject to a securitization,
greater delinquencies would adversely impact the value of any interest-only,
principal-only and subordinated securities we hold in connection with that
securitization.
In a securitization, relevant agreements permit us to be terminated as
servicer under specific conditions described in these agreements, such as the
failure of a sub-servicer to perform certain functions within specific time
periods. If, as a result of a sub-servicer's failure to perform adequately, we
were terminated as servicer of a securitization, the value of any servicing
rights held by us would be adversely affected.
Intense Competition for Mortgage Loans May Adversely Affect Our Operations
We compete in purchasing non-conforming mortgage loans and issuing mortgage-
backed securities with:
. other mortgage conduit programs;
. investment banking firms;
. savings and loan associations;
. banks;
. thrift and loan associations;
. finance companies;
. mortgage bankers;
. insurance companies;
. other lenders; and
. other entities purchasing mortgage assets.
Consolidation in the future
determinemortgage banking industry may adversely affect us by
reducing the number of current sellers to our mortgage operations and our
potential customer base. As a result, we may have to purchase a larger
percentage of mortgage loans from a smaller number of customers, which could
cause us to have to pay higher premiums for loans.
9
If We Fail to Maintain Our REIT Status We May be Subject to Taxation as a
Regular Corporation
Consequences if We Fail to Qualify as a REIT
We believe that we have operated and intend to continue to operate in a
manner that enables us to meet the Company will pay such brokerage commissions on behalf of
Participants if, based on the advice ofrequirements for qualification as a REIT
for Federal income tax counsel orpurposes. We have not requested, and do not plan to
request, a favorable ruling from the Internal Revenue Service ("IRS"), it determines that the Company's payment
of such expenses will not jeopardize the Company's statuswe qualify as a REIT.
Participants electingMoreover, no assurance can be given that legislation, new regulations,
administrative interpretations or court decisions will not significantly
change the tax laws with respect to invest optional cash paymentsqualification as a REIT or the federal
income tax consequences of such qualification. Our continued qualification as
a REIT will depend on our satisfaction of certain asset, income,
organizational and stockholder ownership requirements on a continuing basis.
If we fail to qualify as a REIT, we would not be allowed a deduction for
distributions to stockholders in additional shares
of Common Stock arecomputing our taxable income and would be
subject to a minimum per month purchase limit of $50 and a
maximum per month purchase limit of $10,000 (subject to waiver). See Question
18. Optional cash payments in excess of $10,000 may be made only upon
acceptance by the Company of a completed Request for Waiver form from a
Participant. See Question 18. Each month,Federal income tax at least five business days prior to
each record date (as defined in Question 19), the Company will establish the
Waiver Discount (as defined in Question 18), applicable to optional cash
payments that exceed $10,000. The Waiver Discount, which may vary each month,
will be established in the Company's sole discretion after a review of
5
current market conditions, the level of participation in the Plan and the
Company's current and projected capital needs. Optional cash payments that do
not exceed $10,000 and the reinvestment of dividends in additional shares of
Common Stock will notregular corporate rates. We also could be
subject to the Waiver Discount. Optional cash
paymentsFederal alternative minimum tax. Unless we are entitled to
relief under specific statutory provisions, we could not elect to be taxed as
a REIT for four taxable years following the year during which we were
disqualified. Therefore, if we lose our REIT status, the funds available for
distribution to you would be reduced substantially for each of less than $50 and that portionthe years
involved.
Effect of any optional cash payment which
exceeds the maximum monthly purchase limit of $10,000, unless such limit has
been waived,Distribution Requirements
As a REIT, we are subject to returnannual distribution requirements, which limit
the amount of cash we have available for other business purposes, including
amounts to fund our growth.
Other Tax Liabilities
Even if we qualify as a REIT, we may be subject to certain Federal, state,
and local taxes on our income, property and operations that could reduce
operating cash flow.
Recent Developments
The Tax Relief Extension Act of 1999 was enacted and it contains several tax
provisions regarding REITs. It includes a provision, which reduces the annual
distribution requirement for REIT taxable income from 95% to 90%. It also
changes the 10% voting securities test under current law to a 10% vote or
value test. Thus, subject to certain exceptions, a REIT will no longer be
allowed to own more than 10% of the vote or value of the outstanding
securities of any issuer, other than a qualified REIT subsidiary or another
REIT. One exception to this new test, which is also an exception to the Participant without interest.
Participants may request that5%
asset test under current law, allows a REIT to own any or all sharesof the
securities of a taxable REIT subsidiary. A taxable REIT subsidiary can perform
non-customary services as well as engage in non-real estate activities. A
taxable REIT subsidiary will be taxed as a regular C corporation but will be
subject to earnings stripping limitations on the deductibility of interest
paid to its REIT. In addition, the REIT will be subject to a 100% excise tax
to the extent any transaction between the taxable REIT subsidiary and the REIT
is not conducted on an arm's length basis. Securities of a taxable REIT
subsidiary will constitute non-real-estate assets for purposes of determining
whether at least 75% of a REIT's assets consist of real estate assets. In
addition, no more that 20% of a REIT's total assets can consist of securities
of taxable REIT subsidiaries. These new tax provisions became effective
January 1, 2001. In addition, grandfather protection is provided with respect
to the 10% value test for securities of a corporation held by a REIT on July
12, 1999, but such protection ceases to apply after the corporation engages in
a substantial new line of business or acquires
10
any substantial asset and also ceases to apply after the acquisition of
additional securities of the corporation by the REIT after July 12, 1999.
Because we currently own more than 10% of the value of IFC, we have made an
election to have IFC become a taxable REIT subsidiary as of January 1, 2001.
Potential Characterization of Distributions or Gain on Sale as Unrelated
Business Taxable Income to Tax-Exempt Investors
If (1) all or a portion of our assets are subject to the rules relating to
taxable mortgage pools, (2) we are a "pension-held REIT," (3) a tax-exempt
stockholder has incurred debt to purchase or hold our common stock, or (4) the
residual REMIC interests we buy generate "excess inclusion income," then a
portion of the distributions to and, in the Plancase of a stockholder described in
(3), gains realized on the sale of common stock by, such tax-exempt
stockholder may be soldsubject to Federal income tax as unrelated business taxable
income under the Internal Revenue Code.
Classification as a Taxable Mortgage Pool Could Subject Us to Increased
Taxation
If we have borrowings with two or more maturities and, (1) those borrowings
are secured by mortgage loans or mortgage-backed securities and, (2) the
payments made on the borrowings are related to the payments received on the
underlying assets, then the borrowings and the pool of mortgage loans or
mortgage backed securities to which such borrowings relate may be classified
as a taxable mortgage pool under the Internal Revenue Code. If any part of our
company were to be treated as a taxable mortgage pool, then our REIT status
would not be impaired, but a portion of the taxable income we recognize may,
under regulations to be issued by the Plan AdministratorTreasury Department, be characterized as
"excess inclusion" income and allocated among our stockholders to the extent
of and generally in proportion to the distributions we make to each
stockholder. Any excess inclusion income would:
. not be allowed to be offset by a stockholder's net operating losses;
. be subject to a tax as unrelated business income if a stockholder were a
tax-exempt stockholder;
. be subject to the application of federal income tax withholding at the
maximum rate (without reduction for any otherwise applicable income tax
treaty) with respect to amounts allocable to foreign stockholders; and
. be taxable (at the highest corporate tax rate) to us, rather than to our
stockholders, to the extent the excess inclusion income relates to stock
held by disqualified organizations (generally, tax-exempt companies not
subject to tax on behalfunrelated business income, including governmental
organizations).
Based on advice of such Participants. See Question 28.our tax counsel, we take the position that our existing
financing arrangements do not create a taxable mortgage pool. However, the IRS
may successfully maintain that our financing arrangements do qualify as a
taxable mortgage pool. In addition, we may enter into arrangements creating
excess inclusion income in the future.
Our Operations May be Adversely Affected if We are Subject to the availabilityInvestment
Company Act
We intend to conduct our business at all times so as not to become regulated
as an investment company under the Investment Company Act. The Investment
Company Act exempts entities that are primarily engaged in the business of
purchasing or otherwise acquiring mortgages and other liens on and interests
in real estate.
11
In order to qualify for this exemption we must maintain at least 55% of our
assets directly in mortgage loans, qualifying pass-through certificates and
certain other qualifying interests in real estate. Our ownership of certain
mortgage assets may be limited by the provisions of the Investment Company
Act. If the Securities and Exchange Commission adopts a contrary
interpretation with respect to these securities or otherwise believes we do
not satisfy the above exception, we could be required to restructure our
activities or sell certain of our assets. To insure that we continue to
qualify for the exemption we may be required at times to adopt less efficient
methods of financing certain of our mortgage assets and we may be precluded
from acquiring certain types of higher-yielding mortgage assets. The net
effect of these factors will be to lower at times our net interest income. If
we fail to qualify for exemption from registration as an investment company,
our ability to use leverage would be substantially reduced, and we would not
be able to conduct our business as described. Our business will be materially
and adversely affected if we fail to qualify for this exemption.
Future Revisions in Policies and Strategies at the Discretion of Our Board of
Directors May be Affected Without Stockholder Consent
Our board of directors, including a majority of our unaffiliated directors,
has established our investment and operating policies and strategies. We may:
. invest in the securities of other REITs for the purpose of exercising
control;
. issue securities in exchange for property; and
. repurchase or otherwise reacquire our shares or other securities in the
future.
In October 1998, we adopted a repurchase plan to repurchase up to $5.0
million of our common stock in the open market. In 1999, the board of
directors approved common stock repurchases up to an additional $5.0 million,
or a total of $10.0 million. During 1999, we repurchased 2.0 million shares of
our common stock for $9.9 million. During 2000, we adopted a repurchase plan
to repurchase up to $3.0 million of our common stock in the open market. As of
December 31, 2000, we had repurchased 991,000 shares for $2.3 million. We may
also underwrite the securities of other issuers, although we have no present
intention to do so. Any of the policies, strategies and activities may be
modified or waived by our board of directors, subject in certain cases to
approval by a majority of our unaffiliated directors, without stockholder
consent.
Effect of Future Offerings May Adversely Affect Market Price of Our Securities
We may elect to increase our capital resources by making additional private
or public offerings of securities in the future. We do not know:
. the actual or perceived effect of these offerings;
. the timing of these offerings;
. the dilution of the book value or earnings per share of our securities
then outstanding; and
. the effect on the market price of our securities then outstanding.
Risk Relating to Common Stock
registeredThe sale or the proposed sale of substantial amounts of our common stock in
the public market could materially adversely affect the market price of our
common stock or other outstanding securities.
12
Maryland Business Combination Statute
The Maryland General Corporation Law establishes special requirements for
issuance under"business combinations" between a Maryland corporation and "interested
stockholders" unless exemptions are applicable. An interested stockholder is
any person who beneficially owns 10% or more of the Plan, there is no total maximum or minimum numbervoting power of shares
that can be issued pursuantour then-
outstanding voting stock. Among other things, the law prohibits for a period
of five years a merger and other similar transactions between our company and
an interested stockholder unless the board of directors approved the
transaction prior to the reinvestmentparty becoming an interested stockholder. The five-
year period runs from the most recent date on which the interested stockholder
became an interested stockholder. The law also requires a supermajority
stockholder vote for such transactions after the end of dividendsthe five-year period.
This means that the transaction must be approved by at least:
. 80% of the votes entitled to be cast by holders of outstanding voting
shares,
. 66% of the votes entitled to be cast by holders of outstanding voting
shares other than shares held by the interested stockholder with whom the
business combination is to be effected.
The business combination statute could have the effect of discouraging
offers to acquire us and of increasing the difficulty of consummating any such
offers, even if our acquisition would be in our stockholders' best interests.
Maryland Control Share Acquisition Statute
Maryland law provides that "control shares" of a Maryland corporation
acquired in a "control share acquisition" have no pre-
established maximum limit appliesvoting rights except to optional cash paymentsthe
extent approved by a stockholder vote. Two-thirds of the shares eligible to
vote must vote in favor of granting the "control shares" voting rights.
"Control shares" are shares of stock that, taken together with all other
shares of stock the acquirer previously acquired, would entitle the acquirer
to exercise at least 10% of the voting power in electing directors. Control
shares do not include shares of stock the acquiring person is entitled to vote
as a result of having previously obtained stockholder approval. A "control
share acquisition" means the acquisition of control shares, subject to certain
exceptions.
If a person who has made (or proposes to make) a control share acquisition
satisfies certain conditions (including agreeing to pay expenses), he may
compel our board of directors to call a special meeting of stockholders to be
made
pursuantheld within 50 days to Requestsconsider the voting rights of the shares. If such a
person makes no request for Waiver. See Question 2. Asa meeting, we have the option to present the
question at any stockholders' meeting.
If voting rights are not approved at a meeting of stockholders then we may
redeem any or all of the control shares (except those for which voting rights
have previously been approved) for fair value. We will determine the fair
value of the shares, without regard to voting rights, as of the date of
either:
. the Prospectus, 2,085,083last control share acquisition, or
. the meeting where stockholders considered and did not approve voting
rights of the control shares.
If voting rights for control shares are approved at a stockholders' meeting
and the acquirer becomes entitled to vote a majority of the shares of Commonstock
entitled to vote, all other stockholders may exercise appraisal rights. This
means that you would be able to force us to redeem your stock for fair value.
Under Maryland law, the fair value may not be less than the highest price per
share paid in the control share acquisition. Furthermore, certain limitations
otherwise applicable to the exercise of dissenters' rights would not apply in
the context of a control share acquisition. The control share acquisition
statute would not apply to shares acquired in a merger,
13
consolidation or share exchange if we were a party to the transaction. The
control share acquisition statute could have the effect of discouraging offers
to acquire us and of increasing the difficulty of consummating any such
offers, even if our acquisition would be in our stockholders' best interests.
Possible Adverse Consequences of Limits on Ownership of Shares
Our charter limits ownership of our capital stock by any single stockholder
to 9.5% of our outstanding shares. Our charter also prohibits anyone from
buying shares if the purchase would result in us losing our REIT status. This
could happen if a share transaction results in fewer than 100 persons owning
all of our shares or in five or fewer persons, applying certain broad
attribution rules of the Internal Revenue Code, owning more than 50% (by
value) of our shares. If you or anyone else acquires shares in excess of the
ownership limit or in violation of the ownership requirements of the Internal
Revenue Code for REITs, we:
. will consider the transfer to be null and void;
. will not reflect the transaction on our books;
. may institute legal action to enjoin the transaction;
. will not pay dividends or other distributions with respect to those
shares;
. will not recognize any voting rights for those shares;
. will consider the shares held in trust for the benefit of our Company;
and
. will either direct the affected person to sell the shares and turn over
any profit to us, or
. we will redeem the shares. If we redeem the shares, it will be at a price
equal to the lesser of:
(a) the price paid by the transferee of the shares, or
(b) the average of the last reported sales prices on the American Stock
Exchange on the ten trading days immediately preceding the date fixed
for redemption by our board of directors.
An individual who acquires shares that violate the above rules bears the
risk that (1) he may lose control over the power to dispose of his shares, (2)
he may not recognize profit from the sale of his shares if the market price of
the shares increases and (3) he may be required to recognize a loss from the
sale of his shares if the market price decreases.
Limitations on Acquisition and Change in Control Ownership Limit
The 9.5% ownership limit discussed above may have beenthe effect of precluding
acquisition of control of our company by a third party without consent of our
board of directors.
14
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of common shares
pursuant to this prospectus.
SELLING SECURITY HOLDER AND PLAN OF DISTRIBUTION
All of the common stock registered and are
available for sale under this prospectus is owned by
the Plan.
The Company expects to grant Requests for Waiver to financial
intermediaries, including brokers and dealers, and other Participants in the
future. Grants of Requests for Waiver will be made in the sole discretionselling stockholder. All of the Company based on a variety of factors, which may include:shares offered in this prospectus were
acquired from LBP, Inc. (OTC Bulletin Board: LBPI.OB).
