-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QL7wh2iUydFi/Xny5Bgb7k6gSmPmUV76+w9yeK9T1YfLEY5DrrKBXXTzY7t5/o9F 9ugwvItB0krguVSiEc5TPA== /in/edgar/work/0000950123-00-009390/0000950123-00-009390.txt : 20001016 0000950123-00-009390.hdr.sgml : 20001016 ACCESSION NUMBER: 0000950123-00-009390 CONFORMED SUBMISSION TYPE: SC 14D9 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20001013 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: IMPAC COMMERCIAL HOLDINGS INC CENTRAL INDEX KEY: 0001036615 STANDARD INDUSTRIAL CLASSIFICATION: [6798 ] IRS NUMBER: 330745075 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9 SEC ACT: SEC FILE NUMBER: 005-51447 FILM NUMBER: 740179 BUSINESS ADDRESS: STREET 1: 1301 AVENUE OF AMERICAS STREET 2: 42ND FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127986100 MAIL ADDRESS: STREET 1: 1301 AVENUE OF AMERICAS STREET 2: 42ND FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: IMH COMMERCIAL HOLDINGS INC DATE OF NAME CHANGE: 19970728 FORMER COMPANY: FORMER CONFORMED NAME: IMPERIAL CREDIT COMMERCIAL HOLDINGS INC DATE OF NAME CHANGE: 19970728 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: IMPAC COMMERCIAL HOLDINGS INC CENTRAL INDEX KEY: 0001036615 STANDARD INDUSTRIAL CLASSIFICATION: [6798 ] IRS NUMBER: 330745075 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9 BUSINESS ADDRESS: STREET 1: 1301 AVENUE OF AMERICAS STREET 2: 42ND FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127986100 MAIL ADDRESS: STREET 1: 1301 AVENUE OF AMERICAS STREET 2: 42ND FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: IMH COMMERCIAL HOLDINGS INC DATE OF NAME CHANGE: 19970728 FORMER COMPANY: FORMER CONFORMED NAME: IMPERIAL CREDIT COMMERCIAL HOLDINGS INC DATE OF NAME CHANGE: 19970728 SC 14D9 1 y41310sc14d9.txt IMPAC COMMERCIAL HOLDINGS, INC./IMPAC COMMERCIAL 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 14D-9 (RULE 14d-101) SOLICITATION/RECOMMENDATION STATEMENT UNDER SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ IMPAC COMMERCIAL HOLDINGS, INC. (NAME OF SUBJECT COMPANY) IMPAC COMMERCIAL HOLDINGS, INC. (NAME OF PERSON(S) FILING STATEMENT) COMMON STOCK, PAR VALUE $0.01 PER SHARE (TITLE OF CLASS OF SECURITIES) 45254R 10 8 (CUSIP NUMBER OF CLASS OF SECURITIES) RANDAL A. NARDONE IMPAC COMMERCIAL HOLDINGS, INC. C/O FIC MANAGEMENT INC. 1301 AVENUE OF THE AMERICAS NEW YORK, NY 10019 (212) 798-6100 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT) ------------------------ COPIES TO: J. GREGORY MILMOE, ESQ. CHRISTOPHER E. MANNO, ESQ. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP WILLKIE FARR & GALLAGHER FOUR TIMES SQUARE 787 SEVENTH AVENUE NEW YORK, NEW YORK 10036 NEW YORK, NEW YORK 10019 TELEPHONE: (212) 735-3000 TELEPHONE: (212) 728-8000 TELECOPIER: (212) 735-2000 TELECOPIER: (212) 728-8111
[ ] Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 ITEM 1. SUBJECT COMPANY INFORMATION (a) The name of the subject company to which this Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9") relates is Impac Commercial Holdings, Inc., a Maryland corporation (the "Company"). The address of the principal executive offices of the Company is 1301 Avenue of the Americas, New York, NY 10019. The telephone number of the principal executive offices of the Company is (212) 798-6100. (b) The title of the class of equity securities to which this Schedule 14D-9 relates is common stock, par value $0.01 per share. As of October 4, 2000, there were 8,040,812 shares of Company common stock outstanding (on a fully diluted basis assuming conversion of all options exercisable within 60 days and the conversion of all shares of the Company's Series B 8.5% Cumulative Convertible Preferred Stock). ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON (a) The name, address and telephone number of the Company, which is the person filing the Schedule 14D-9, are set forth in Item 1 above. (d) This Statement relates to a tender offer by Fortress Impac Acquisition Corp., a Maryland corporation ("Purchaser") and its affiliates, disclosed in a tender offer statement on Schedule TO (the "Schedule TO") dated October 13, 2000, to purchase any and all outstanding shares of common stock of the Company (the "Shares") at a price of $7.55 per Share, net to the seller in cash, without interest, less any amounts required to be withheld and paid to governmental entities (the "Offer Price"), upon the terms and subject to the conditions set forth in the Offer to Purchase dated October 13, 2000 (the "Offer to Purchase"), a copy of which is attached as Exhibit (a)(1) to the Schedule TO, which is incorporated by reference herein, and the related Letter of Transmittal, a copy of which is attached as Exhibit (a)(2) to the Schedule TO (which, as may be amended from time to time, together constitute the "Offer"). The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of October 6, 2000 (the "Merger Agreement"), between the Company, Fortress Investment Corp. ("FIC") and Purchaser. The Merger Agreement provides that, among other things, as promptly as practicable after the purchase of Shares pursuant to the Offer and the satisfaction or waiver, where appropriate, of other conditions set forth in the Merger Agreement, Purchaser will be merged with and into the Company (the "Merger"), with the Company continuing as the surviving corporation. The Merger Agreement further provides that those Shares that are not acquired in the Offer will be converted into the right to receive $7.55 per Share in cash in the Merger. A copy of the Merger Agreement is attached hereto as Exhibit (e)(1) and is incorporated by reference herein. According to the Schedule TO, the address of the principle executive offices of FIC and Purchaser is 1301 Avenue of the Americas, New York, NY 10019. ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS For a description of certain contracts, agreements, arrangements or understandings and any actual or potential conflicts of interests between the Company or its affiliates and (i) the Company's executive officers, directors or affiliates, or (ii) Purchaser or its respective executive officers, directors or affiliates, see "SPECIAL FACTORS -- Interests of Certain Persons in the Offer and Merger" in the Offer to Purchase which is incorporated by reference herein. A summary of the material provisions of the Merger Agreement is included in "SPECIAL FACTORS -- The Merger Agreement" in the Offer to Purchase, which is incorporated by reference herein. The summary of the Merger Agreement contained in the Offer to Purchase is qualified in its entirety by reference to the Merger Agreement. ITEM 4. THE SOLICITATION OR RECOMMENDATION (a) Recommendation of the Board of Directors. At a meeting held on October 6, 2000, the Board of Directors of the Company (the "Company's Board"), after receiving the unanimous recommendation of the 1 3 special committee of independent directors of the Company's Board, consisting entirely of directors not affiliated with the Company's management, FIC or Purchaser (the "Independent Committee"), unanimously approved the Merger Agreement and the transactions completed thereby, including the Offer and the Merger, and determined that the transactions contemplated by the Merger Agreement, including the Offer and the Merger, are advisable, fair to and in the best interests of the Company's stockholders (other than Purchaser and its affiliates). The Company's Board unanimously recommends that the stockholders accept the Offer and tender their Shares pursuant to the Offer. A letter to the stockholders communicating the Company's Board's unanimous recommendation and a press release announcing the commencement of the Offer are filed herewith as Exhibits (a)(3) and (a)(4), respectively, and are incorporated by reference herein. (b) Reasons. Independent Committee. In evaluating the Merger Agreement, the Offer and the Merger, the Independent Committee relied upon its knowledge of the business, financial condition and prospects of the Company as well as the advice of its financial and legal advisors. In determining that the Independent Committee would recommend the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, to the Company's Board, the Independent Committee considered a number of factors, including the following: (i) Financial and Business Information. The Independent Committee considered the information with regard to the financial condition, results of operations, competitive position, business and prospects of the Company, current economic and market conditions (including current conditions in the industry in which the Company is engaged) and the estimated liquidation value of the Company. (ii) Market Price and Premium. The Independent Committee considered the historical market prices and recent trading activity of the Company's common stock with a particular emphasis on the relationship between the $7.55 per Share amount and the trading history of the Company's common stock. In particular, the Independent Committee noted that the $7.55 per Share amount represented a premium of approximately 20.8% over the $6.25 per Share closing price on the American Stock Exchange on October 6, 2000, prior to the announcement of the Merger Agreement, a premium of approximately 31.3% over the $5.75 per Share price of the Company's self tender in May 2000, which was oversubscribed, and a premium of approximately 37.3% over the $5.49 per Share average trading price during the twelve months ended September 29, 2000. (iii) Alternatives to the Merger. The Independent Committee considered possible alternatives to the Offer and the Merger, including continuing to operate the Company as a publicly-held entity and assuming the risks and costs associated therewith, including, the Company's inability to raise capital to fund future growth in a manner that would not be dilutive to stockholders and the costs of continuing to manage the Company and maintain compliance with the Company's obligations as a public company. The Independent Committee discussed that the Company had already implemented its business plan involving the liquidation of certain non-core assets and the reinvestment of the proceeds in investment grade commercial mortgage backed securities and the lack of positive effect of such activities on the Company's stock price. The Independent Committee also considered a liquidation of the assets of the Company, but concluded that the relative illiquidity of certain of the Company's assets and the expenses and transaction costs associated therewith would not result in greater value to the stockholders than the Offer and the Merger. (iv) Recent Discussions Regarding a Sale of the Company. The Independent Committee considered the discussions that the Company has had with other potential strategic acquirors regarding a possible sale of the Company and the absence of viable potential merger candidates. (v) Arm's-Length Negotiations. The Independent Committee considered the fact that the Merger Agreement and the transactions contemplated thereby were the product of arms-length negotiations 2 4 between Purchaser and the Independent Committee (and their respective advisors), none of whose members were employed by or affiliated with the Company (except in their capacities as directors) or FIC or would have any equity interest in the Company following the Merger. (vi) Offer Price and Merger Consideration. The Independent Committee concluded, based on its negotiations with FIC and Purchaser, that the Offer Price represented the highest price that Purchaser would be willing to pay to acquire the Shares. This determination was the result of the Independent Committee's negotiations with Purchaser. (vii) Fairness Opinion. The Independent Committee considered the financial presentation of Bear, Stearns & Co. Inc. ("Bear Stearns") and Bear Stearns oral opinion delivered at the October 5, 2000 meeting of the Independent Committee (subsequently followed by delivery of a written opinion dated October 6, 2000 (the "Fairness Opinion"), the date that the Merger Agreement was executed and delivered) that, as of the date of such written opinion and based upon and subject to the assumptions, factors and limitations set forth therein, the per Share amount was fair, from a financial point of view, to the Company's stockholders (other than Purchaser and its affiliates). A COPY OF BEAR STEARNS'S WRITTEN OPINION SETTING FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY BEAR STEARNS IS ATTACHED AS