The following table sets forth the Company's
current and projected capital needs, the alternatives available to the Company
to meet those needs, prevailing market prices for Common Stock, general
economic and market conditions, expected aberrations in the price or trading
volumename of the Common Stock, the potential disruption of the price of the
Common Stock by a financial intermediary,selling stockholder, the number
of shares of common stock which may be deemed to be beneficially owned by the
selling stockholder and the maximum number of shares which may be offered by the
selling stockholder.
-----------------------------------------------------------------------
Name of Shares of Number of Shares of Common
selling stock Common Stock heldShares of Stock Beneficially
holder Beneficially Common Stock Owned After
Owned Prior to Being Offered Offering
Offering
-----------------------------------------------------------------------
Impac 2,118,644 2,118,644 0
Funding
Corporation,
Inc.
-----------------------------------------------------------------------
IMH owns 100% of the non-voting preferred stock of, and 99% of the economic
interest in, IFC. Joseph R. Tomkinson, IMH's Chairman of the Board and Chief
Executive Officer and IFC's Chief Executive Officer and a director is an owner
of one-third of the common stock of IFC. William S. Ashmore, IMH's President,
Chief Operating Officer and a director and IFC's President and a director is an
owner of one-third of the common stock of IFC. Richard J. Johnson, IMH's
Executive Vice President and Chief Financial Officer and Executive Vice
President, Chief Financial Officer and a director of IFC, is an owner of one-
third of the common stock of IFC.
The selling stockholder may sell the common stock:
. directly to purchasers;
. to or through underwriters;
. through dealers, agents or institutional investors; or
. through a combination of such methods.
Regardless of the method used to sell the common stock, we will provide a
prospectus supplement that will disclose:
. the identity of any underwriters, dealers, agents or investors who
purchase the common stock;
. the material terms of the distribution, including the number of shares
sold and the consideration paid;
. the amount of any compensation, discounts or commissions to be received
by the Participant submittingunderwriters, dealers or agents;
. the waiver request, the past actionsterms of a
Participantany indemnification provisions, including indemnification
from liabilities under the Plan,federal securities laws; and
. the aggregate amountnature of optional cash payments for
which such waivers have been submittedany transaction by an underwriter, dealer or agent during
the offering that is intended to stabilize or maintain the market price
of our common stock.
The selling stockholder and any underwriters, broker/dealers or agents that
participate in the administrative constraints
associated with granting such waivers. If such Requests for Waiver are
granted, a portiondistribution of the shares available for issuance under the Plan will be
purchased by Participants (including brokers or dealers) who, in connection
with any resales of such shares may be deemed to be underwriters"underwriters"
within the meaning of the Securities Act.
See "Plan15
DESCRIPTION OF CAPITAL STOCK
The following is a brief description of Distribution.the material terms of the securities
to be registered. This description is not complete and is subject and
qualified by reference to Maryland law and our charter and Bylaws, copies of
which are on file with the Securities and Exchange Commission, and are
incorporated by reference herein. Please see "Where You Can Find More
Information."
ToGeneral
Our authorized stock consists of 50,000,000 shares of common stock, $0.01
par value per share, and 10,000,000 shares of preferred stock, $0.01 par value
per share. Our stockholder meetings are held annually. Pursuant to our
charter, we reserve the extent that Requests for Waiver are granted, itright to amend any provision of our charter upon the
affirmative vote of stockholders entitled to cast at least a majority of all
the votes entitled to be cast on the matter.
Common Stock
Each share of our common stock is expected that a
greater numberentitled to participate equally in
dividends when authorized by our board of sharesdirectors and in the distribution of
our assets upon liquidation. Each share of common stock is entitled to one
vote, subject to the provisions of our charter regarding restrictions on
transfer of stock, and will be issued under the optional cash payment
featurefully paid and nonassessable upon issuance.
Shares of the Plan as opposed to the dividend reinvestment feature of the
Plan.
Financial intermediaries may purchase a significant portion of the shares of
Common Stock issued pursuant to the optional cash payment feature of the Plan.
The Company does notcommon stock have any formalno preference, conversion, exchange, redemption,
appraisal, preemptive or informal understanding with any such
organizations and, therefore, the extent of such financial intermediaries'
participation under the Plan cannot be estimated at this time. Participants
that are financial intermediaries that acquire shares of Common Stock under
the Plan with a view to distribution of such shares or that offer or sell
Shares for the Company in connection with the Plancumulative voting rights. Our authorized stock may be
deemed to be
underwriters within the meaning of the Securities Act.
From time to time, financial intermediaries, including brokersincreased and dealers,
may engage in positioning transactions in order to benefit from the discount
from the Market Price of the shares of Common Stock acquired through the
reinvestment of dividends under the Plan. Such transactions may cause
fluctuations in the trading volume of the Common Stock. Financial
intermediaries which engage in positioning transactions may be deemed to be
underwriters within the meaning of the Securities Act. The Plan is intended
for the benefit of investors in the Company and not for individuals or
investors who engage in transactions which may cause aberrations in the price
or trading volume of the Common Stock.
6
THE PLAN
The current Impac Mortgage Holdings, Inc. Dividend Reinvestment and Stock
Purchase Plan was adopted by the Board of Directors of Impac Mortgage
Holdings, Inc. (the "Company") on October 21, 1997 (the "Previous Plan"). The
Previous Plan was amended and restated on April 28, 1998, including but not
limited to authorizing the issuance of additional shares thereunder. Because
the Company currently expects to continue the Plan indefinitely, it expects to
authorize for issuance and register under the Securities Act additional sharesaltered from time to time as necessary for purposes of the Plan. The following
questions and answers explain and constitute the Plan. Stockholders who do not
participate in the Plan will receive cashmanner prescribed by Maryland
law upon the affirmative vote of stockholders entitled to cast at least a
majority of all the votes entitled to be cast on the matter. Our charter
authorizes our board of directors to reclassify any unissued shares of common
stock in one or more classes or series of stock.
Preferred Stock
Our charter authorizes our board of directors to issue shares of preferred
stock and to classify or reclassify any unissued shares of preferred stock
into one or more classes or series of stock. The preferred stock may be issued
from time to time with such designations, preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends or other
distributions, qualifications or terms or conditions of redemption as declared, and paid inshall be
determined by the usual manner. A person participating in the Previous Plan will be enrolled
automatically in the Plan, unless the person gives written noticeboard of directors for each class or series of stock subject
to the contrary. See Question 11.
PURPOSE
1. WHAT IS THE PURPOSE OF THE PLAN?
The primary purposeprovisions of the Planour charter regarding restrictions on transfer of stock.
Preferred stock is to provide eligible holders of shares of
Common Stock of the Company with a convenient and simple method of increasing
their investment in the Company by investing cash dividends in additional
shares of Common Stock without payment of any brokerage commission or service
charge and at a discount from the Market Price (as defined in Question 13), to
the extent shares are purchased directly from the Company, and by investing
optional cash payments in additional shares of Common Stock at a discount from
the Market Price (and without payment of any brokerage commission or service
charge, to the extent shares are purchased directly from the Company). See
Question 5 for a description of the holders who are eligible to participate in
the Plan. The Plan may also be used by the Company to raise additional capital
through the sale each month of a portion of the shares available for issuance
under the Plan to owners of shares (including brokerspossible future financings or dealers) who, in
connection with any resales of such shares, may be deemed to be underwriters.
These sales will be effected through the Company's ability to waive
limitations applicable to the amounts which Participants (as defined in
Question 2) may invest pursuant to the Plan's optional cash payment feature.
See Question 18 for information concerning limitations applicable to
optional cash paymentsacquisitions
and certain of the factors considered by the Company in
granting waivers. To the extent shares are purchased from the Company under
the Plan, it will receive additional funds for general corporate purposes. The
Planpurposes without further stockholder authorization,
unless such authorization is intended forrequired by applicable law or the benefit of investors in the Company and not for
individuals or investors who engage in transactions which may cause
aberrations in the price or trading volume of Common Stock. From time to time,
financial intermediaries may engage in positioning transactions in order to
benefit from the discount from the Market Pricerules of the
sharesprincipal national securities exchange on which such stock is listed or
admitted to trading.
Repurchase of Common Stock
acquired through the reinvestmentShares and Restrictions on Transfer
Pursuant to our charter, if certain proposed transfers of dividends under the Plan. Such
transactions may cause fluctuations in the trading volume of the Common Stock.
The Company reserves the right to modify, suspendcommon stock or
terminate participation
in the Plan by otherwise eligible holders of Common Stock in order to
eliminate practices which are not consistent with the purposes of the Plan.
OPTIONS AVAILABLE TO PARTICIPANTS
2. WHAT OPTIONS ARE AVAILABLE TO ENROLLED PARTICIPANTS?
Dividend Reinvestment
Eligible holders of Common Stock who wish to participate in the Plan (each a
"Participant") may elect to have cash dividends paid on all or a portion of
their shares of Common Stock automatically reinvested in
7
additional shares of Common Stock. Cash dividends are paid on the Common Stock
when and as authorized and declared by the Company's Board of Directors.
Subject to the availability of shares of Common Stock registered for issuance
under the Plan, there is no minimum limitation on the amount of dividends a
Participant may reinvest under the dividend reinvestment feature of the Plan.
Optional Cash Payments
Each month, Participants may also elect to invest optional cash payments in
additional shares of Common Stock, subject to a minimum per month purchase
limit of $50 and a maximum per month purchase limit of $10,000, subject to
waiver. See Question 18 for information concerning limitations applicable to
optional cash payments and the availability of waivers with respect to such
limitations. Participants may make optional cash payments each month even if
dividends on their shares of Common Stock are not being reinvested and whether
or not a dividend has been declared.
ADVANTAGES AND DISADVANTAGES
3. WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF THE PLAN?
Advantages:
(a) The Plan provides Participants with the opportunity to reinvest cash
dividends paid on all or a portion of their shares of Common Stock in
additional shares of Common Stock without payment of any brokerage
commission or service charge and, as of the date of this Prospectus, at a
3% discount from the Market Price (subject to change), to the extent shares
are purchased directly from the Company.
(b) The Plan provides Participants with the opportunity to make monthly
investments of optional cash payments, subject to minimum and maximum
amounts, for the purchase of additional shares of Common Stock at, as of
the date of this Prospectus, a 1% discount from the Market Price (subject
to change) (and without payment of any brokerage commission or service
charge, to the extent shares are purchased directly from the Company).
(c) Subject to the availability of shares of Common Stock registered for
issuance under the Plan, all cash dividends paid on Participants' shares
can be fully invested in additional shares of Common Stock because the Plan
permits fractional shares to be credited to Plan accounts. Dividends on
such fractional shares, as well as on whole shares, will also be reinvested
in additional shares which will be credited to Plan accounts.
(d) The Plan Administrator, at no charge to Participants, provides for
the safekeeping of stock certificates for shares credited to each Plan
account.
(e) Periodic statements reflecting all current activity, including share
purchases and latest Plan account balance, simplify Participants' record
keeping. See Question 23 for information concerning reports to
Participants.
Disadvantages:
(a) No interest will be paid by the Company or the Plan Administrator on
dividends or optional cash payments held pending reinvestment or
investment. See Question 12.
(b) With respect to optional cash payments, the actual number of shares
to be issued to a Participant's Plan account will not be determined until
the end of the relevant Pricing Period. Therefore, during the Pricing
Period Participants will not know the actual number of shares they have
purchased.
8
(c) Even if a Discount from the Market Price is in effect during the
Pricing Period, the Market Price, as so discounted, may exceed the price at
which shares of the Common Stock are trading on the Investment Date (as
defined in Question 12) when the shares are issued or thereafter.
(d) Because optional cash payments must be received by the Plan
Administrator prior to the related Pricing Period, such payments may be
exposed to changes in market conditions for a longer period of time than in
the case of typical secondary market transactions. In addition, optional
cash payments once received by the Plan Administrator will not be returned
to Participants unless a written or telephonic request is directed to the
Plan Administrator at least two business days prior to the commencement of
the Pricing Period with respect to which optional cash payments have been
delivered by such Participant. See Questions 19 and 21.
(e) Resales of shares of Common Stock credited to a Participant's account
under the Plan will involve a brokerage commission and any applicable stock
transfer taxes on the resales. See Questions 22 and 28.
ADMINISTRATION
4. WHO ADMINISTERS THE PLAN?
The Company has retained Boston Equiserve, L.P. as plan administrator (the
"Plan Administrator"), to administer the Plan, keep records, send statements
of account activity to each Participant and perform other duties relating to
the Plan. See Question 23 for information concerning reports to Participants.
Shares purchased under the Plan and held by the Plan Administrator will be
registered in the Plan Administrator's name or the name of its nominee for the
benefit of the Participants. In the eventevents occur that the Plan Administrator resigns
or otherwise ceases to act as plan administrator, the Company will appoint a
new plan administrator to administer the Plan.
The Plan Administrator also acts as dividend disbursing agent, transfer
agent and registrar for the Company's Common Stock.
PARTICIPATION
For purposes of this section, responses will generally be based upon the
method by which the stockholder holds his or her shares of Common Stock.
Generally, stockholders are either Record Owners or Beneficial Owners. A
Record Owner is a stockholder who owns shares of Common Stock in his or her
own name. A Beneficial Owner is a stockholder who beneficially owns shares of
Common Stock that are registeredresult in a name other than his or her own name (for
example, theperson owning shares are held in the name of a broker, bank or other nominee).
A Record Owner may participate directly in the Plan, whereas a Beneficial
Owner will have to either become a Record Owner by having one or more shares
transferred into his or her own name or coordinate his or her participation in
the Plan through the broker, bank or other nominee in whose name the
Beneficial Owner's shares are held. If a Beneficial Owner who desires to
become a Participant encounters any difficulties in coordinating his or her
participation in the Plan with his or her broker, bank or other nominee, he or
she should call the Company's Investor Relations department at (714) 438-2100.
5. WHO IS ELIGIBLE TO PARTICIPATE?
All Record Owners or Beneficial Owners of at least one share of Common Stock
are eligible to participate in the Plan. A Record Owner may participate
directly in the Plan. A Beneficial Owner must either become a
9
Record Owner by having one or more shares transferred into his or her own name
or arrange with the broker, bank or other nominee who is the record holder to
participate on his or her behalf. See Question 6.
To facilitate participation by Beneficial Owners, the Company has made
arrangements with the Plan Administrator to reinvest dividends, on a per
dividend basis, and accept optional cash payments under the Plan by record
holders such as brokers, banks and other nominees, on behalf of Beneficial
Owners. See Question 6. Notwithstanding anything in the Plan to the contrary,
the Company reserves the right to exclude from participation in the Plan, at
any time, persons or entities who attempt to circumvent the Plan's standard
$10,000 per month maximum by accumulating accounts over which they have
control or any other persons or entities, as determined in the sole discretion
of the Company. See Question 1.
Furthermore, the Company may terminate, by written notice, at any time any
Participant's individual participation in the Plan if such participation would
be in violation of the restrictions contained in the Charter or Bylaws of the
Company. Because the Company expects to continue to qualify as a REIT, the
Charter contains restrictions on the transfer of stock which are intended to
assist the Company in complying with these requirements. The Ownership Limit
(as defined in the Charter) prohibits any person, subject to certain specified
exceptions, from owning, actually or constructively, shares of stock in excess of 9.5% (in value or in number, whichever is more restrictive) of the
outstanding shares of stock. The constructiveour
ownership rules are complex,limits and, may cause shares of stock owned actually or constructively by a group of
related individuals and/or entities to be constructively owned by one
individual or entity. As a result, the acquisition of less than 9.5% of the
shares of stock (or the acquisition of an interest in an entity that owns,
actually or constructively, shares of stock) by an individual or entity, could
nevertheless cause that individual or entity, or another individual or entity,
to own constructively in excess of 9.5% of the outstanding shares of stock and
thus violate the Ownership Limit, or such other limit as provided in the
Charter or as otherwise permitted by the Board of Directors. The Board of
Directors may, but in no event will be required to, exempt a person from the
Ownership Limit if it determines that such person's ownership of shares of
stock will not jeopardize the Company's status as a REIT. As a condition of
such waiver, the Board of Directors may require a ruling from the IRS or
opinion of counsel satisfactory to it and undertakings or representations from
the applicant with respect to the Company's status as a REIT. Pursuant to the
Charter, if any purported transfer of stock or any other event would otherwise
result in any person owning shares of stock in excess of the Ownership Limit
or otherwise cause the Company toconsequently, we fail to qualify as a REIT, then that
number of shares of stock actually or constructively owned by that person in
violation of the actual or constructive ownership of which otherwise
would cause such person to violate such restrictions (rounded to the nearest
whole share)limits will be automatically transferred to a trustee as
trustee of a trust for the exclusive benefit of one or more charitable
beneficiaries, and
thebeneficiaries. The intended transferee will not acquire any rights in suchthe
shares. 6. HOW DOES AN ELIGIBLE STOCKHOLDER PARTICIPATE?
Stockholders who are presently enrolledShares held by the trustee will constitute issued and outstanding
shares of stock. The trustee will have all voting rights and rights to
dividends or other distributions with respect to shares held in the existing Impac Mortgage
Holdings, Inc. Dividend Reinvestmenttrust,
which rights will be exercised for the exclusive benefit of the charitable
beneficiary. Any dividend or other distribution paid prior to our discovery
that shares of stock have been transferred to the trustee will be paid to the
trustee upon demand and any dividend or other
16
distribution authorized but unpaid will be paid when due to the trustee. Any
dividends or distributions paid to the trustee will be held in trust for the
charitable beneficiary. Subject to Maryland law, effective as of the date that
such shares have been transferred to the trustee, the trustee will have the
authority (at the trustee's sole discretion) (1) to rescind as void any vote
cast by an intended transferee prior to our discovery that such shares have
been transferred to the trustee and (2) to recast such vote in accordance with
the desires of the trustee acting for the benefit of the charitable
beneficiary.
Within 20 days of receiving notice from us that shares of stock have been
transferred to the trust, the trustee will sell the shares held in the trust
to a person designated by the trustee whose ownership of the shares will not
violate the ownership restrictions set forth in our charter. Upon such sale,
the interest of the charitable beneficiary in the shares sold will terminate
and the trustee will distribute the net proceeds of the sale to the intended
transferee and to the charitable beneficiary as follows: the intended
transferee will receive the lesser of
. the price paid by the intended transferee for the shares or, if the
intended did not give value for the shares in connection with the event
causing the shares to be held in the trust, the market price of the
shares on the day of the event causing the shares to be held in the trust
and
. the price per share received by the trustee from the sale or other
disposition of the shares held in the trust.
Any net sales proceeds in excess of the amount payable to the intended
transferee will be immediately paid to the charitable beneficiary.
In addition, shares of stock held in trust will be deemed to have been
offered for sale to us, or our designee, at a price per share equal to the
lesser of
. the price per share in the transaction that resulted in such transfer to
the trust (or, in the case of a devise or gift, the market price at the
time of such devise or gift) and
. the market price on the date we, or our designee, accept such offer.
We will have the right to accept such offer until the trustee has sold the
shares held in the trust. If the shares are sold to us, the interest of the
charitable beneficiary in the shares sold will terminate and the trustee will
distribute the net proceeds of the sale to the intended transferee.
Market price is defined in our charter as the closing price for shares on a
particular date. The closing price on any date shall mean the last sale price
for such shares, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, for such shares, in either case as
reported on the American Stock Purchase PlanExchange or the principal national securities
exchange on which shares are listed or admitted to trading.
All certificates representing shares of common stock bear a legend referring
to the restrictions described above.
Every owner of more than 5% (or such lower percentage as required by the
Internal Revenue Code of all classes or series of our stock, within 30 days
after the end of each taxable year, is required to give us written notice
stating
. the name and address of such owner
. the number of shares of each class and series of our stock beneficially
owned and
. a description of the manner in which the shares are held.
Each owner shall provide us any additional information that we may request
in order to determine the effect, if any, of such beneficial ownership on our
status as a REIT and to ensure compliance with the ownership limit.
17
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
Based on various assumptions and factual representations made by us
regarding our operations, in the opinion of McKee Nelson LLP, our tax counsel,
commencing with our taxable year ended December 31, 1995, we have been and
will continue to be enrolledorganized in conformity with the requirements for
qualification as a REIT under the Code, and our method of operating has
enabled us, and our proposed method of operating in the Planfuture will enable us,
to meet the requirements for qualification and taxation as a REIT. Our
qualification as a REIT depends upon our ability to meet the various
requirements imposed under the Code through our actual operations. McKee
Nelson LLP will not review our operations, and no assurance can be given that
our actual operations will meet the requirements imposed under the Code. The
opinion of McKee Nelson LLP is not binding on the IRS or any court. The
opinion of McKee Nelson LLP is based upon existing law, Treasury regulations,
currently published administrative positions of the IRS, and judicial
decisions, all of which are subject to change either prospectively or
retroactively.
The provisions of the Code pertaining to REITs are highly technical and
complex. Under the Code, if certain requirements are met in a taxable year, a
REIT generally will not be subject to federal income tax with respect to
income that it distributes to its shareholders. If we fail to qualify during
any taxable year as a REIT, unless they notifycertain relief provisions are available, we
will be subject to tax (including any applicable alternative minimum tax) on
our taxable income at regular corporate rates, which could have a material
adverse effect upon our stockholders.
The following discussion summarizes the Company otherwise. The Plan
amendsmaterial United States federal
income tax consequences that relate to our qualification and restatestaxation as a
REIT and that flow from an investment in its entiretyour stock. No assurance can be given
that the existing Impac Mortgage Holdings, Inc.
Dividend Reinvestment and Stock Purchase Plan. Stockholders who are not
participants inconclusions set out below, if challenged by the Plan and who do not want to become participants need do
nothing and will continue to receive their cash dividend, if and when
declared,IRS, would be
sustained by a court. This discussion deals only with stock that is held as usual.
10
Record Owners
Record Owners may join the Plan by completing and signing the Authorization
Form included with the Plan and returning ita
capital asset, which generally means property that is held for investment. In
addition, except to the Plan Administrator. A
postage-paid envelope is provided forextent discussed below, this purpose. If sharessummary does not address
tax consequences applicable to you if you are registeredsubject to special tax rules.
For instance, the discussion does not address tax consequences applicable to
the following categories of stockholders:
. dealers or traders in securities;
. financial institutions;
. insurance companies;
. stockholders that hold our stock as a hedge, part of a straddle,
conversion transaction or other arrangement involving more than one
name (e.g., joint tenants, trustees), all registered holders
of such shares must signposition;
. stockholders whose functional currency is not the Authorization Form exactlyUnited States dollar;
or
. stockholders that are tax-exempt organizations or foreign taxpayers.
The discussion set out below is intended only as their names appear
on the account registration. Authorization Forms may be obtained at any time
by written request to:
Boston Equiserve, L.P.
Dividend Reinvestment Unit
P.O. Box 8040
Boston, Massachusetts 02266-8040
Telephone: (781) 575-3120
Beneficial Owners
Beneficial Owners who wish to participate in the Dividend Reinvestment
featurea summary of the Plan must contact their broker, bank,material
United States federal income tax consequences of our treatment as a REIT and
of an investment in our stock. Taxpayers and preparers of tax returns
(including returns filed by any partnership or other nominee.
Brokers, Banks or other nominees whose shares are held byarrangement) should be
aware that under Treasury regulations a major depository
institution should then contactprovider of advice on specific issues
of law is not considered an income tax return preparer unless the advice is
(i) given with respect to events that institutionhave occurred at the time the advice is
rendered and is not given with respect to participatethe consequences of contemplated
actions, and (ii) is directly relevant to the determination of an entry on a
tax return. Accordingly, we urge you to consult your own tax advisors
regarding the tax consequences of an investment in our stock, including the
Dividend Reinvestment featureapplication to your particular situation of the Plan on behalf of the Beneficial Owner.
Beneficial Owners who wish to participate in the Optional Cash Payment feature
of the Plan must contact their broker, bank or other nominee who should
complete a Broker and Nominee Form for the Beneficial Owner. The Beneficial
Owner must also complete an Authorization Form. Both forms must be completed
and submitted together to the Plan Administrator with an optional cash payment
to take advantage of the Optional Cash Payment feature. See Question 8 for a
discussion of the Broker and Nominee Form (the "B&N Form"). See also Question
17.
Incomplete Forms
If a Record Owner or a Beneficial Owner submits a properly executed
Authorization Form without electing an investment option, such Authorization
Form will be deemed to indicate the intention of such Record Owner or
Beneficial Owner, as the case may be, to apply all cash dividends and optional
cash payments, if applicable, toward the purchase of additional shares of
Common Stock. See Question 7 for investment options.
7. WHAT DOES THE AUTHORIZATION FORM PROVIDE?
The Authorization Form appoints the Plan Administrator as agent for the
Participant and directs the Company to pay to the Plan Administrator each
Participant's cash dividends on all or a specified number of shares of Common
Stock owned by the Participant on the applicable record date ("Participating
Shares"),tax matters discussed below,
as well as on all whole and fractional sharesthe application of Common Stock
credited to a Participant's Plan account ("Plan Shares").state, local or foreign tax laws. The Authorization
Form directs the Plan Administrator to purchasestatements
of United States tax law set out below are based on the
Investment Date (as
defined18
laws in Question 12) additional shares of Common Stock with such dividendsforce and optional cash payments, if any, made by the Participant. See Question 8
for a discussion of the B&N Form which is required to be used by a broker,
bank or other nominee for optional cash payments of a Beneficial Owner. The
Authorization Form also directs the Plan Administrator to reinvest
automatically all subsequent dividends on Plan Shares. Dividends will continue
to be reinvested on the number of Participating Shares and on all Plan Shares
until the Participant specifies otherwise by contacting the Plan
Administrator, in writing, withdraws from the Plan (see Questions 27 and 28),
or the Plan is terminated. See Question 6 for additional information about the
Authorization Form.
11
The Authorization Form provides for the purchase of additional shares of
Common Stock through the following investment options:
(1) If "Full Dividend Reinvestment" is elected, the Plan Administrator
will apply all cash dividends on all shares of Common Stock then or
subsequently registered in the Participant's name, and all cash dividends
on all Plan Shares, together with any optional cash payments, toward the
purchase of additional shares of Common Stock.
(2) If "Partial Dividend Reinvestment" is elected, the Plan Administrator
will apply all cash dividends on only the number of Participating Shares
registered in the Participant's name and specified on the Authorization
Form and all cash dividends on all Plan Shares, together with any optional
cash payments, toward the purchase of additional shares of Common Stock.
(3) If "Optional Cash Payments Only" is elected, the Participant will
continue to receive cash dividends on shares of Common Stock registered in
that Participant's name in the usual manner. However, the Plan
Administrator will apply all cash dividends on all Plan Shares, together
with any optional cash payments received from the Participant, toward the
purchase of additional shares of Common Stock. See Question 8 for a
discussion of the B&N Form which is required to be used by a broker, bank
or other nominee for optional cash payments of a Beneficial Owner.
Each Participant may select any one of these three options. In each case,
dividends will be reinvested on all Participating Shares and on all Plan
Shares held in the Plan account, including dividends on shares of Common Stock
purchased with any optional cash payments, until a Participant specifies
otherwise by contacting the Plan Administrator, in writing, or withdraws from
the Plan altogether (see Questions 27 and 28), or until the Plan is
terminated. If a Participant would prefer to receive cash payments of
dividends paid on Plan Shares rather than reinvest such dividends, those
shares must be withdrawn from the Plan by written notification to the Plan
Administrator. See Questions 27 and 28 regarding withdrawal of Plan Shares.
Participants may change their investment options at any time by requesting a
new Authorization Form and returning it to the Plan Administrator at the
address set forth in Question 38. See Question 12 for the effective date for
any change in investment options.
8. WHAT DOES THE B&N FORM PROVIDE?
The B&N Form provides the only means by which a broker, bank or other
nominee holding shares of a Beneficial Owner may invest optional cash payments
on behalf of such Beneficial Owner. A B&N Form must be delivered to the Plan
Administrator each time such broker, bank or other nominee transmits optional
cash payments on behalf of a Beneficial Owner. The Beneficial Owner must also
complete an Authorization Form. The B&N Form must be executed by the broker,
bank or other nominee for the Beneficial Owner. A broker, bank or other
nominee holding shares for a Beneficial Owner in the name of a major
securities depository may also participate in the Plan through the Depository
Trust Company ("DTC"). Currently, only the dividend reinvestment option is
available through DTC. B&N Forms will be furnished at any time upon request to
the Plan Administrator at:
Boston EquiServe, L.P.
Dividend Reinvestment Unit
P.O. Box 8040
Boston, Massachusetts 02266-8040
Telephone: (781) 575-3120
A B&N FORM COMPLETED BY THE BROKER, BANK OR OTHER NOMINEE FOR A BENEFICIAL
OWNER MUST BE SUBMITTED ALONG WITH AN AUTHORIZATION FORM COMPLETED BY THE
BENEFICIAL OWNER. SEE QUESTIONS 6 AND 7.
12
THE B & N FORM AND APPROPRIATE INSTRUCTIONS MUST BE RECEIVED BY THE PLAN
ADMINISTRATOR NOT LATER THAN THE APPLICABLE RECORD DATE OR THE OPTIONAL CASH
PAYMENT WILL NOT BE INVESTED UNTIL THE FOLLOWING INVESTMENT DATE.
9. IS PARTIAL PARTICIPATION POSSIBLE UNDER THE PLAN?
Yes. Record Owners or the broker, bank or other nominee for Beneficial
Owners may designate on the Authorization Form a number of shares for which
dividends are to be reinvested. Dividends will thereafter be reinvested only
on the number of shares specified, and the Record Owner or Beneficial Owner,
as the case may be, will continue to receive cash dividends on the remainder
of the shares.
10. WHEN MAY AN ELIGIBLE STOCKHOLDER JOIN THE PLAN?
A Record Owner or a Beneficial Owner may join the Plan at any time. Once in
the Plan, a Participant remains in the Plan until he or she withdraws from the
Plan, the Company terminates his or her participation in the Plan or the
Company terminates the Plan. See Question 28 regarding withdrawal from the
Plan.
11. WILL A STOCKHOLDER PRESENTLY ENROLLED IN THE PREVIOUS PLAN CONTINUE TO BE
ENROLLED IN THE PLAN?
Yes. A stockholder enrolled in the Previous Plan will continue to be
enrolled in the Plan in accordance with the investment option chosen under the
Previous Plan, provided he or she is an eligible stockholder as set forth in
Question 5, and thus entitled to participate in the Plan.
If an eligible stockholder enrolled in the Previous Plan does not wish to
participate in the Plan, he or she should withdraw from the Plan in the manner
described in Questions 27 and 28. If an eligible stockholder wishes to change
the nature of his or her participation from that in the Previous Plan, he or
she should return an Authorization Form as described in Question 6. If an
eligible stockholder enrolled in the Previous Plan does not wish to withdraw
or change the nature of his or her participation, he or she will continue to
be enrolled in the Plan and the nature of his or her investment option will
remain the same under the Plan.
12. WHEN WILL DIVIDENDS BE REINVESTED AND/OR OPTIONAL CASH PAYMENTS BE
INVESTED?
When shares are purchased from the Company, such purchases will be made on
the "Investment Date" in each month. The Investment Date with respect to
Common Stock acquired directly from the Company and relating to a dividend
reinvestment will be the dividend payment date declared by the Board of
Directors (unless such date is not a business day in which case it is the
first business day immediately thereafter) or, in the case of open market
purchases, no later than thirty business days following the dividend payment
date. The Investment Date with respect to Common Stock acquired directly from
the Company and relating to an optional cash payment will generally be on or
about the twenty-ninth day of each month or, in the case of open market
purchases, no later than thirty business days following the related Investment
Date. In no event, however, will the Investment Date relating to dividend
reinvestments be less than ten days from the Investment Date relating to
optional cash payments.