SCHEDULE I TO THIS SCHEDULE 14D-9 AND IS INCORPORATED BY REFERENCE HEREIN. STOCKHOLDERS ARE URGED TO, AND SHOULD, READ THE OPINION OF BEAR STEARNS CAREFULLY AND IN ITS ENTIRETY (SEE "SCHEDULE I -- OPINION OF BEAR, STEARNS & CO. INC."). (viii) Transaction Structure. The Independent Committee evaluated the benefits of the transaction being structured as an immediate cash tender offer for all of the Shares, thereby enabling the public stockholders of the Company the opportunity to obtain cash for all of their Shares at the earliest possible time and the fact that the per Share consideration to be paid in the Offer and the Merger is the same. In addition, the per Share consideration is payable in cash, thereby eliminating any uncertainties in valuing the consideration to be received by the Company's public stockholders. (ix) Ability to Consider Alternative Transactions. The Independent Committee considered the terms of the Merger Agreement, including (A) the absence of standard "no-shop" provisions, (B) the ability of the Company's Board, in the exercise of its fiduciary duties, to terminate the Merger Agreement in order to permit the Company to enter into an alternative transaction and to pay actual expenses not to exceed $400,000 in lieu of a customary break-up fee. (x) Possible Decline in Market Price of Company Common Stock. The Independent Committee considered that if a merger transaction with Purchaser were not negotiated and the Company remained as a publicly-held corporation, it is possible that, because of a decline in the market price of the Company common stock or the stock market in general, the price that might be received by the holders of the Shares in the open market or in a future transaction might be less than the $7.55 per Share price to be received by the Company's stockholders in connection with Offer and the Merger. Company's Board. In reaching its determination to approve the Merger Agreement and the transactions contemplated thereby, the Company's Board independently considered each of the factors enumerated above and considered and relied upon the conclusions and unanimous recommendation of the Independent Committee that the Company's Board approve the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, and the considerations referred to above as having been taken into account by the Independent Committee, as well as the Company's Board's own familiarity with the Company's business, financial condition, results of operations and prospects and the nature of the industry in which the Company operates. Members of the Company's Board are also affiliates of Purchaser and adopt the reasons regarding fairness of the Offer and the Merger described in the section entitled "SPECIAL FACTORS -- Position of Purchaser and its Affiliates Regarding Fairness of the Offer and the Merger" set forth in the Offer to Purchase. If Purchaser does not own at least 90% of the Shares of Company common stock at the expiration of the Offer, then the Company will call a special meeting of stockholders to consider and vote upon the approval of the Merger Agreement and the Merger. 3 5 The Independent Committee and the Company's Board did not structure the transaction to require the approval of the holders of a majority of the Company common stock held by stockholders unaffiliated with Purchaser and its affiliates because such approval is not required under Maryland law and the Independent Committee and the Company's Board believe that the substantive and procedural fairness of the transaction was established by the factors set forth above. In light of the number and variety of factors that the Independent Committee and the Company's Board considered in connection with their evaluation of the Offer and the Merger, neither the Independent Committee nor the Company's Board found it practicable to quantify or otherwise assign relative weights to the foregoing factors, and, accordingly, neither the Independent Committee nor the Company's Board did so. In addition, individual members of the Independent Committee and the Company's Board may have given different weights to different factors. Rather, the Independent Committee and the Company's Board viewed their positions and recommendations as being based on the totality of the information presented to and considered by them. THE COMPANY'S BOARD, AFTER RECEIVING THE UNANIMOUS RECOMMENDATION OF THE INDEPENDENT COMMITTEE, UNANIMOUSLY (1) HAS APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, (2) HAS DETERMINED THAT THE OFFER AND THE MERGER ARE ADVISABLE, FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS (OTHER THAN PURCHASER AND ITS AFFILIATES) AND (3) RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. BEAR STEARNS'S ANALYSIS The Independent Committee retained Bear Stearns to act as its financial advisor in connection with the Offer and the Merger. On October 5, 2000, the Independent Committee met to review the Offer and the terms of the Merger Agreement. During this meeting, Bear Stearns orally rendered its opinion, that, as of that date, based upon and subject to the assumptions, factors and limitations set forth in the Bear Stearns opinion, a cash purchase price of $7.55 per Share was fair to stockholders of the Company, other than Purchaser and its affiliates, from a financial point of view. THE FULL TEXT OF THE FAIRNESS OPINION, WHICH SETS FORTH, AMONG OTHER THINGS, THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED, AND QUALIFICATIONS AND LIMITATIONS ON THE SCOPE OF THE REVIEW UNDERTAKEN BY BEAR STEARNS IN RENDERING THE FAIRNESS OPINION, IS ATTACHED AS SCHEDULE I TO THIS DOCUMENT. STOCKHOLDERS ARE URGED TO, AND SHOULD, READ THE FAIRNESS OPINION CAREFULLY AND IN ITS ENTIRETY. THE FAIRNESS OPINION WAS DELIVERED TO THE INDEPENDENT COMMITTEE FOR ITS USE IN CONNECTION WITH ITS CONSIDERATION OF THE OFFER AND ADDRESSES ONLY, AS OF THE DATE OF THE FAIRNESS OPINION, THE FAIRNESS OF THE OFFER PRICE FROM A FINANCIAL POINT OF VIEW, TO BE RECEIVED BY THE STOCKHOLDERS OF THE COMPANY, OTHER THAN PURCHASER AND ITS AFFILIATES. THE FAIRNESS OPINION IS NOT INTENDED TO BE, AND DOES NOT CONSTITUTE, A RECOMMENDATION TO THE INDEPENDENT COMMITTEE OF THE COMPANY OR TO ANY STOCKHOLDER OF THE COMPANY. THE FAIRNESS