When open market purchases are made by the Plan Administrator, such
purchases may be made on any securities exchange where the shares are traded,
in the over-the-counter market or by negotiated transactions, and may be
subject to such terms with respect to price, delivery and other matters as
agreed to by the Plan Administrator. Neither the Company nor any Participant
shall have any authorization or power to direct the time
13
or price at which shares will be purchased or the selection of the broker or
dealer through or from whom purchases are to be made by the Plan
Administrator. However, when open market purchases are made by the Plan
Administrator, the Plan Administrator shall use its best efforts to purchase
the shares at the lowest possible price.
If the Authorization Form is received prior to the record date for a
dividend payment, the election to reinvest dividends will begin with that
dividend payment. If the Authorization Form is received on or after any such
record date, reinvestment of dividends will begin on the dividend payment date
following the next record date if the Participant is still a stockholder of
record. Record dates for payment of dividends normally precede payment dates
by approximately two to three weeks.
See Question 18 for information concerning limitations on the minimum and
maximum amounts of optional cash payments that may be made each month and
Question 19 for information as to when optional cash payments must be received
to be invested on each Investment Date.
Shares will be allocated and credited to Participants' accounts as follows:
(1) shares purchased from the Company will be allocated and credited on the
appropriate Investment Date; and (2) shares purchased in market transactions
will be allocated and credited as of the date on which the Plan Administrator
completes the purchases of the aggregate number of shares to be purchased on
behalf of all Participants with dividends to be reinvested or optional cash
payments, as the case may be, during the month.
NO INTEREST WILL BE PAID ON CASH DIVIDENDS OR OPTIONAL CASH PAYMENTS PENDING
INVESTMENT OR REINVESTMENT UNDER THE TERMS OF THE PLAN. SINCE NO INTEREST IS
PAID ON CASH HELD BY THE PLAN ADMINISTRATOR, IT NORMALLY WILL BE IN THE BEST
INTEREST OF A PARTICIPANT TO DEFER OPTIONAL CASH PAYMENTS UNTIL SHORTLY BEFORE
COMMENCEMENT OF THE PRICING PERIOD.
PURCHASE AND PRICES OF SHARES
13. WHAT WILL BE THE PRICE TO PARTICIPANTS OF SHARES PURCHASED UNDER THE PLAN?
Dividend Reinvestment
With respect to reinvested dividends, the price per share of Common Stock
acquired directly from the Company will be,interpretation as of the date of this Prospectus,
97% (subjectprospectus, and
are subject to change)changes occurring after that date.
REIT Qualification Requirements
The following is a brief summary of the average of the high and low sales prices,
computed to three decimal places, of the Common Stock on the AMEX on the
Investment Date (as defined in Question 12), or if no trading occurs in the
Common Stock on the Investment Date, the average of the high and low sales
prices for the first trading day immediately preceding the Investment Date for
which trades are reported.
No discount will be available for dividends reinvested in Common Stock
acquired in open market purchases. See Question 16. The price per share of
Common Stock acquired through open market purchases with reinvested dividends
will be the weighted average of the actual prices paid, computed to three
decimal places, for all of the Common Stock purchasedmaterial technical requirements
imposed by the Plan
Administrator with all Participants' reinvested dividends forCode that we must satisfy on an ongoing basis to qualify, and
remain qualified, as a REIT.
Stock Ownership Requirements
We must meet the related
quarter. Additionally, each Participant willfollowing stock ownership requirements:
(1) our capital stock must be charged a pro rata portion of
any brokerage commissions or other fees or charges paidtransferable;
(2) our capital stock must be held by the Plan
Administrator in connection with such open market purchases. (If a Participant
14
desires to opt out of the dividend reinvestment feature of the Plan when the
Common Stock relating to dividend reinvestments will be purchased in the open
market, a Participant must notify the Plan Administrator no later than the
record date for the related dividend payment date. For information as to the
source of the Common Stock to be purchased under the Plan see Question 16.)
Optional Cash Payments
With respect to optional cash payments that do not exceed $10,000 (see
Question 18 for a discussion of the discount applicable to optional cash
payments in excess of $10,000), the price per share of Common Stock acquired
directly from the Company will be, as of the date of this Prospectus, 99%
(subject to change) of the average of the high and low sales prices, computed
to three decimal places, of the Common Stock as reported on the AMEX for the
three Trading Days immediately preceding the relevant Investment Date (as
defined in Question 12 above) or, if no trading occurs in the Common Stock on
one or more of such Trading Days, for the three Trading Days immediately
preceding the Investment Date for which trades are reported. A "Trading Day"
means a day on which trades in the Common Stock are reported on the AMEX. With
respect to all optional cash payments, regardless of the amount being
invested, the period encompassing the three Trading Days which relate to an
Investment Date constitutes the relevant "Pricing Period."
The price per share of Common Stock acquired through open market purchases
with optional cash payments will be 100% (subject to change) of the weighted
average of the actual prices paid, computed to three decimal places, for all
of the Common Stock purchased by the Plan Administrator with all Participants'
optional cash payments for the related month.
Market Price
All references in the Plan to the "Market Price" when it relates to dividend
reinvestments which will be reinvested in Common Stock acquired directly from
the Company shall mean the average of the high and low sales prices, computed
to three decimal places, of the Common Stock on the AMEX on the Investment
Date, or if no trading occurs in the Common Stock on the Investment Date, the
average of the high and low sales prices for the first trading day immediately
preceding the Investment Date for which trades are reported. With respect to
dividend reinvestments which will be reinvested in Common Stock purchased in
the open market, "Market Price" shall mean the weighted average of the actual
prices paid, computed to three decimal places, for all of the Common Stock
purchased by the Plan Administrator with all Participants' reinvested
dividends for the related quarter. All references in the Plan to the "Market
Price" for optional cash payments which will be invested in Common Stock
acquired directly from the Company shall mean the average of the high and low
sales prices, computed to three decimal places, of the Common Stock as
reported on the AMEX during the Pricing Period (as defined above). With
respect to optional cash payments which will be reinvested in Common Stock
purchased in the open market, "Market Price" shall mean the weighted average
of the actual prices paid, computed to three decimal places, for all of the
Common Stock purchased by the Plan Administrator with all Participants'
optional cash payments for the related month.
14. WHAT ARE THE RECORD DATES AND INVESTMENT DATES FOR DIVIDEND REINVESTMENT?
For the reinvestment of dividends, the "Record Date" is the record date
declared by the Board of Directors for such dividend. Likewise, the dividend
payment date declared by the Board of Directors constitutes the Investment
Date applicable to the reinvestment of such dividend with respect to Common
Stock acquired directly from the Company, except that if any such date is not
a business day, the first business day immediately
15
following such date shall be the Investment Date. The Investment Date with
respect to Common Stock purchased in open market transactions will be no later
than thirty business days following the dividend payment date. Dividends will
be reinvested on the Investment Date using the applicable Market Price (as
defined in Question 13). Generally, record dates for quarterly dividends on
the Common Stock will precede the dividend payment dates by approximately two
to three weeks. Please refer to Question 19 for a discussion of the Record
Dates and Investment Dates applicable to optional cash payments.
15. HOW WILL THE NUMBER OF SHARES PURCHASED FOR A PARTICIPANT BE DETERMINED?
A Participant's account in the Plan will be credited with the number of
shares, including fractions computed to three decimal places, equal to the
total amount to be invested on behalf of such Participant divided by the
purchase price per share as calculated pursuant to the methods described in
Question 13, as applicable. The total amount to be invested will depend on the
amount of any dividends paid on the number of Participating Shares and Plan
Shares in such Participant's Plan account and available for investment on the
related Investment Date, or the amount of any optional cash payments made by
such Participant and available for investment on the related Investment Date.
Subject to the availability of shares of Common Stock registered for issuance
under the Plan, there is no total maximum number of shares available for
issuance pursuant to the reinvestment of dividends.
16. WHAT IS THE SOURCE OF COMMON STOCK PURCHASED UNDER THE PLAN?
Plan Shares will be purchased either directly from the Company, in which
event such shares will be authorized but unissued shares, or on the open
market, at the option of the Company, after a review of current market
conditions and the Company's current and projected capital needs. The Company
will determine the source of the Common Stock to be purchased under the Plan at least three business100 persons during at
least 335 days prior to the relevant Record Date, and will
notify the Plan Administrator of the same. Neither the Company nor the Plan
Administrator shall be required to provide any written notice to Participants
as to the source of the Common Stock to be purchased under the Plan, but
current information regarding the source of the Common Stock may be obtained
by contacting the Company's Investor Relations at (714) 438-2100.
17. HOW DOES THE OPTIONAL CASH PAYMENT FEATURE OF THE PLAN WORK?
All Record Holders and Beneficial Owners who have timely submitted signed
Authorization Forms indicating their intention to participate in this feature
of the Plan are eligible to make optional cash payments during any month,
whether or not a dividend is declared. A broker, bank or other nominee which
holds shares on behalf of a Beneficial Owner must also complete the B&N Form.
See Question 8. Optional cash payments must be accompanied by an Authorization
Form andtaxable year of 12 months (or during a B&N Form, if applicable. Each month the Plan Administrator will
apply any optional cash payment received from a Participant no later than one
business day prior to the commencement of that month's Pricing Period (as
defined in Question 13) to the purchase of additional shares of Common Stock
for the account of the Participant on the following Investment Date (as
defined in Question 12).
As of the date of this Prospectus, the discount from the Market Price
applicable to optional cash payments will be 1% (subject to change) of the
Market Price (as defined in Question 13). Refer to Question 18 for a
discussion of the possible limitations on the purchase price applicable to the
purchase of shares made with optional cash payments.
16
18. WHAT LIMITATIONS APPLY TO OPTIONAL CASH PAYMENTS?
Optional Cash Payments up to $10,000
Each optional cash payment is subject to a minimum per month purchase limit
of $50 and a maximum per month purchase limit of $10,000. For purposes of
these limitations, all Plan accounts under the common control or managementproportionate
part of a Participant will be aggregated. Generally, optional cash paymentstaxable year of less than $5012 months); and
that portion of any optional cash payment which exceeds the
maximum monthly purchase limit of $10,000, unless such limit has been waived
by the Company, will be promptly returned to Participants without interest at
the end(3) no more than 50% of the relevant Pricing Period.
Requests for Waiver
Participants may make optional cash paymentsvalue of up to $10,000 each month
without the prior approval of the Company. Optional cash payments in excess of
$10,000our capital stock may be madeowned,
directly or indirectly, by a Participant only upon acceptance by the Company of a
completed Request for Waiver form from such Participant. There is no pre-
established maximum limit applicable to optional cash payments that may be
made pursuant to accepted Requests for Waiver. A Request for Waiver form must
be received and accepted by the Company each month no later than three
business days prior to the Record Date (as defined in Question 19) for the
applicable Investment Date. Request for Waiver forms will be furnishedfive or fewer individuals at any time upon request toduring the
Plan Administrator at the address or telephone number
specified in Question 38. Participants interested in obtaining further
information about a Request for Waiver should contact the Company's Investor
Relations Department at (714) 438-2100.
The Company expects to grant Requests for Waiver to financial
intermediaries, including brokers and dealers, and other Participants in the
future. Waivers will be considered on the basis of a variety of factors, which
may include the Company's current and projected capital needs, the
alternatives available to the Company to meet those needs, prevailing market
prices for Common Stock and other Company securities, general economic and
market conditions, expected aberrations in the price or trading volumelast half of the Common Stock,taxable year. In applying this test, the potential disruptionCode treats some
entities as individuals.
Tax-exempt entities, other than private foundations and certain unemployment
compensation trusts, are generally not treated as individuals for these
purposes. The requirements of the price of the Common Stock by a
financial intermediary, the number of shares of Common Stock held by the
Participant submitting the waiver request, the past actions of a Participant
under the Plan, the aggregate amount of optional cash payments for which such
waivers have been submitteditems (2) and the administrative constraints associated with
granting such waivers. Grants of waivers will be made in the absolute
discretion of the Company.
PARTICIPANTS IN THE PLAN ARE NOT OBLIGATED TO PARTICIPATE IN THE OPTIONAL
CASH PAYMENT FEATURE OF THE PLAN AT ANY TIME. OPTIONAL CASH PAYMENTS NEED NOT
BE IN THE SAME AMOUNT EACH MONTH.
The Waiver Discount
Each month, at least five business days prior to the applicable Record Date
(as defined in Question 19), the Company will establish the discount from the
Market Price applicable to optional cash payments made pursuant to Requests
for Waiver and will notify the Plan Administrator of the same. Such discount
(the "Waiver Discount") will be between 0% and 5% of the Market Price and may
vary each month, but once established will apply uniformly to all optional
cash payments made pursuant to Requests for Waiver during that month. The
Waiver Discount will be established in the Company's sole discretion after
advice from counsel, a review of current market conditions, the level of
participation in the Plan, and the Company's current and projected capital
needs. The Waiver Discount applies only to optional cash payments made
pursuant to Requests for Waiver and
17
does not apply to other optional cash payments. NEITHER THE COMPANY NOR THE
PLAN ADMINISTRATOR SHALL BE REQUIRED TO PROVIDE ANY WRITTEN NOTICE TO
PARTICIPANTS AS TO THE WAIVER DISCOUNT, BUT CURRENT INFORMATION REGARDING THE
WAIVER DISCOUNT APPLICABLE TO THE NEXT INVESTMENT DATE MAY BE OBTAINED BY
CONTACTING THE COMPANY'S INVESTOR RELATIONS AT (714) 438-2100. Setting a
Waiver Discount applicable to the next Investment Date shall not affect the
setting of a Waiver Discount for any subsequent Investment Date. The Waiver
Discount feature discussed(3) above applies only to optional cash payments made
pursuant to Requests for Waiver and doesdid not apply to the
reinvestmentfirst taxable year for which we made an election to be taxed as a REIT.
However, these stock ownership requirements must be satisfied in each
subsequent taxable year. Our charter imposes restrictions on the transfer of
dividends.
Shares acquiredour shares to help us meet the stock ownership requirements. In addition,
Treasury regulations require us to demand from optionalthe record holders of
designated percentages of our capital stock, annual written statements
disclosing actual and constructive ownership of our stock. The same
regulations require us to maintain permanent records showing the information
we have received regarding actual and constructive stock ownership and a list
of those persons failing or refusing to comply with our demand.
Asset Requirements
We generally must meet the following asset requirements at the close of each
quarter of each taxable year:
(a) at least 75% of the value of our total assets must be "qualified REIT
real estate assets" (described below), government securities, cash payments in excessand cash
items;
(b) no more than 25% of $10,000 that are
granted pursuant to a Request for Waiverthe value of our total assets may be acquired either directly fromsecurities
other than securities in the Company or through open market purchases. See Question 13 for a
description75% asset class (for example, government
securities and certain mortgage-backed securities);
(c) no more than 20% of the price per sharevalue of our total assets may be securities
of one or more Taxable REIT subsidiaries (described below); and
(d) except for securities in each case.
ONLY OPTIONAL CASH PAYMENTS MADE PURSUANT TO REQUESTS FOR WAIVER WILL BE
AFFECTED BY THE WAIVER DISCOUNT. ALL OTHER OPTIONAL CASH PAYMENTS WILL BE MADE
ATthe 75% asset class, securities in a Taxable
REIT subsidiary or "qualified REIT subsidiary," and certain partnership
interests and debt obligations--
(1) no more than 5% of the value of our total assets may be
securities of any one issuer,
(2) we may not hold securities that possess more than 10% percent of
the total voting power of the outstanding securities of any one issuer,
and
(3) we may not hold securities that have a value of more than 10
percent of the total value of the outstanding securities of any one
issuer.
19
"Qualified REIT real estate assets" means assets of the type described in
section 856(c)(5)(B) of the Code, and generally include (among other assets)
interests in mortgages on real property and certain mortgage-backed
securities, and shares in other REITs.
A 1% (SUBJECT TO CHANGE) DISCOUNT FROM THE MARKET PRICE, WITHOUT REGARD TO
ANY WAIVER DISCOUNT.
19. WHAT ARE THE RECORD DATES AND INVESTMENT DATES FOR OPTIONAL CASH PAYMENTS?
Optional cash payments"Taxable REIT subsidiary" is a corporation that may earn income that would
not be qualifying income if earned directly by the REIT. A REIT may hold up to
100% of the stock in a Taxable REIT subsidiary. Both the subsidiary and the
REIT must jointly elect to treat the subsidiary as a Taxable REIT subsidiary
by jointly filing a Form 8875 with the IRS. A Taxable REIT subsidiary will be invested every monthpay
tax at the corporate rates on any income it earns. Moreover, the related
Investment Date. The "Record Date" for optional cash payments is two business
days priorCode contains
rules to ensure contractual arrangements between a Taxable REIT subsidiary and
the parent REIT are at arm's length. We have, together with IFC, filed an
election to have IFC treated as our Taxable REIT subsidiary as of January 1,
2001.
If we fail to meet any of the asset tests as of the close of a calendar
quarter due to the related Pricing Period andacquisition of securities or other assets, the "Investment Date" is
generally on or about the twenty-ninth day of each month or, in the case of
open market purchases, no later than thirty business daysCode allows
us a 30-day period following the Investment Date. In no event, however, will the Investment Date relating to
optional cash payments be less than ten days from the Investment Date relating
to dividend reinvestments.
Optional cash payments received by the Plan Administrator, and such funds
that have cleared at least one business day prior to the commencement of a
Pricing Period will be applied to the purchase of shares of Common Stock on
the Investment Date which relates to that Pricing Period. Generally, optional
cash payments received on or after the commencement of a Pricing Period will
be held by the Plan Administrator pending investment on the next Investment
Date. No interest will be paid by the Company or the Plan Administrator on
optional cash payments held pending investment.
For a schedule of expected Record Dates and Investment Dates in 1998, see
Schedule A.
20. WHEN MUST OPTIONAL CASH PAYMENTS BE RECEIVED BY THE PLAN ADMINISTRATOR?
Each month the Plan Administrator will apply any optional cash payment for
which good funds are timely received to the purchase of shares of Common Stock
for the accountclose of the Participant on the next Investment Date. See Question
19. In order for fundscalendar quarter to be invested on the next Investment Date, the Plan
Administrator must have received a check, money order or wire transfer by the
end of the business day immediately preceding the ensuing Pricing Period and
such check, money order or wire transfer must have cleared on or before the
end of the business day immediately preceding such ensuing Pricing Period. For
optional cash payments less than $10,000, wire transfers may be used only if
approved verbally in advance by the Plan Administrator. However, optional cash
payments in excess of $10,000, made pursuant to accepted Requests for Waiver,
must be made by wire transfer. Wire transfer instructions may be obtained by
contacting the Company's Investor Relations at (714) 438-2100. Checks and
money orders are accepted subject to timely collection as good funds and
verification ofcome into
compliance with the termsasset tests. If we do cure a failure within the 30-day
period, we will be treated as having satisfied the asset tests at the close of
the Plan. Checks or money orders
shouldcalendar quarter.
Gross Income Requirements
We generally must meet the following gross income requirements for each
taxable year:
(a) at least 75% of our gross income must be made payable to Boston Equiserve--Impac Mortgage Holdings, Inc.
DRIP. Checks returned for any reason will not be resubmitted for collection.
18
If the Plan Administrator does not receive a payment because of insufficient
funds or incorrect draft information, the requested purchase will be deemed
void, and the Plan Administrator will immediately remove any shares purchased
in anticipation of receiving such fundsderived from the Participant's account. Ifreal estate
sources specified in section 856(c)(3) of the net proceedsCode, including interest
income and gain from the disposition of qualified REIT real estate assets,
and "qualified temporary investment income" (generally, income we earn from
investing new capital, provided we received that income within one year of
acquiring such new capital); and
(b) at least 95% of our gross income for each taxable year must be
derived from sources of income specified in section 856(c)(2) of the Code,
which includes the types of gross income described just above, as well as
dividends, interest, and gains from the sale of such shares are insufficientstock or other financial
instruments (including interest rate swap and cap agreements, options,
futures contracts, forward rate agreements or similar financial instruments
entered into to satisfy the
balance of uncollected amounts, the Plan Administrator may sell additional
shares from the Participant's account necessary to satisfy the uncollected
amount. In addition, an "insufficient funds" fee of $25 will be charged. The
Plan Administrator may place a hold on the Participant's account until the
"insufficient funds" fee is received, or may sell shares from the
Participant's account to satisfy any uncollected amounts.
NO INTEREST WILL BE PAID BY THE COMPANY OR THE PLAN ADMINISTRATOR ON
OPTIONAL CASH PAYMENTS HELD PENDING INVESTMENT. SINCE NO INTEREST IS PAID ON
CASH HELD BY THE PLAN ADMINISTRATOR, IT NORMALLY WILL BE IN THE BEST INTEREST
OF A PARTICIPANT TO DEFER OPTIONAL CASH PAYMENTS UNTIL SHORTLY BEFORE
COMMENCEMENT OF THE PRICING PERIOD.
In order for payments to be invested on the Investment Date, in addition to
the receipt of good funds by the end of the business day immediately preceding
the commencement of a Pricing Period, the Plan Administrator must be in
receipt of an Authorization Form or a B&N Form, as appropriate, as of the same
date. See Questions 6 and 8.
21. MAY OPTIONAL CASH PAYMENTS BE RETURNED?
Upon telephone or written request to the Plan Administrator received at
least two business days prior to the commencement of the Pricing Periodreduce interest rate risk with respect to which optional cash payments have been delivereddebt incurred or
to be incurred to acquire or carry qualified REIT real estate assets) not
held for sale in the ordinary course of business.
Distribution Requirements
We generally must distribute dividends (other than capital gain dividends)
to our stockholders in an amount at least equal to (1) the sum of (a) 90% of
our REIT taxable income (computed without regard to the Plan
Administrator,dividends paid
deduction and net capital gains) and (b) 90% of the net income (after tax, if
any) from foreclosure property, minus (2) the sum of certain items of non-cash
income. In addition, if we were to recognize "Built in Gain" (as defined
below) on disposition of any assets acquired from a "C" corporation in a
transaction in which Built in Gain was not recognized (for instance, assets
acquired in a statutory merger), we would be required to distribute at least
90% of the Built in Gain recognized net of the tax we would pay on such optional cash payments will be returned togain.
Built in Gain is the Participant
as soon as practicable. Requests received less than two business days prior to
such date will not be returned but instead will be invested onexcess of (a) the next
related Investment Date. Also, each optional cash payment, to the extent that
it does not either conform to the limitations described in Question 19 or
clear withinfair market value of an asset (measured
at the time limit describedof acquisition) over (b) the basis of the asset (measured at the
time of acquisition). We do not hold any assets having Built in QuestionGain.
We are not required to distribute our net capital gains. Rather than
distribute them, we may elect to retain and pay the federal income tax on
them, in which case our stockholders will (1) include their proportionate
share of the undistributed net capital gains in income, (2) receive a credit
for their share of the federal income tax we pay and (3) increase the bases in
their stock by the difference between their share of the capital gain and
their share of the credit.
20
Failure to Qualify
If we fail to qualify as a REIT in any taxable year and the relief
provisions provided in the Code do not apply, we will be subject to returnfederal
income tax, including any applicable alternative minimum tax, on our taxable
income in that taxable year and all subsequent taxable years at the regular
corporate income tax rates. We will not be allowed to deduct distributions to
shareholders in these years, nor will the Code require us to make
distributions. Further, unless entitled to the Participantrelief provisions of the Code,
we also will be barred from re-electing REIT status for the four taxable years
following the year in which we fail to qualify. It is not possible to state in
what circumstances we would be entitled to any statutory relief.
We intend to monitor on an ongoing basis our compliance with the REIT
requirements described above. To maintain our REIT status, we will be required
to limit the types of assets that we might otherwise acquire, or hold some
assets at times when we might otherwise have determined that the sale or other
disposition of these assets would have been more prudent.
Taxation as soona REIT
In any year in which we qualify as practicable.
22. ARE THERE ANY EXPENSES TO PARTICIPANTS IN CONNECTION WITH THEIR
PARTICIPATION UNDER THE PLAN?
Participantsa REIT, we generally will havenot be subject
to pay brokerage feesfederal income tax on that portion of our REIT taxable income or commissionscapital
gain that we distribute to our stockholders. We will, however, be subject to
federal income tax at regular corporate income tax rates on shares of
Common Stock purchased with reinvested dividends and optional cash paymentsany undistributed
taxable income or capital gain.
Notwithstanding our qualification as a REIT, we may also be subject to tax
in the following other circumstances:
. If we fail to satisfy either the 75% or the 95% gross income test, but
nonetheless maintain our qualification as a REIT because we meet other
requirements, we generally will be subject to a 100% tax on the open market, which sums are, asgreater
of the dateamount by which we fail either the 75% or the 95% gross income
test multiplied by a fraction intended to reflect our profitability.
. We will be subject to a tax of this Prospectus,100% on net income derived from any
"prohibited transaction" which is, in general, a sale or other
disposition of property held primarily for sale to customers in the
ordinary course of business.
. If we have (1) net income from the sale or other disposition of
foreclosure property that is held primarily for sale to customers in the
ordinary course of business or (2) other non-qualifying income from
foreclosure property, it will be subject to federal income tax at the
highest corporate income tax rate.
. If we fail to distribute during each calendar year at least the sum of
(1) 85% of our REIT ordinary income for such year, (2) 95% of our REIT
capital gain net income for such year and (3) any amount of undistributed
ordinary income and capital gain net income from preceding taxable years,
we will be subject to a 4% federal excise tax on the excess of the
required distribution over the amounts actually distributed during the
taxable year.
. If we acquire a Built in Gain asset from a C corporation in a transaction
in which the basis of the asset is determined by reference to the basis
of the asset in the hands of the C corporation and we recognize Built
21
in Gain upon a disposition of such asset occurring within 10 years of its
acquisition, then we will be subject to federal tax to the extent of any
Built in Gain at the highest corporate income tax rate.
. We may also be subject to the corporate alternative minimum tax, as well
as other taxes in situations not expectedpresently contemplated.
Taxation of Stockholders
Unless you are a tax-exempt entity, distributions that we make to exceed $.15 peryou,
including constructive distributions, generally will be subject to tax as
ordinary income to the extent of our current and accumulated earnings and
profits as determined for federal income tax purposes. If the amount we
distribute to you exceeds your allocable share (subjectof current and accumulated
earnings and profits, the excess will be treated as a return of capital to change) andthe
extent of your adjusted basis in your stock, which will reduce your basis in
your stock but will not be first
deducted before determiningsubject to tax. To the numberextent the amount we
distribute to you exceeds both your allocable share of sharescurrent and accumulated
earnings and profits and your adjusted basis, this excess amount will be
treated as a gain from the sale or exchange of a capital asset. Distributions
to our corporate stockholders, whether characterized as ordinary income or as
capital gain, are not eligible for the corporate dividends received deduction.
Distributions that we designate as capital gain dividends generally will be
taxable in your hands as long-term capital gains, to the extent such
distributions do not exceed our actual net capital gain for the taxable year.
In the event that we realize a loss for the taxable year, you will not be
permitted to deduct any share of that loss. Further, if we, or a portion of
our assets, were to be purchased. However,treated as a taxable mortgage pool, any excess
inclusion income that is allocated to you could not be offset by any losses or
other deductions you may have. Future Treasury regulations may require you to
take into account, for purposes of computing your individual alternative
minimum tax liability, some of our tax preference items.
Dividends that we declare during the Boardlast quarter of Directorsa calendar year and
actually pay to you during January of the following taxable year, generally
are treated as if we had paid, and you had received them on December 31 of the
calendar year and not on the date actually paid. In addition, we may elect to
treat other dividends distributed after the close of the taxable year as
having been paid during the taxable year, so long as they meet the
requirements described in the future determineCode, but you will be treated as having received
these dividends in the taxable year in which the distribution is actually
made.
If you sell or otherwise dispose of our stock, you will generally recognize
a capital gain or loss in an amount equal to the difference between the amount
realized and your adjusted basis in the stock, which gain or loss will be
long-term if the stock is held for more than one year. Any loss recognized on
the sale or exchange of stock held for six months or less generally will be
treated as a long-term capital loss to the extent of (1) any long-term capital
gain dividends you receive with respect to the stock and (2) your
proportionate share of any long-term capital gains that we retain (see the
Companydiscussion under the caption Distribution Requirements).
If we fail to qualify as a REIT in any year, distributions we make to you
will pay such
brokerage fees or commissions. The Plan Administratorbe taxable in the same manner discussed above, except that:
. we will effect open market
purchasesnot be allowed to designate any distributions as capital gain
dividends;
. distributions (to the extent they are made out of our current and
sales of sharesaccumulated earnings and profits) will be eligible for the Plan through itselfcorporate
dividends received deduction;
. the excess inclusion income rules will not apply to the stockholders; and
it. you will not receive any share of our tax preference items.
22
In this event, however, we could be subject to substantial federal income
tax liability as a commissionC corporation, and the amount of earnings and cash
available for effecting such transactions. Participantsdistribution to you and other stockholders could be
significantly reduced or eliminated.
Information Reporting and Backup Withholding
For each calendar year, we will incurreport to our domestic stockholders and to
the IRS the amount of distributions that we pay, and the amount of tax (if
any) that we withhold on these distributions. Under the backup withholding
rules, you may be subject to backup withholding tax at a rate of 31% with
respect to distributions paid unless you:
. are a corporation or come within another exempt category and demonstrate
this fact when required; or
. provide a taxpayer identification number, certify as to no brokerage commissions or service charges in connectionloss of
exemption from backup withholding tax and otherwise comply with the
reinvestment of dividends and optional cash purchases when shares of Common
Stock are acquired directly from the Company. The Company will pay all other
costs of administrationapplicable requirements of the Plan. However, Participants that request thatbackup withholding tax rules.
A domestic stockholder may satisfy this requirement by providing us an
appropriately prepared Form W-9. If you do not provide us with your correct
taxpayer identification number, then you may also be subject to penalties
imposed by the Plan Administrator sell allIRS.
Backup withholding tax is not an additional tax. Any amounts withheld under
the backup withholding tax rules will be refunded or any portion of their shares (see Question
28) must pay any related brokerage commissions and applicable stock transfer
taxes.
19
23. WHAT KIND OF REPORTS WILL BE SENT TO PARTICIPANTS IN THE PLAN?
Each Participant in the Plan will receive a statement of his or her account
following each purchase of additional shares. These statements are
Participants' continuing record of the cost of their purchases and should be
retained forcredited against your
United States federal income tax purposes. In addition, Participants will receive
copies of other communications sent to holders ofliability, provided you furnish the Common Stock, including
the Company's annual report to its Stockholders, the notice of annual meeting
and proxy statement in connection with its annual meeting of Stockholders and
Internal Revenue Servicerequired
information for reporting dividends paid.
DIVIDENDS ON FRACTIONS
24. WILL PARTICIPANTS BE CREDITED WITH DIVIDENDS ON FRACTIONS OF SHARES?
Yes.
CERTIFICATES FOR COMMON SHARES
25. WILL CERTIFICATES BE ISSUED FOR SHARES PURCHASED?
No. Common Stock purchased for Participants will be held in the name of the
Plan Administrator or its nominee. No certificates will be issued to
Participants for shares in the Plan unless a Participant submits a written
request to the Plan Administrator or until participation in the Plan is
terminated. At any time,IRS.
Taxation of Tax-Exempt Entities
The discussion under this heading only applies to you if you are a Participant may request the Plan Administrator to
send a certificate for some or all of the whole shares credited to a
Participant's account. This request should be mailedtax-
exempt entity.
Subject to the Plan Administrator
atdiscussion below regarding a pension-held REIT, distributions
received from us or gain realized on the address set forth in the answer to Question 38. Any remaining whole
shares and any fractionssale of shares will remain credited to the Plan account.