OPINION DOES NOT ADDRESS THE UNDERLYING BUSINESS DECISION OF THE INDEPENDENT COMMITTEE TO RECOMMEND THE OFFER AND THE MERGER TO THE STOCKHOLDERS OF THE COMPANY OR THE UNDERLYING BUSINESS DECISION OF THE COMPANY TO ENTER INTO THE MERGER AGREEMENT, THE RELATIVE MERITS OF THE OFFER AND THE MERGER AS COMPARED TO ANY ALTERNATIVE BUSINESS STRATEGIES THAT MIGHT EXIST FOR THE COMPANY OR THE EFFECTS OF ANY OTHER TRANSACTION IN WHICH THE COMPANY MIGHT ENGAGE. THE SUMMARY OF THE FAIRNESS OPINION SET FORTH IN THIS DOCUMENT IS QUALIFIED BY REFERENCE TO THE FULL TEXT OF THE FAIRNESS OPINION. The Fairness Opinion related to the $7.55 per Share Offer Price at October 6, 2000 was based on facts and information known at October 6, 2000 and does not relate to or consider any changes, including changes in 4 6 economic or market conditions, since that date. The Offer Price, the form of the consideration and the terms of the Merger were determined by arm's-length negotiations between the Independent Committee, FIC and Purchaser and were not based on any recommendation by Bear Stearns. The Independent Committee and the Company did not impose any limitations on Bear Stearns with respect to the investigations made or the procedures followed by Bear Stearns in rendering its opinion. In arriving at its opinion, Bear Stearns, among other things: - reviewed the draft Merger Agreement which Bear Stearns was advised was in substantially final form; - reviewed the Company's Annual Reports on Form 10-K for the years ended December 31, 1997-1999, its Quarterly Report on Form 10-Q for the periods ended March 31, 2000 and June 30, 2000; its reports on Form 8-K during the three years ended October 5, 2000; and its self-tender documents on forms SC TO-I dated April 24, 2000 and June 6, 2000; - reviewed certain operating and financial information, including projections through December 31, 2001 provided to us by management of FIC Management Inc., an affiliate of FIC (the "Manager") relating to the Company's business, operations and prospects; - reviewed the Management Agreement between the Company and the Manager dated May 6, 1999 (the "Management Agreement"); - reviewed the Manager's projections of revenues, expenses and incentive fees related to the Management Agreement; - reviewed the terms of the Series B 8.5% Cumulative Convertible Preferred Stock held by an affiliate of FIC and the provisions of the Merger Agreement related thereto; - met with certain members of the Company's senior management, all of whom are also employees of an affiliate of FIC, to discuss the Company's business, operations, historical and projected financial results and future prospects; - obtained from management of the Company third party marks of the estimated market value of the Company's commercial mortgage backed securities investments as of June 30, 2000; - met with representatives of FIC and the Manager to discuss the Offer and their views as to the Company's business; - met with the Independent Committee and discussed, among other things, the Independent Committee's view of the financial projections of the Company furnished to Bear Stearns by the Manager, strategic alternatives pursued by the Company and prospects for the Company; - reviewed the historical prices, trading multiples and trading volume of the Company common stock; - reviewed publicly available financial data, stock market performance data and trading multiples of companies which Bear Stearns deemed generally comparable to the Company; - reviewed the terms of recent merger and acquisition and liquidation transactions involving companies which Bear Stearns deemed generally comparable to the Company; - reviewed the terms of recent merger and acquisition transactions involving the acquisition of real estate investment trusts ("REIT") by advisors to REITs, or by third parties in connection with their acquisitions of a REIT; - performed discounted cash flow analyses based on the projections for a hypothetical liquidation of the Company and third party marks of the estimated market value of the Company's commercial mortgage backed securities investments as obtained from management of the Company; - performed discounted cash flow analysis based on the projections for the Manager under the Management Agreement; and 5 7 - conducted such other studies, analyses, inquiries and investigations as Bear Stearns deemed appropriate. Bear Stearns relied upon and assumed, without independent verification, the accuracy and completeness of the financial and other information, including without limitation the projections provided to us by the Company, FIC and the Manager. With respect to the Company's and the Manager's projected financial results, Bear Stearns assumed that they had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the senior managements of the Manager and the Company as to the expected future performance of the Company and the Manager, respectively. Bear Stearns did not assume any responsibility for the independent verification of any such information or projections provided to Bear Stearns, and Bear Stearns further relied upon the assurances of the senior management of the Company and the Manager that they were unaware of any facts that would make the information, projections and estimates provided to Bear Stearns incomplete or misleading. In addition, Bear Stearns did not perform or receive any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of the Company, nor was Bear Stearns furnished with any such evaluation or appraisal. During the course of Bear Stearns's engagement, Bear Stearns was not asked by the Independent Committee to, and did not, solicit indications of interest from third parties regarding a transaction with the Company. Bear Stearns has assumed that the Transaction will be consummated in a timely manner and in accordance with the terms of the Merger Agreement without any regulatory limitations, restrictions, conditions or modifications that collectively would have a material effect on the Company. Bear Stearns was recently informed by the Manager that (i) there have been prepayments made to the collateral underlying the Company's collateralized mortgage obligations and (ii) that these prepayments will have a non-material