Certificates for fractional sharesour stock will not be issuedtaxable
as unrelated business taxable income (UBTI), provided that:
. you have not incurred indebtedness to purchase or hold our stock;
. you do not otherwise use our stock in trade or business unrelated to your
exempt purpose; and
. we, consistent with our present intent, do not hold a residual interest
in a REMIC that gives rise to excess inclusion income as defined under
any circumstances.
26. IN WHOSE NAME WILL CERTIFICATES BE REGISTERED WHEN ISSUED?
Each Plan account is maintained insection 860E of the name in which the related
Participant's certificates were registered at the time of enrollment in the
Plan. Stock certificates for whole shares purchased under the Plan will be
similarly registered when issued upon a Participant's request.Code.
If a
Participant is a Beneficial Owner, such request should be placed through such
Participant's banker, broker or other nominee. See Question 6. A Participant
who wishes to pledge shares credited to such Participant's Plan account must
first withdraw such shares from the account.
WITHDRAWALS AND TERMINATION
27. WHEN MAY PARTICIPANTS WITHDRAW FROM THE PLAN?
Participants may withdraw from the Plan with respect to all or a portion of the shares held in his or her account in the Plan at any time. If the requestour assets were to withdraw is received prior tobe treated as a dividend record date set by the Board of
Directors for determining stockholders of record entitled to receivetaxable mortgage
pool, however, a dividend, the request will be processed on the day following receipt of the
request by the Plan Administrator.
If the request to withdraw is received by the Plan Administrator on or after
a dividend record date, but before payment date, the Plan Administrator, in
its sole discretion, may either pay such dividend in cash or
20
reinvest it in shares for the Participant's account. The request for
withdrawal will then be processed as promptly as possible following such
dividend payment date. All dividends subsequent to such dividend payment date
or Investment Date will be paid in cash unless a stockholder re-enrolls in the
Plan, which may be done at any time. Any optional cash payments which have
been sent to the Plan Administrator prior to a request for withdrawal will
also be invested on the next Investment Date unless a Participant expressly
requests return of that payment in the request for withdrawal, and the request
for withdrawal is received by the Plan Administrator at least two business
days prior to the commencement of the Pricing Period.
28. HOW DOES A PARTICIPANT WITHDRAW FROM THE PLAN?
A Participant who wishes to withdraw from the Plan with respect to all or asubstantial portion of the sharesdividends you receive may be
subject to tax as UBTI.
In addition, a substantial portion of the dividends you receive may
constitute UBTI if we are treated as a "pension-held REIT" and you are a
"qualified pension trust" that holds more than 10% by value of our stock at
any time during a taxable year. For these purposes, a "qualified pension
trust" is any pension or other retirement trust that satisfies the
requirements imposed under section 401(a) of the Code. We will be treated as a
"pension-held REIT" if (1) we would not be a REIT if we had to treat stock
held in hisa qualified pension trust as owned by the trust (instead of as owned
by the trust's multiple beneficiaries) and (2) (a) at least one qualified
pension trust holds more than 25% of our stock by value, or her account(b) one or more
qualified pension trusts (each owning more than 10% of our stock by value)
hold in the Plan must notifyaggregate more than 50% of our stock by value. Assuming compliance
with the Plan Administrator in writing at its addressownership limit provisions set forth in the answerour articles of
incorporation, it is unlikely that pension plans will accumulate sufficient
stock to Question 38. Uponcause us to be treated as a Participant's withdrawal from the Plan or terminationpension-held REIT.
23
If you qualify for exemption under sections 501(c)(7), (c)(9), (c)(17), and
(c)(20) of the PlanCode, then distributions received by you may also constitute
UBTI. We urge you to consult your tax advisors concerning the Company, certificates forapplicable set
aside and reserve requirements.
United States Federal Income Tax Considerations Applicable to Foreign
Stockholders
The discussion under this heading only applies to you if you are not a U.S.
person (hereafter, "foreign stockholder"). A U.S. person is a person who is:
. a citizen or resident of the appropriate number of whole
shares credited to hisUnited States;
. a corporation, partnership, or her accountother entity created or organized in the
United States or under the Plan will be issued. A cash
payment will be made for any fraction of a share.
Upon withdrawal from the Plan, a Participant may also request in writing
that the Plan Administrator sell all or partlaws of the shares creditedUnited States or of any political
subdivision thereof;
. an estate whose income is includible in gross income for United States
Federal income tax purposes regardless of its source; or
. a trust, if (1) a court within the United States is able to his or
her account inexercise
primary supervision over the Plan. The Plan Administrator will sell the shares as
requested within ten business days after processing the request for
withdrawal. The Participant will receive the proceedsadministration of the sale, less any
brokerage feestrust and one or commissions and any applicable stock transfer taxes,
generally within five business daysmore
U.S. persons have authority to control all substantial decisions of the
sale.
29. ARE THERE ANY AUTOMATIC TERMINATION PROVISIONS?
Participationtrust, or (2) the trust was in the Plan will be terminated if the Plan Administrator
receives written notice of the death or adjudicated incompetency of a
Participant, together with satisfactory supporting documentation of the
appointment of a legal representative, at least five business days before the
next Record Date for purchases made through the reinvestment of dividends or
optional cash payments, as applicable. In the event written notice of death or
adjudicated incompetency and such supporting documentation is received by the
Plan Administrator less than five business days before the next Record Date
for purchases made through the reinvestment of dividends or optional cash
payments, as applicable, shares will be purchased for the Participant with the
related cash dividend or optional cash payment and participation in the Plan
will not terminate until after such dividend or payment has been reinvested.
Thereafter, no additional purchase of shares will be made for the
Participant's account and the Participant's shares and any cash dividends paid
thereon will be forwarded to such Participant's legal representative.
OTHER INFORMATION
30. WHAT HAPPENS IF A PARTICIPANT SELLS OR TRANSFERS ALL OF THE SHARES
REGISTERED IN THE PARTICIPANT'S NAME?
If a Participant disposes of all shares registered in his or her name, and
is not shownexistence on August 26, 1996, was treated
as a Record Owner on a dividend record date, the Participant may
be terminated from the Plan as ofdomestic trust prior to such date, and such terminationhas made an election to
continue to be treated as though a withdrawal notice had been received prior to the record date.
31. WHAT HAPPENS IF THE COMPANY DECLARES A DIVIDEND PAYABLE IN SHARES OR
DECLARES A STOCK SPLIT?
Any dividend payable in shares and any additional shares distributed by the
Company in connection with a stock split in respect of shares credited to a
Participant's Plan account will be added to that account. Stock
21
dividends or split shares which are attributable to shares registered in a
Participant's own name and not in his or her Plan account will be mailed
directly to the Participant as in the case of stockholders not participating
in the Plan.
32. HOW WILL SHARES HELD BY THE PLAN ADMINISTRATOR BE VOTED AT MEETINGS OF
STOCKHOLDERS?
If the Participant is a Record Owner, the Participant will receive a proxy
card covering both directly held shares and shares held in the Plan. If the
Participant is a Beneficial Owner, the Participant will receive a proxy
covering shares held in the Plan through his or her broker, bank or other
nominee.
If a proxy is returned properly signed and marked for voting, all the shares
covered by the proxy will be voted as marked. If a proxy is returned properly
signed but no voting instructions are given, all of the Participant's shares
will be voted in accordance with recommendations of the Board of Directors of
the Company, unless applicable laws require otherwise. If the proxy is not
returned, or if it is returned unexecuted or improperly executed, shares
registered in a Participant's name may be voted only by the Participant inU.S. person.
33. WHAT ARE THE RESPONSIBILITIES OF THE COMPANY AND THE PLAN ADMINISTRATOR
UNDER THE PLAN?
The Company and the Plan Administrator will not be liable in administering
the Plan for any act done in good faith or required by applicable law or for
any good faith omission to act including, without limitation, any claim of
liability arising out of failure to terminate a Participant's account upon his
or her death, with respect to the prices at which shares are purchased and/or
the times when such purchases are made or with respect to any fluctuation in
the market value before or after purchase or sale of shares. Notwithstanding
the foregoing, nothing contained in the Plan limits the Company's liability
with respect to alleged violations of federal securities laws.
The Company and the Plan Administrator shall be entitled to rely on
completed forms and the proof of due authority to participate in the Plan,
without further responsibility of investigation or inquiry.
34. MAY THE PLAN BE CHANGED OR DISCONTINUED?
Yes. The Company may suspend, terminate, or amend the Plan at any time.
Notice will be sent to Participants of any suspension or termination, or of
any amendment that alters the Plan terms and conditions, as soon as
practicable after such action by the Company.
The Company may substitute another administrator or agent in place of the
Plan Administrator at any time; Participants will be promptly informed of any
such substitution.
Any questions of interpretation arising under the Plan will be determined by
the Company and any such determination will be final.
35. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATION IN THE PLAN?
The following summary of certain federal income tax considerations regarding
the Plan is based on current law, is for general information only, and is not
tax advice.
This discussion does not purport to deal with all aspects of
taxation that may be relevant to particular investors in light of their
personal investment circumstances, or to certain types of investors subject to
special treatment under the federal income tax laws, including, without
limitation, life insurance companies, certain financial institutions, dealers
in securities or currencies, stockholders
22
holding Common Stock as part ofis only a conversion transaction, as part of a hedge
or hedging transaction, or as a position in a straddle for tax purposes, tax-
exempt organizations, or foreign corporations, foreign partnerships or persons
who are not citizens or residentsbrief summary of the United States. In addition, the
summary belowStates federal tax
consequences that apply to you, which are highly complex, and does not
consider any specific facts or circumstances that may apply to you and your
particular situation. We urge you to consult your tax advisors regarding the
effectUnited States federal tax consequences of acquiring, holding and disposing of
our stock, as well as any tax consequences that may arise under the laws of
any foreign, state, local or other tax laws that may be applicabletaxing jurisdiction.
Distributions
Except for distributions attributable to prospective Participants.
EACH PROSPECTIVE PARTICIPANT IS ADVISED TO CONSULT HIS OR HER OWN TAX
ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER THAT MAY RESULT
FROM PARTICIPATING IN THE PLAN AND DISPOSING OF SHARES ACQUIRED PURSUANT TO
THE PLAN, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES OF SUCH PARTICIPATION AND DISPOSITION AND OF POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.
Dividend Reinvestment. Dividends paid with respect to Common Stock that a
Participant reinvests in Common Stock that is acquired directlygain from the Companydisposition of real
property interests or distributions designated as capital gains dividends,
distributions you receive from us generally will be treated for federal income tax purposes as having been
received by the Participant in the form of a taxable stock distribution. In
that case, an amount equalsubject, to the fair market value onextent of
our earnings and profits, to federal withholding tax at the daterate of purchase30%,
unless reduced or eliminated by an applicable tax treaty or unless the
distributions are treated as effectively connected with your United States
trade or business. If you wish to claim the benefits of the Common Stock acquired directly from the Companyan applicable tax
treaty, you may need to satisfy certification and other requirements, such as
providing Form W-8BEN. If you wish to claim distributions are effectively
connected with your United States trade or business, you may need to satisfy
certification and other requirements such as providing Form W-8ECI.
Distributions you receive that are in excess of our earnings and profits
will be treated as a dividendtax-free return of capital to the extent the Company has current or accumulated earnings and
profits for federal income tax purposes. For federal income tax purposes, the
Company intends to take the position that the fair market value of the shares
acquired directly from the Company with reinvested dividends under the Plan
will be equal to the average of the high and low sale prices of shares on the
related Investment Date.
Alternatively, dividends paid with respect to Common Stock that a
Participant reinvestsyour adjusted
basis in Common Stock through purchases byyour stock. If the Plan
Administrator in the open market will be treated for federal income tax
purposes as having been received by the Participant in the form of a taxable
cash distribution. The amount of the cash distribution plus thealso exceeds your
adjusted basis, this excess amount of any
discount, will be treated as gain from the sale or
exchange of your stock as described below. If we cannot determine at the time
we make a dividend todistribution whether the extent the Company has current
or accumulateddistribution will exceed our earnings and
profits, forthe distribution will be subject to withholding at the same rate as
dividends. These withheld amounts, however, will be refundable or creditable
against your United States federal tax liability if it is subsequently
determined that the distribution was, in fact, in excess of our earnings and
profits. If you receive a dividend that is treated as being effectively
connected with your conduct of a trade or business within the United States,
the dividend will be subject to the United States federal income tax purposes.on net
income that applies to United States persons generally, and may be subject to
the branch profits tax if you are a corporation.
24
Distributions in excessthat we make to you and designate as capital gains dividends,
other than those attributable to the disposition of the Company's current and accumulated earnings
and profitsa United States real
property interest, generally will not be subject to United States federal
income taxation, unless:
. your investment in our stock is effectively connected with your conduct
of a trade or business within the United States; or
. you are a nonresident alien individual who is present in the United
States for 183 days or more in the taxable year, and other requirements
are met.
Distributions that are attributable to a Participantdisposition of United States real
property interests are subject to income and withholding taxes pursuant to the
extentForeign Investment in Real Property Act of 1980 (FIRPTA), and may also be
subject to branch profits tax if you are a corporation that such
distributionsis not entitled to
treaty relief or exemption. However, because we do not exceedexpect to hold assets
that would be treated as United States real property interests as defined by
FIRPTA, the adjusted basisFIRPTA provisions should not apply to investment in our stock.
Gain on Disposition
You generally will not be subject to United States federal income tax on
gain recognized on a sale or other disposition of our stock unless:
. the gain is effectively connected with your conduct of a trade or
business within the United States;
. you are a nonresident alien individual who holds our stock as a capital
asset and are present in the United States for 183 or more days in the
taxable year and other requirements are met; or
. you are subject to tax under the FIRPTA rules discussed below.
Gain that is effectively connected with your conduct of a trade or business
within the United States will be subject to the United States federal income
tax on net income that applies to United States persons generally and may be
subject to the branch profits tax if you are a corporation. However, these
effectively connected gains will generally not be subject to withholding. We
urge you to consult applicable treaties, which may provide for different
rules.
Under FIRPTA, you may be subject to tax on gain recognized from a sale or
other disposition of your stock if we were to both (1) hold United States real
property interests and (2) fail to qualify as a domestically controlled REIT.
A REIT qualifies as a domestically-controlled REIT as long as less than 50% in
value of its shares of beneficial interest are held by foreign persons at all
times during the shorter of (1) the previous five years and (2) the period in
which the REIT is in existence. As mentioned above, we do not expect to hold
any United States real property interests. Furthermore, we will likely qualify
as a domestically controlled REIT, although no assurances can be provided
because our shares are publicly traded.
Information Reporting and Backup Withholding Tax
The information reporting and backup withholding tax requirements (discussed
above) will generally not apply to foreign holders in the case of
distributions treated as (1) dividends subject to the 30% (or lower treaty
rate) withholding tax (discussed above), or (2) capital gain dividends. Also,
as a general matter, backup withholding and information reporting will not
apply to the payment of proceeds from shares sold by or through a foreign
office of a foreign broker. However, in some cases (for example, a sale of
shares through the foreign office of a U.S. broker), information reporting is
required unless the foreign holder certifies under penalty of
25
perjury that it is a foreign holder, or otherwise establishes an exemption. A
foreign stockholder may satisfy this requirement by using an appropriately
prepared Form W-8 BEN.
Federal Estate Taxes
In general, if an individual who is not a citizen or resident (as defined in
the Code) of the Participant's shares. ToUnited States owns (or is treated as owning) our stock at the
extentdate of death, such distributions exceed the adjusted basis of a Participant's
shares, theystock will be included in income as capital gain. In addition, in the event that the Company designates a part or all of the amount so distributed
as a capital gain dividend, such distributions will be taxable to the
Participant as gain (to the extent that they do not exceed the Company's
actual net capital gainindividual's estate for
the taxable year) from the sale or disposition of
a capital asset (provided that the shares have been held as a capital asset).
Depending upon the period of time that the Company held the assets to which
such gains were attributable,United States Federal estate tax purposes, unless an applicable treaty
provides otherwise.