impact on the Company's interest income and the financial performance of the Company. The preparation of a fairness opinion is a complex process that involves various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not necessarily susceptible to partial analysis or summary description. Bear Stearns believes that its analyses must be considered as a whole and that selecting portions of its analyses and the factors considered, without considering all of the analyses and factors, could create a misleading or incomplete view of the processes underlying its opinion. In arriving at its opinion, Bear Stearns did not assign any particular weight to any analysis or factor considered by it, but rather made qualitative judgments based upon its experience in providing such opinions and on then-existing economic, monetary, market and other conditions as to the significance of each analysis and factor. In its analyses, Bear Stearns, at the Company's direction and with the Independent Committee's consent, made numerous assumptions with respect to industry performance, general business conditions and other matters, many of which are beyond the control of the Company or Bear Stearns. Any assumed estimates implicitly contained in Bear Stearns's opinion or relied upon by Bear Stearns in rendering its opinion do not necessarily reflect actual values or predict future results or values. Any estimates relating to the value of a business or securities do not purport to be appraisals or to necessarily reflect the prices at which companies or securities may actually be sold. The Independent Committee retained Bear Stearns based upon Bear Stearns's qualifications, experience and expertise. Bear Stearns is an internationally recognized investment banking firm which, as part of its investment banking business, regularly engages in the evaluation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. Bear Stearns has previously rendered investment banking and financial advisory services to the Company and has received fees for rendering these services. In addition to acting as the Independent Committee's financial advisor in connection with the Offer and the Merger, Bear Stearns has, within the past eighteen months, acted as an advisor to the Company in connection with an unsolicited proposed transaction with Apex Mortgage Capital, Inc. Bear Stearns has provided investment banking services to affiliates of FIC. In addition, Bear Stearns, through one of its affiliated investment partnerships, is an investor in a fund sponsored by an affiliate of FIC. In the ordinary course of its business, Bear Stearns may actively trade the 6 8 equity and/or debt securities of the Company for its own account or for accounts of its customers and, accordingly, Bear Stearns may at any time hold a long or short position in such securities. SUMMARY OF ANALYSES The following is a summary of the material financial analyses presented by Bear Stearns to the Independent Committee of the Board of Directors of the Company on October 5, 2000. Some of these summaries of financial analyses include information presented in tabular format. In order to fully understand the financial analyses used by Bear Stearns, the tables must be read together with the text of each summary. The tables alone do not represent a complete description of the financial analyses. (A) Comparable Companies Analysis. Bear Stearns developed a set of comparable public companies and compared certain information to similar data for the Company. The set of comparable companies was developed after reviewing the following factors, among others: business comparability and market segmentation, relative size of market capitalization and liquidity, growth parameters and other relevant business and financial characteristics. This set of comparable companies consists of the following commercial mortgage REITs: Amresco Capital Trust Anthracite Capital, Inc. Clarion Commercial Holdings Resource Asset Investment Trust This comparable companies analysis included information such as share price as a multiple of latest twelve months earnings per share, last quarter's annualized, projected (where available) 2000 and 2001 EPS and book value/Net Asset Value. When deriving multiples on projected measures of financial performance, Bear Stearns based the estimates of future financial performance on analysts' estimates prepared by equity research analysts from various securities firms. The following table sets forth the statistics derived from the comparable companies analysis:
PRICE/EARNINGS PRICE/EARNINGS PRICE/BOOK VALUE OR 2000 ESTIMATE 2001 ESTIMATE NET ASSET VALUE -------------- -------------- ------------------- High.................................. 6.6x 6.2x 1.0x Low................................... 4.5x 5.0x 0.6x Mean.................................. 5.6x 5.6x 0.8x Median................................ 5.7x 5.6x 0.9x
Bear Stearns noted that not all companies in the analysis employ the same method of accounting for their assets. Some companies mark to market many of their assets and carry the assets at estimated market value, while other companies record their assets' book values primarily at historical cost. Bear Stearns noted that none of the comparable companies is identical to the Company and that, accordingly, any analysis of comparable companies necessarily involves complex consideration and judgments concerning differences in financial and operating characteristics and other factors that would necessarily affect the relative trading values of the Company versus the companies to which the Company was being compared. 7 9 (B) Comparable Merger and Acquisition and Liquidation Transactions. Bear Stearns reviewed the publicly available financial terms of relevant precedent transactions in the commercial mortgage REIT sector. The following table sets forth the applicable comparable transactions: MERGERS & ACQUISITIONS:
DATE ACQUIROR ANNOUNCED TARGET - -------- --------- ----------------------------- Anthracite Acquisition Corp. ............ 2/9/2000 CoreCap, Inc. Ocwen Financial Corp..................... 7/26/1999 Ocwen Asset Investment Corp. Imperial Credit Industries............... 7/22/1999 Imperial Credit Commercial Mortgage Investment Corp.
LIQUIDATIONS:
DATE COMPANY ANNOUNCED - ------- --------- Amresco Capital Trust.................... 8/23/2000 Chastain Capital Corp.................... 5/14/1999
For each of these transactions, Bear Stearns analyzed various multiples based on the purchase price paid by the acquiror (the "Acquisition Price"), including the ratio of the Acquisition Price to 1999 earnings per share, the ratio of the Acquisition Price to last twelve months earnings per share, the ratio of the Acquisition Price to last quarter annualized earnings per share and the ratio of the Acquisition Price to book value. The ratio of the Acquisition Price to book value per share ranged from 0.6x to 0.8x book value for the comparable mergers and acquisitions. In the cases where the comparable company chose to pursue a plan of liquidation, the ratio of trading prices immediately following the announcement of shareholder approval of the company's liquidation plan to publicly disclosed nominal proceeds expected from the liquidation ranged from .85x to .96x. Bear Stearns noted that none of the comparable transactions is identical to the Merger and that, accordingly, any analysis of comparable transactions necessarily involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that would necessarily affect the relative values of the Merger versus the companies to which the Merger was being compared. (C) Liquidation Analysis. Bear Stearns performed an analysis of the present value of proceeds potentially realizable from the liquidation of the Company's assets. This analysis was based on estimates and guidance provided by the Company's management regarding the potential sales proceeds, interim costs of operating the Company and other costs associated with the sale of the assets. Bear Stearns utilized a range of values for the assets based on third party bid indications obtained by management as part of the quarterly reporting process. Bear Stearns computed the present value of the cash flows from the sale of the assets by applying a range of discount rates of 15% to 20% per year. These discount rates were based on management's targeted return on equity when acquiring assets for the Company's portfolio. Bear Stearns noted that this analysis relies on complex assumptions regarding, among other things, the value of certain assets, timing of sales, expenses associated with a liquidation and interest income and expense that require complex considerations and judgments. Bear Stearns noted that the liquidation analysis is hypothetical in that sales prices, timing and costs could not be assured, accordingly any liquidation analysis involves complex adjustments concerning differences in financial and operating characteristics and other factors that would necessarily affect the relevant present values of cash flows. 8 10 (D) Premium Analysis. Bear Stearns observed that, based on the Offer Price to the public stockholders of $7.55 per share, the following premiums were applicable: MERGER PREMIUMS BASED ON THE OFFER PRICE FOR THE FOLLOWING PERIODS PRIOR TO TRANSACTION ANNOUNCEMENT One Day Prior (10/04/2000).................................. 18.4% 90 Day Average from 5/24/2000............................... 26.7% 52 Week High (8/17/2000).................................... 12.9% 52 Week Average as of 9/29/2000............................. 37.5% 52-Week Low (3/21/2000)..................................... 61.0% Self-tender price (5/22/2000)............................... 31.3%
As described above, Bear Stearns's Fairness Opinion and presentation to the Independent Committee were some of the many factors taken into consideration by the Independent Committee in making its determination to recommend the Offer, the Merger, the Merger Agreement and the transactions contemplated thereby to the Company's Board. Consequently, the analyses described above should not be viewed as determinative of the opinion of the Independent Committee, the Company's Board or the Company's management with respect to the value of the Company or whether the Independent Committee would have been willing to recommend a transaction at a different level of consideration. (c) Intent to tender. After reasonable inquiry and to the best of the Company's knowledge, each executive officer, director and affiliate of the Company (other than those affiliated with Purchaser or its affiliates) currently intends to tender all Shares, held of record or beneficially owned by such person, to Purchaser as of the expiration date of the Offer. ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED (a) Pursuant to the terms of the engagement letter, dated September 26, 2000, between Bear Stearns, the Independent Committee and the Company (the "Engagement Letter"), the Company engaged Bear Stearns to act as financial advisor to the Independent Committee in connection with various possible transactions, including transactions contemplated by the Merger Agreement (each, a "Transaction"). As part of its role as financial advisor, Bear Stearns executed and delivered the Fairness Opinion. Pursuant to the terms of the Engagement Letter, the Company has agreed to pay Bear Stearns upon the earlier of (i) receipt by Bear Stearns of a written request from the Company to render an opinion or (ii) execution by the Company of a definitive agreement relating to a Transaction (including the Merger Agreement), a fee of $625,000 payable in cash. The Company has also agreed to reimburse Bear Stearns for its reasonable out-of-pocket expenses, including the reasonable fees and disbursements of its attorneys, and indemnify Bear Stearns and related parties against certain liabilities arising out of or in connection with or as a result of Bear Stearns's engagement as financial advisor to the Independent Committee, including certain liabilities under the federal securities laws. Purchaser has retained Corporate Investor Communications, Inc. to act as the information agent (the "Information Agent") in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, facsimile, telegraph and personal interviews and may request brokers, dealers and other nominee stockholders to forward materials to the beneficial owners of Shares. The Information Agent will receive reasonable and customary compensation for its services, will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities and expenses in connection therewith, including certain liabilities under the federal securities laws. Except as set forth above, neither the Company nor any person acting on its behalf has employed or retained or will compensate any person or class of persons to make solicitations or recommendations on its behalf with respect to the Offer or the Merger. 9 11 ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY (b) To the Company's knowledge, no transactions in the Shares have been effected during the past 60 days by the Company or its executive officers, directors, affiliates or subsidiaries, or by Purchaser or its executive officers, directors, affiliates or subsidiaries. ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS (d)(1)(i) Except as indicated in Items 3 and 4 above, no negotiations are being undertaken or are underway by the Company in response to the Offer which relate to a tender offer or other acquisition of the Company's securities by the Company, any subsidiary of the Company or any other person. (d)(1)(ii) Except as indicated in Items 3 and 4 above, no negotiations are being undertaken or are underway by the Company in response to the Offer which relate to, or would result in, (i) an extraordinary transaction, such as a merger, reorganization or liquidation, involving the Company or any subsidiary of the Company, (ii) a purchase, sale or transfer of a material amount of assets by the Company or any subsidiary of the Company, or (iii) any material change in the present dividend rate or policy, or indebtedness or capitalization of the Company. (d)(2) Except as indicated in Items 3 and 4 above, there are no transactions, Company's Board resolutions, agreements in principle or signed contracts in response to the Offer that relate to or would result in one or more of the matters referred to in this Item 7. ITEM 8. ADDITIONAL INFORMATION (b) The information contained in all of the Exhibits referred to in Item 9 below is incorporated by reference herein. ITEM 9. EXHIBITS
EXHIBIT NUMBER - ------- (a)(1) Offer to Purchase, dated October 13, 2000 (incorporated herein by reference to Exhibit (a)(1) to the Schedule TO). (a)(2) Letter of Transmittal (incorporated herein by reference to Exhibit (a)(2) to the Schedule TO). (a)(3) Form of letter to stockholders of Impac Commercial Holdings, Inc., dated October 13, 2000. (Included in copy mailed to stockholders.) (a)(4) Press release of Impac Commercial Holdings, Inc., dated as of October 6, 2000. (e)(1) Agreement and Plan of Merger, dated as of October 6, 2000, between Fortress Investment Corp., Fortress Impac Acquisition Corp. and Impac Commercial Holdings, Inc. (e)(2) Opinion of Bear, Stearns & Co. Inc. to the Independent Committee of the Board of Directors of Impac Commercial Holdings, Inc., dated October 6, 2000 (included as Schedule I hereto). (g) Not applicable.