State and upon certain designations, if any, whichLocal Taxes
We and our stockholders may be made by the Company, such gains will be taxable to non-corporate
Participants at a rate of either 20%, 25% or 28%. Participants that are
corporations may, however, be required to treat up to 20% of certain capital
gain dividends as ordinary income. Participants' statements of account will
show the fair market value on the date of purchase of the Common Stock
purchased with reinvested dividends, and a Form 1099-DIV mailed to
Participants at year-end will show total dividend income, the amount of any
return of capital distribution and the amount of any capital gain dividend.
The Internal Revenue Service ("IRS") has ruled in private letter rulings
that brokerage commissions paid by a corporation with respect to open market
purchases on behalf of participants in a dividend reinvestment plan were to be
treated as constructive distributions to such participants. Such constructive
distributions were subject to income taxstate or local taxation in the same manner as distributionsvarious
jurisdictions, including those in which we or they transact business or
reside. The state and includible in the Participants' cost basis of the shares purchased.
Accordingly, in the event the Board of Directors determines that the Company
will pay brokerage
23
commissions with respect to any open market purchases made by the Plan
Administrator, the Company intends to take the position that Participants
received their proportionate amount of such commissions as additional
distributions. While the matter is not free from doubt, the Company intends to
take the position that administrative expenses of the Plan paid by the Company
are not constructive distributions to Participants.
The tax basis of newly issued Common Stock purchased directly from the
Company for a Participant under the Plan by reinvestment of dividends will be
equal to the fair market value of the Common Stock on the relevant Investment
Date. The tax basis of Common Stock purchased in the open market pursuant to
the dividend reinvestment feature of the Plan will be equal to the amount paid
for such shares, plus the amount of any income recognized by the Participant
upon such purchase as a result of any discount or the Company's payment of the
Participant's share of brokerage commissions, if any. The holding period of
Common Stock acquired under the Plan will begin on the day following the
Investment Date.
A Participant in the Plan will not realize any taxable income when the
Participant receives certificates for whole shares of Common Stock credited to
the Participant's account, either upon a Participant's request for such
certificates or upon withdrawal from or termination of the Plan. However, a
Participant will recognize gain or loss when whole shares of Common Stock or
rights applicable to Common Stock acquired under the Plan are sold or
exchanged. A Participant will also recognize gain or loss when the Participant
receives a cash payment for a fractional share of Common Stock credited to the
Participant's account upon withdrawal from or termination of the Plan. The
amount of such gain or loss will be the difference between (i) the amount
received for the Participant's shares or fractional shares of Common Stock or
rights applicable to Common Stock and (ii) the tax basis thereof.
Optional Cash Purchases. To the extent the Company offers Common Stock at a
discount from the fair market value of such shares on the Investment Date, or
pays brokerage commissions with respect to the purchase of such shares,
pursuant to the optional cash purchase feature of the Plan, thelocal tax treatment of such activities is unclear. The Company presently intendsthat applies to take the
position that any such discount or payment of brokerage commissions doesus and our
stockholders may not constitute a distribution from the Company to Participants in the optional
cash payment feature of the Plan. However, it is possible that Participants
will be treated as having received a distribution from the Company upon the
purchase of Common Stock with an optional cash payment, in an amount equalconform to the excess, if any, of the fair market value of the shares on the Investment
Date over the amount of the optional cash payment, plus the amount of
brokerage commissions paid by the Company, if any. The Company may take this
position in future reports to Participants or the I.R.S. Participants are
urged to consult their own tax advisors with respect to the tax treatment of
any such actions. Shares acquired under the optional cash payment feature of
the Plan will have a tax basis equal to the amount of the optional cash
payment plus the income, if any, recognized by the Participant upon such
acquisition.
Participants will recognize gain or loss when shares of Common Stock
acquired pursuant to optional cash purchases are sold or exchanged. The amount
of such gain or loss will be the difference between the amount received for
the Participant's shares and the tax basis thereof.
36. HOW ARE INCOME TAX WITHHOLDING PROVISIONS APPLIED TO STOCKHOLDERS WHO
PARTICIPATE IN THE PLAN?
If a Participant fails to provide certain federal income tax certifications
in the manner required by law, dividends on shares of Common Stock, proceeds
from the sale of fractional shares and proceeds from the sale of shares held
for a Participant's account will be subject to federal income tax withholding
at the rate of 31%. If withholding is required for any reason, the appropriate
amount of tax will be withheld. Certain stockholders (including most
corporations) are, however, exempt from the above withholding requirements.
24
Participants which are foreign stockholders are urgedconsequences discussed
above. Consequently, we urge you to consult theiryour own tax advisors regarding
the effect of state and local tax consequences to them of participation in the Plan.
In general, if a Participant is a foreign stockholder, the appropriate amount
will be withheld and the balance in shares will be credited to such
Participant's account.
37. WHO BEARS THE RISK OF MARKET FLUCTUATIONS IN THE COMPANY'S COMMON STOCK?
A Participant's investment in shares held in the Plan account is no
different from his or her investment in directly held shares. The Participant
bears the risk of any loss and enjoys the benefits of any gain from market
price changes with respect to such shares.
38. WHO SHOULD BE CONTACTED WITH QUESTIONS ABOUT THE PLAN?
All correspondence regarding the Plan should be directed to:
BOSTON EQUISERVE, L.P.
DIVIDEND REINVESTMENT UNIT
P.O. BOX 8040
BOSTON, MASSACHUSETTS 02266-8040
TELEPHONE: (781) 575-3120
Please mention Impac Mortgage Holdings, Inc. and this Plan in all
correspondence.
39. HOW IS THE PLAN INTERPRETED?
Any question of interpretation arising under the Plan will be determined by
the Company and any such determination will be final. The Company may adopt
rules and regulations to facilitate the administration of the Plan. The terms
and conditions of the Plan and its operation will be governed by the laws of
the State of California.
40. WHAT ARE SOME OF THE PARTICIPANT RESPONSIBILITIES UNDER THE PLAN?
Plan Shares are subject to escheat to the state in which the Participant
resides in the event that such shares are deemed, under such state's laws, to
have been abandoned by the Participant. Participants, therefore, should notify
the Plan Administrator promptly in writing of any change of address. Account
statements and other communications to Participants will be addressed to them
at the last address of record provided by Participants to the Plan
Administrator.
Participants will have no right to draw checks or drafts against their Plan
accounts or to instruct the Plan Administrator with respect to any shares of
Common Stock or cash held by the Plan Administrator except as expressly
provided herein.
25
DIVIDENDS
The Company has paid dividends since its incorporation. In order to
accommodate the provisions of this Plan, the Company anticipates that
dividends will be payable on or about the fifteenth business day of January,
April, July and October. However, the actual dates may vary and will be
determined at the discretion of the Board of Directors.
USE OF PROCEEDS
The Company does not know either the number of shares of Common Stock that
will be ultimately sold pursuant to the Plan or the prices at which such
shares will be sold. However, the Company proposes to use the net proceeds
from the sale of newly issued shares of Common Stock for general corporate
purposes.
PLAN OF DISTRIBUTION
Except to the extent the Plan Administrator purchases Common Stock in open
market transactions, the Common Stock acquired under the Plan will be sold
directly by the Company through the Plan. The Company may sell Common Stock to
owners of shares (including brokers or dealers) who, in connection with any
resales of such shares, may be deemed to be underwriters. Such shares,
including shares acquired pursuant to waivers granted with respect to the
optional cash payment feature of the Plan, may be resold in market
transactions (including coverage of short positions) on any national
securities exchange on which shares of Common Stock trade or in privately
negotiated transactions. The Common Stock is currently listed on the American
Stock Exchange. Under certain circumstances, it is expected that a portion of
the shares of Common Stock available for issuance under the Plan will be
issued pursuant to such waivers. The difference between the price such owners
pay to the Company for shares of Common Stock acquired under the Plan, after
deduction of the applicable discount from the Market Price, if any, and the
price at which such shares are resold, may be deemed to constitute
underwriting commissions received by such owners in connection with such
transactions.
Subject to the availability of shares of Common Stock registered for
issuance under the Plan, there is no total maximum number of shares that can
be issued pursuant to the reinvestment of dividends. From time to time,
financial intermediaries may engage in positioning transactions in order to
benefit from the discount from the Market Price of Common Stock acquired
through the reinvestment of dividends under the Plan.
Except with respect to open market purchases of Common Stock, the Company
will pay any and all brokerage commissions and related expenses incurred in
connection with purchases of Common Stock under the Plan. Upon withdrawal by a
Participant from the Plan by the sale of Common Stock held under the Plan, the
Participant will receive the proceeds of such sale less any related brokerage
commissions and any applicable transfer taxes.
Common Stock may not be available under the Plan in all states. This
Prospectus does not constitute an offer to sell, or a solicitation of an offer
to buy, any Common Stock or other securities in any state or any other
jurisdiction to any person to whom it is unlawful to make such offer in such
jurisdiction.
26
laws.
LEGAL OPINIONMATTERS
The validity of the securitiesissuance of the shares offered hereby has beenin this prospectus will
be passed upon for us by Freshman, Marantz, Orlanski, CooperKirkpatrick & Klein, Beverly Hills, California,
counsel to the CompanyLockhart LLP, Los Angeles, California.
Certain legal matters described under "Material Federal Income Tax
Consequences" and certain legal matters with respect to Maryland law will be passed
upon for us by Ballard Spahr Andrews & Ingersoll,McKee Nelson LLP, Baltimore, Maryland.Washington, D.C.
EXPERTS
The consolidated financial statements of Impac Mortgage Holdings, Inc. and
of Impac Funding Corporation incorporatedCorp. as of December 31, 2000 and 1999, and for each of the
years in the Prospectusthree-year period ending December 31, 2000, have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG LLP, independent auditors, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
26
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document it files at the Securities and Exchange Commission's public
reference room at 450 Fifth Street, N.W., in Washington, D.C. 20549. Please
call the Securities and Exchange Commission at 1-800-SEC-0330 for further
information on the operation of the public reference room. In addition, the
Securities and Exchange Commission maintains an Internet site that contains
our reports, proxy and information statements and other information at
http://www.sec.gov.
The Securities and Exchange Commission allows us to "incorporate by
reference" the Company'sinformation it files with it, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is part of this prospectus, and later
information that we file with the Securities and Exchange Commission will
automatically update and supersede this information. We incorporate by
reference the documents listed below. We also incorporate by reference any
future filings made with the Securities and Exchange Commission under Sections
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934. This
prospectus is part of a registration statement that Impac Mortgage Holdings
has filed with the Securities and Exchange Commission.
. Impac Mortgage Holding's Annual Report on Form 10-K for the year ended
December 31, as amended, 1997
have been so incorporated by reference therein in reliance upon the reports of
KPMG Peat Marwick LLP, independent auditors, and upon the authority of said
firm as experts in auditing and accounting.
INDEMNIFICATION
The Company's Charter contains a provision which limits the liability of its
directors and officers to the Company and its stockholders for money damages
except for liability resulting from (a) actual receipt of an improper benefit
or profit in money, property or services or (b) active and deliberate
dishonesty established by a final judgment as being material to the cause of
action. The Company's Charter and Bylaws also provide that the Company shall
indemnify directors and officers under certain circumstances for liabilities
and expenses incurred by reason of their actions in such capacities. In
addition, the Company maintains an insurance policy that indemnifies directors
and officers against certain liabilities.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in
the opinion of the Commission such indemnification is against public policy as
expressed in said Act and is therefore unenforceable.
27
GLOSSARY
"AMEX" means the American Stock Exchange.
"Beneficial Owners" means stockholders who beneficially own shares of Common
Stock that are registered in a name other than their own (for example, in the
name of a broker, bank or other nominee).
"B&N Form" means a Broker and Nominee form.
"business day" means any day other than Saturday, Sunday or legal holiday on
which the AMEX is closed or a day on which the Plan Administrator is
authorized or obligated by law to close.
"Commission" means2000 filed with the Securities and Exchange Commission.
"Common Stock" meansCommission on
March 30, 2001.
. Impac Mortgage Holdings's Quarterly Report on Form 10-Q for the common stock, $.01 par value, ofquarter
ended March 31, 2001 filed with the Company.
"Company" meansSecurities and Exchange Commission on
May 15, 2001.
. Impac Mortgage Holding's Current Reports on Form 8-K filed with the SEC
on June 1, 2001, March 30, 2001, March 5, 2001 and January 19, 2001.
. Impac Mortgage Holdings Inc.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"IRS" means Internal Revenue Service.
"Investment Date" means, with respect to Common Stock acquired directly from
the Company andDefinitive Proxy Statement dated June 1, 2001
relating to the 2001 Annual Meeting of Stockholders to be held on July
24, 2001.
You may request a dividend reinvestment, the dividend payment date
declaredcopy of these filings, at no cost, by the Board of Directors (unless such date is not a business day in
which case it is the first business day immediately thereafter) or, in the
case of open market purchases, no later than thirty business days following
the dividend payment date; and with respect to Common Stock acquired directly
from the Company and relating to an optional cash payment, generally on or
about the twenty-ninth day of each month; or, in the case of open market
purchases, no later than thirty business days following the Investment Date.
In no event, however, will the Investment Date relating to dividend
reinvestments be less than ten days from the Investment Date relating to
optional cash payments.
"Market Price" means, with respect to Common Stock acquired directly from
the Company and relating to a dividend reinvestment, the average of the high
and low sales prices, computed to three decimal places, of the Common Stock on
the AMEX on the Investment Date, or if no trading occurs in the Common Stock
on the Investment Date, the average of the high and low sales prices for the
first trading day immediately preceding the Investment Date for which trades
are reported. With respect to dividend reinvestments which will be reinvested
in Common Stock purchased in the open market, "Market Price" shall mean the
weighted average of the actual prices paid, computed to three decimal places,
for all of the Common Stock purchased by the Plan Administrator with all
Participants' reinvested dividends for the related quarter. With respect to
Common Stock acquired directly from the Company and relating to optional cash
payments, "Market Price" shall mean the average of the high and low sales
prices, computed to three decimal places, of the Common Stock as reported on
the AMEX during the Pricing Period. With respect to optional cash payments
which will be reinvested in Common Stock purchased in the open market, "Market
Price" shall mean the weighted average of the actual prices paid, computed to
three decimal places, for all of the Common Stock purchased by the Plan
Administrator with all Participants' optional cash payments for the related
month.
"Participant" means an eligible holder of Common Stock who wishes to
participate in the Plan.
28
"Participating Shares" means shares of Common Stock owned by a Participant
on the applicable record date as to which such Participant has directed the
Company to pay the related cash dividends to the Plan Administrator.
"Plan" means the Impac Mortgage Holdings, Inc. Dividend Reinvestment and
Stock Purchase Plan which amended and restated the Previous Plan.
"Plan Administrator" means a plan administrator that administers the Plan,
keeps records, sends statements of account to each Participant and performs
other duties related to the Plan. Boston Equiserve, L.P. currently serves as
Plan Administrator of the Plan.
"Plan Shares" means all whole and fractional shares of Common Stock credited
to a Participant's Plan account.
"Previous Plan" means the Impac Mortgage Holdings, Inc. Dividend
Reinvestment and Stock Purchase Plan as approved by the Company's Board of
Directors on October 21, 1997.
"Pricing Period" means the period encompassing the three Trading Days
preceding the relevant optional cash payment Investment Date.
"REIT" means real estate investment trust.
"Record Date" means, with respect to reinvestments of dividends, the record
date declared by the Board of Directors for such dividend; and with respect to
optional cash payments, two business days prior to the commencement of the
Pricing Period.
"Record Owners" means stockholders who own shares of Common Stock in their
own names.
"Requests for Waiver" means a written request from a Participant to make
optional cash payments in excess of $10,000.
"Securities Act" means the Securities Act of 1933, as amended.
"Trading Day" means a day on which trades in the Common Stock are reported
on the AMEX.
"Waiver Discount" means the discount from the Market Price applicable to
optional cash payments made pursuant to Requests for Waiver. Such discount
will vary between 0% and 5% of the Market Price and may vary each month.