10 12 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief I certify that the information set forth in this Statement is true, complete and correct. IMPAC COMMERCIAL HOLDINGS, INC. By: /s/ RANDAL A. NARDONE ------------------------------------ Name: Randal A. Nardone Title: Chief Operating Officer and Secretary Date: October 13, 2000 11 13 EXHIBIT INDEX
EXHIBIT NO. - ------- (a)(1) Offer to Purchase, dated October 13, 2000 (incorporated herein by reference to Exhibit (a)(1) to the Schedule TO). (a)(2) Letter of Transmittal (incorporated herein by reference to Exhibit (a)(2) to the Schedule TO). (a)(3) Form of letter to stockholders of Impac Commercial Holdings, Inc., dated October 13, 2000. (Included in copy mailed to stockholders.) (a)(4) Press release of Impac Commercial Holdings, Inc., dated as of October 6, 2000. (e)(1) Agreement and Plan of Merger, dated as of October 6, 2000, between Fortress Investment Corp., Fortress Impac Acquisition Corp. and Impac Commercial Holdings, Inc. (e)(2) Opinion of Bear, Stearns & Co. Inc. to the Independent Committee of the Board of Directors of Impac Commercial Holdings, Inc., dated October 6, 2000 (included as Schedule I hereto). (g) Not applicable.
14 SCHEDULE I OPINION OF BEAR, STEARNS & CO. INC. October 6, 2000 The Special Committee of the Board of Directors of Impac Commercial Holdings, Inc. 1301 Avenue of the Americas, 42nd Floor New York, NY 10019 Ladies and Gentlemen: We understand that Impac Commercial Holdings, Inc. ("Impac" or the "Company"), Fortress Impac Acquisition Corp. ("Purchaser") and Fortress Investment Corp. ("Fortress") intend to enter into an Agreement and Plan of Merger (the "Agreement"), pursuant to which Purchaser will commence a tender offer (the "Offer") to purchase for $7.55 cash (the "Purchase Price") all of the issued and outstanding shares of common stock of Impac not already owned by Fortress and its affiliates followed by a merger of Purchaser with and into Impac (the "Merger") pursuant to which holders of the remaining outstanding shares of common stock, other than Fortress and its affiliates, will receive the Purchase Price in exchange for their shares (the Offer and Merger, collectively the "Transaction"). You have asked us for our opinion as to whether the Purchase Price to be received by the public stockholders of Impac in the Transaction is fair, from a financial point of view, to the public stockholders of Impac, other than Purchaser and its affiliates. In the course of performing our review and analyses for rendering this opinion, we have: - - reviewed the draft Agreement (which you have advised us is in substantially final form); - - reviewed Impac's Annual Reports on Form 10-K for the years ended December 31, 1997-1999, its Quarterly Reports on Form 10-Q for the periods ended March 31, 2000 and June 30, 2000, its Reports on Form 8-K during the three years ended October 5, 2000 and its self-tender documents on forms SC TO-I dated April 24, 2000 and June 6, 2000; - - reviewed certain operating and financial information, including projections through December 31, 2001, provided to us by management of FIC Management Inc., an affiliate of Fortress (the "Manager") relating to Impac's business, operations and prospects; - - reviewed the management agreement between Impac and the Manager dated May 6, 1999 (the "Management Agreement"); - - reviewed the Manager's projections of revenues, expenses and incentive fees related to the Management Agreement; - - reviewed the terms of the Series B 8.5% Cumulative Convertible Preferred Stock held by a Fortress affiliate and the provisions of the Agreement related thereto; - - met with certain members of Impac's senior management, all of whom are also employees of Fortress and the Manager, to discuss Impac's business, operations, historical and projected financial results and future prospects; - - obtained from management of Impac third party marks of the estimated market value of the Company's CMBS investments as of June 30, 2000; - - met with representatives of Fortress and the Manager to discuss the offer and their views as to the Company's business; 15 The Special Committee of the Board of Directors of Impac Commercial Holdings, Inc. October 6, 2000 Page 2 - - met with the Special Committee and discussed, among other things, the Special Committee's view of the financial projections of Impac furnished to us by the Manager, strategic alternatives pursued by the Company and prospects for the Company; - - reviewed the historical prices, trading multiples and trading volume of the common shares of Impac; - - reviewed publicly available financial data, stock market performance data and trading multiples of companies which we deemed generally comparable to Impac; - - reviewed the terms of recent merger and acquisition and liquidation transactions involving companies we deemed generally comparable to Impac; - - reviewed the terms of recent merger and acquisition transactions involving the acquisition of REITs by advisors to the REITs, or by third parties in connection with their acquisition of REITs; - - performed discounted cash flow analyses of the Company based on the projections for a hypothetical liquidation of Impac and third party marks of the estimated market value of Impac's CMBS investments as obtained from management of Impac; - - performed discounted cash flow analyses based on the projections for the Manager under the Management Agreement; and - - conducted such other studies, analyses, inquiries and investigations as we deemed appropriate. We have relied upon and assumed, without independent verification, the accuracy and completeness of the financial and other information, including without limitation the projections, provided to us by Impac, Fortress and the Manager. With respect to Impac's and the Manager's projected financial results, we have assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the senior managements of Impac and the Manager as to the expected future performance of Impac and the Manager, respectively. We have not assumed any responsibility for the independent verification of any such information or of the projections provided to us, and we have further relied upon the assurances of the senior managements of Impac and the Manager that they are unaware of any facts that would make the information, projections and estimates provided to us incomplete or misleading. We were recently