29
SCHEDULE A
OPTIONAL CASH PAYMENTS
The following table sets forth the applicable dates for optional cash payments
for 1998. The Company will typically set these dates two months before the end
of each year and they will be available fromwriting our Investor
Relations Department us at (714) 438-
2100 on the 1st of December of each year.
WAIVER
DISCOUNT OPTIONAL CASH PRICING PERIOD INVESTMENT
SET DATE RECORD DATE PAYMENT DUE DATE COMMENCE DATE DATE
--------- ------------------ ------------------ ------------------ ------------------
September 15, 1998 September 22, 1998 September 23, 1998 September 24, 1998 September 29, 1998
October 15, 1998 October 22, 1998 October 23, 1998 October 26, 1998 October 29, 1998
November 12, 1998 November 19, 1998 November 20, 1998 November 23, 1998 November 30, 1998
December 14, 1998 December 21, 1998 December 22, 1998 December 23, 1998 December 29, 1998
January 15, 1999 January 22, 1999 January 25, 1999 January 26, 1999 January 29, 1999
February 11, 1999 February 18, 1999 February 22, 1999 February 23, 1999 February 26, 1999
March 12, 1999 March 19, 1999 March 23, 1999 March 24, 1999 March 29, 1999
April 14, 1999 April 21, 1999 April 23, 1999 April 26, 1999 April 29, 1999
May 13, 1999 May 20, 1999 May 24, 1999 May 25, 1999 May 28, 1999
June 14, 1999 June 21, 1999 June 23, 1999 June 24, 1999 June 29, 1999
July 14, 1999 July 21, 1999 July 23, 1999 July 26, 1999 July 29, 1999
August 13, 1999 August 20, 1999 August 24, 1999 August 25, 1999 August 30, 1999
September 14, 1999 September 21, 1999 September 23, 1999 September 24, 1999 September 29, 1999
October 14, 1999 October 21, 1999 October 25, 1999 October 26, 1999 October 29, 1999
November 11, 1999 November 18, 1999 November 22, 1999 November 23, 1999 November 29, 1999
December 13, 1999 December 20, 1999 December 22, 1999 December 23, 1999 December 29, 1999
SUMMARY DATE INFORMATION
. The Investment Date is, with respect to Common Stock acquired directly from
the Company and relating to a dividend reinvestment, the dividend payment
date declaredfollowing address: 1401 Dove Street, Suite 100,
Newport Beach, CA 92660, or by the Board of Directors (unless such date is not a business
day in which case it is the first business day immediately thereafter) or,
in the case of open market purchases, no later than thirty business days
following the dividend payment date; and with respect to Common Stock
acquired directly from the Company and relating to an optional cash payment,
generally on or about the twenty-ninth day of each month; or, in the case of
open market purchases, no later than the thirty business days following the
Investment Date. In no event, however, will the Investment Date relating to
dividend reinvestments be less than ten days from the Investment Date
relating to optional cash payments.
. The Pricing Period for optional cash payments which are invested in Common
Stock acquired directly from the Company is the three Trading Days preceding
the relevant Investment Date.
. Optional cash payments must be received by the Plan Administrator by the end
of the business day immediately preceding the commencement of the relevant
Pricing Period.
. The Record Date for dividends is set by the Board of Directors. The Record
Date for optional cash payments is two business days prior to the related
Pricing Period.
. The Waiver Discount is set five business days prior to the applicable Record
Date.
30calling (949) 475-3700.
27
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEMItem 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION:
Registration fee................................................... $ 9,763.86
Printing expenses.................................................. $37,500.00*
Accounting fees and expenses....................................... $ 3,000.00*
Legal fees and expenses............................................ $20,000.00*
Blue sky fees and expenses......................................... $ 1,500.00*
Miscellaneous expenses............................................. $ 3,236.14*
----------
TOTAL............................................................ $75,000.00
==========
- --------
*Estimated
ITEMOther Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses payable by the
Registrant in connection with the sale of the common stock being registered
hereby, other than underwriting commissions and discounts, all of which are
estimated except for the Securities and Exchange Commission filing fees.
Item Amount
---- ------
Securities and Exchange Commission registration fee 3,539
Printing and engraving expenses 10,000
Legal fees and expenses 20,000
Accounting fees and expenses 10,000
Miscellaneous expenses 7,500
---------------
Total $51,039.00
===============
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.Indemnification of Directors and Officers.
The Maryland General Corporation Law, as amended from time to time, ("MGCL")
permits a Maryland corporation to include in its charter a provision limiting
the liability of its directors and officers to the corporation and its
stockholders for money damages except for liability resulting from (a) actual
receipt of an improper benefit or profit in money, property or services or (b)
active and deliberate dishonesty established by a final judgment as being
material to the cause of action. The Charter of the CompanyRegistrant's charter contains such a
provision which eliminates such liability to the maximum extent permitted by
Maryland law.
The Charter of the CompanyRegistrant's charter authorizes it, to the maximum extent permitted
by Maryland law, to obligate itself to indemnify and to pay or reimburse
reasonable expenses in advance of final disposition of a proceeding to (1) any
present or former Directordirector or officer or (2) any individual who, while a
Directordirector of the CompanyRegistrant and at theour request, of the Company, serves or has served another
corporation, real estate investment trust partnership, joint venture, trust,
employee benefit plan or any other enterprise as a director, officer, partner or
trustee of such corporation, real estate investment trust partnership, joint
venture, trust, employee benefit plan or other enterprise from and against any
claim or liability to which such person may become subject or which such person
may incur by reason of his status as a present or former Directordirector or officer of
the Company. The Bylaws of the CompanyRegistrant. Our bylaws obligate it,us, to the maximum extent permitted by Maryland
law, to indemnify and to pay or reimburse reasonable expenses in advance of
final disposition of a proceeding to (1) any present or former Directordirector or
officer who is made a party to the proceeding by reason of his service in that
capacity or (2) any individual who, while a Directordirector of the CompanyRegistrant and at theour
request, of the
Company, serves or has served another corporation, real estate investment trust
partnership, joint venture, trust, employee benefit plan or any other enterprise
as a director, officer, partner or trustee of such corporation, real estate
investment trust partnership, joint venture, trust, employee benefit plan or
other enterprise and who is
II-1
made a party to the proceeding by reason of his service in that capacity. The
Chartercharter and Bylawsbylaws of the Registrant also permit the
Companyit to indemnify and advance
expenses to any person who served a predecessor of the CompanyRegistrant in any of the
capacities described above and to any employeeof our employees or agent of the Companyagents or a
predecessor of the Company.Registrant.
The MGCLMaryland General Corporation Law requires a corporation (unless
its charter provides otherwise, which the Company's Charterour charter does not) to indemnify a
director or officer who has been successful, on the merits or otherwise, in the
defense of any proceeding to which he is made a party by reason of his service
in that capacity. The MGCLMaryland law permits a
II-1
corporation to indemnify its present
and former directors and officers, among others, against judgments, penalties,
fines, settlements and reasonable expenses actually incurred by them in
connection with any proceeding to which they may be made a party by reason of
their service in those or other capacities unless it is established that (1) the
act or omission of the director or officer was material to the matter giving
rise to the proceeding and (i) was committed in bad faith or (ii) was the result
of active and deliberate dishonesty, (2) the director or officer actually
received an improper personal benefit in money, property or services or (3) in
the case of any criminal proceeding, the director or officer had reasonable
cause to believe that the act or omission was unlawful. However, under the MGCL,Maryland
law, a Maryland corporation may not indemnify for an adverse judgment in a suit
by or in the right of the corporation or for a judgment of liability on the
basis that personal benefit was improperly received, unless in either case a
court orders indemnification and then only for expenses. In addition, the
MGCLMaryland law permits a corporation to advance reasonable expenses to a director
or officer upon the corporation's receipt of (1) a written affirmation by the
director or officer of his good faith belief that he has met the standard of
conduct necessary for indemnification by the corporation and (2) a written
undertaking by him or on his behalf to repay the amount paid or reimbursed by
the corporation if it shall ultimately be determined that the standard of
conduct was not met.
In addition, the Registrant has entered into an Indemnity Agreement
(Exhibit 10.4 of its Registration Statement on Form S-11 (File No. 33-96670) and
Amendments No. 1, 2 and 3 filed with the Securities and Exchange Commission on
September 7, 1995, October 23, 1995, October 30, 1995 and November 8, 1995,
respectively) with its officers and Directors.
ITEMdirectors.
Item 16. EXHIBITS.
4. --Dividend Reinvestment and Stock Purchase Plan (included in the
Prospectus)
5.1+ --Opinion of Freshman, Marantz, Orlanski, Cooper & Klein
5.2+ --Opinion of Ballard Spahr Andrews & Ingersoll, LLP
23.1 --Consent of KPMG Peat Marwick LLP regarding the Registrant
23.2 --Consent of KPMG Peat Marwick LLP regarding Impac Funding Corporation
23.3+ --Consent of Freshman, Marantz, Orlanski, Cooper & Klein (included in
Exhibit 5.1)
23.4+ --Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in Exhibit
5.2)
24.1+ --Power of Attorney of Certain Officers and Directors (includedExhibits
3.1 Charter of the Registrant (incorporated by reference to the
corresponding exhibit number to the Registrant's Registration
Statement on
Signature Page)
99.1+ --Form of Letter to Stockholders with respect to Dividend Reinvestment
and Stock Purchase Plan
99.2 --Authorization Form and Broker and Nominee Form
S-11, as amended (File No. 33-96670), filed
with the Securities and Exchange Commission on September 7, 1995)
3.1(a) Certificate of correction of the Registrant (incorporated by
reference to exhibit 3.1(a) of the Registrant's 10-K for the year
ended December 31, 1998)
3.1(b) Articles of Amendment of the Registrant (incorporated by
reference to exhibit 3.1(b) of the Registrant's 10-K for the year
ended December 31, 1998)
3.1(c) Articles of Amendment for change of name to charter of the
Registrant (incorporated by reference to exhibit number 3.1(a) of
the Registrant's Current Report on Form 8-K, filed February 11,
1998)
II-2
3.1(d) Articles Supplementary and Certificate of Correction for Series A
Junior Participating Preferred Stock of the Registrant
(incorporated by reference to exhibit 3.1(d) of the Registrant's
10-K for the year ended December 31, 1998)
3.1(e) Articles Supplementary for Series B 10.5% Cumulative Convertible
Preferred Stock of the Registrant (incorporated by reference to
exhibit 3.1(b) of the Registrant's Current Report on Form 8-K,
filed December 23, 1998)
3.1(f) Articles Supplementary for Series C 10.5% Cumulative Convertible
Preferred Stock of the Registrant (incorporated by reference to
the corresponding exhibit number of the Registrant's Quarterly
Report on Form 10-Q for the period ending September 30, 2000)
3.1(g) Certificate of Correction for Series C Preferred Stock of the
Registrant (incorporated by reference to the corresponding
exhibit number of the Registrant's Quarterly Report on Form 10-Q
for the period ending September 30, 2000)
3.2 Bylaws of the Registrant, as amended and restated (incorporated
by reference to the corresponding exhibit number of the
Registrant's Quarterly Report on Form 10-Q for the period ending
March 31, 1998)
4 Form of Common Stock certificate (incorporated by reference to
Exhibit 4.1 of Registrant's Registration Statement of Form S-11
as amended (File No. 33-96670), filed with the Securities and
Exchange Commission on September 7, 1995)
5.1* Opinion of Kirkpatrick & Lockhart LLP as to the validity of the
securities being registered
5.2* Opinion of McKee Nelson LLP as to the validity of the securities
being registered
8* Opinion of McKee Nelson LLP as to tax matters
23.1* Consent of KPMG LLP regarding Impac Mortgage Holdings, Inc.
23.2* Consent of KPMG LLP regarding Impac Funding Corporation
23.3* Consent of Kirkpatrick & Lockhart LLP (contained in Exhibit 5.1)
23.4* Consent of McKee Nelson LLP (contained in Exhibit 5.2)
23.5* Consent of McKee Nelson LLP (contained in Exhibit 8)
24* Power of Attorney (contained on Signature page)
- --------
+------------
* Previously filed
ITEMItem 17. UNDERTAKINGS.Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To(a) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) ToAct;
(b) to reflect in the prospectus any facts or events arising
after the effective date of thethis Registration Statement (or the most recent
post-
effectivepost-effective amendment thereof)hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in thethis Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high andend of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission II-2
pursuant to Rule 424(b), if in the aggregate, the
changes in volume and price represent no more than 20 percenta 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective Registration Statement;
(iii) Toregistration statement.
II-3
(c) to include any material information with respect to the
plan of distribution not previously disclosed in thethis Registration Statement or
any material change to such information in thethis Registration Statement;Statement.
provided, however, that paragraphs (1)(i)the undertakings set forth in paragraph (a) and (1)(ii) do(b)
above shall not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") that are incorporated by reference in
this Registration Statement;Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new Registration Statementregistration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; andthereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act of 1933 shall be deemed to be part of this Registration
Statement as of the time it was declared effective. For the purpose of
determining any liability under the Securities Act of 1933, each post-effective
that contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant
Certifiesregistrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1
to the Registration
Statement to be signed on its behalf by the Undersigned,undersigned, thereunto duly
authorized, in the City of Santa Ana Heights,Newport Beach, State of California, on September 4, 1998.the 31/st/ day
of July, 2001.
IMPAC MORTGAGE HOLDINGS, INC.
By: /s/ RICHARD J. JOHNSON
-----------------------------
Richard J. Johnson
------------------------------------
Richard J. JohnsonChief Financial Officer and
Executive Vice President
Chief Financial Officer,
TreasurerPursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and Secretary
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.on the dates indicated.
SIGNATURE TITLE DATE
---------Names Title
Date
- ---- -----
----
/S/ * Chairman of the Board and September 4, 1998
____________________________________ Chief
Executive Officer
----------------------- (Principal Executive Officer)
July 31, 2001
Joseph R. Tomkinson
/S/ Richard J. JOHNSON Chief Financial Officer and
Executive Vice President
------------------------- (Principal ExecutiveAccounting and
Financial Officer) /s/July 31, 2001
Richard J. Johnson
Chief Financial Officer September 4, 1998
____________________________________ (Principal Financial and
Richard J. Johnson Accounting Officer)/S/ *
-------------------------
William S. Ashmore Director
September 4, 1998
____________________________________
H. Wayne SnavelyJuly 31, 2001
/S/ *
Director September 4, 1998
____________________________________-------------------------
James Walsh Director
July 31, 2001
/S/ *
-----------------------
Frank P. Filipps Director
September 4, 1998
____________________________________
Frank FilippsJuly 31, 2001
/S/ *
Director September 4, 1998
____________________________________----------------------
Stephan R. Peers Director
July 31, 2001
/S/ *
---------------------
William E. Rose Director
September 4, 1998
____________________________________
William S. AshmoreJuly 31, 2001
/S/ *
---------------------
Leigh J. Abrams Director
July 31, 2001
*By:* By: /s/ Richard J. Johnson
-------------------------------------------------
Richard J. Johnson
Attorney-in-fact
II-4
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT
------- -------
4. --Dividend Reinvestment and Stock Purchase Plan (included in the
Prospectus)
5.1+ --Opinion of Freshman, Marantz, Orlanski, Cooper & Klein
5.2+ --Opinion of Ballard Spahr Andrews & Ingersoll, LLP
23.1 --Consent of KPMG Peat Marwick LLP regarding the Registrant
23.2 --Consent of KPMG Peat Marwick LLP regarding Impac Funding Corporation
23.3+ --Consent of Freshman, Marantz, Orlanski, Cooper & Klein (included in
Exhibit 5.1)
23.4+ --Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in
Exhibit 5.2)
24.1+ --Power of Attorney of Certain Officers and Directors (included on
Signature Page)
99.1+ --Form of Letter to Stockholders with respect to Dividend Reinvestment
and Stock Purchase Plan
99.2 --Authorization Form and Broker and Nominee Form
- --------
+ Previously filed.II-5