informed by the Manager (i) that there have been prepayments made to the collateral underlying the CMO and (ii) that these prepayments will have a non-material impact on the Company's interest income and the financial performance of the Company. In arriving at our opinion, we have not performed or obtained any independent appraisal of the assets or liabilities (contingent or otherwise) of Impac, nor have we been furnished with any such appraisals. During the course of our engagement, we were not asked by the Special Committee to, and did not, solicit indications of interest from third parties regarding a transaction with Impac. We have assumed that the Transaction will be consummated in a timely manner and in accordance with the terms of the Agreement without any regulatory limitations, restrictions, conditions, amendments or modifications that collectively would have a material effect on Impac. We have acted as a financial advisor to the Special Committee of the Board of Directors of Impac Commercial Holdings, Inc. in connection with the Transaction and will receive a customary fee for such services. In the ordinary course of business, Bear Stearns may actively trade the equity and debt securities of Impac for our own account and for the account of our customers and, accordingly, may at any time hold a long or short position in such securities. We have, within the past eighteen months, acted as an advisor to Impac regarding an unsolicited proposed transaction with Apex Mortgage Capital, Inc. In addition, we have provided investment banking services to affiliates of Fortress, and Bear Stearns, through one of its affiliated investment partnerships, is an investor in a fund sponsored by an affiliate of Fortress. 16 The Special Committee of the Board of Directors of Impac Commercial Holdings, Inc. October 6, 2000 Page 3 It is understood that this letter is intended for the use of the Special Committee of Impac in its consideration of the Transaction and does not constitute a recommendation to the Special Committee of Impac, or to any stockholder of the Company. This opinion does not address Impac's underlying business decision to pursue the Transaction, the relative merits of the Transaction as compared to any alternative business strategies that might exist for Impac or the effects of any other transaction in which Impac might engage. This letter is not to be used for any other purpose, or be reproduced, disseminated, quoted from or referred to at any time, in whole or in part, without our prior written consent; provided, however, that this letter may be included in its entirety in any disclosure document on Schedule 13(e)(3) or Schedule 14(d)(9) or any proxy statement to be distributed to the holders of Impac common stock in connection with the Transaction. Our opinion is subject to the assumptions and conditions contained herein and is necessarily based on economic, market and other conditions, and the information made available to us, as of the date hereof. We assume no responsibility for updating or revising our opinion based on circumstances or events occurring after the date hereof. Based on and subject to the foregoing, it is our opinion that, as of the date hereof, the Purchase Price is fair, from a financial point of view, to the public stockholders of Impac, other than Purchaser and its affiliates. Very truly yours, BEAR, STEARNS & CO. INC. By: /s/ CHARLES S. EDELMAN ---------------------------------- Senior Managing Director EX-99.A.3 2 y41310ex99-a_3.txt FORM OF LETTER TO STOCKHOLDERS 1 [IMPAC Commercial Holdings, Inc. Letterhead] October 13, 2000 Dear Stockholder: On October 6, 2000, Impac Commercial Holdings, Inc. (the "Company"), Fortress Investment Corp., a Maryland corporation ("Fortress") and Fortress Impac Acquisition Corp., a Maryland corporation and a wholly-owned subsidiary of Fortress (the "Purchaser"), entered into an Agreement and Plan of Merger providing for the acquisition of any and all of the common stock, par value $0.01 per share, of the Company not already owned by the Purchaser (the "Common Stock") at $7.55 per share in cash. The Purchaser has today commenced a cash tender offer for any and all of the issued and outstanding shares of Common Stock of the Company not already owned by the Purchaser at a price of $7.55 net per share. The Agreement and Plan of Merger provides that, following the tender offer, the Purchaser will merge with and into the Company with the Company as the surviving corporation, and any remaining shares of Common Stock of the Company will be converted into the right to receive $7.55 per share in cash, without interest. At a meeting on October 6, 2000, the Company's Board of Directors (the "Board"), based on, among other things, the unanimous recommendation of the Committee of Independent Directors of the Board, consisting entirely of non-management directors unaffiliated with Fortress or Purchaser (the "Independent Committee"), unanimously (1) has approved the Agreement and Plan of Merger and the transactions contemplated thereby, including the tender offer and the merger, (2) has determined that the tender offer and the merger are fair to and in the best interests of the Company's stockholders (other than the Purchaser and its affiliates) and (3) recommends that the Company's stockholders accept the tender offer and tender their shares pursuant to the tender offer. In arriving at its recommendation, the Board gave careful consideration to the factors described in the enclosed tender offer materials of the Purchaser and Schedule 14D-9 of the Company. Included as Schedule I to the Company's Schedule 14D-9 is the written opinion, dated October 6, 2000, of Bear, Stearns & Co. Inc., the Independent Committee's financial advisor, to the effect that, as of that date and based on and subject to the matters described in the opinion, the price per share of $7.55 to be received in the tender offer and the merger by the holders of shares of the Common Stock of the Company was fair, from a financial point of view, to such holders, other than the Purchaser and its affiliates. Enclosed for your consideration are copies of the Purchaser's tender offer materials and the Company's Schedule 14D-9, which are being filed today with the Securities and Exchange Commission. These documents should be read carefully and in their entirety. On behalf of the Board of Directors, Sincerely, /s/ Wesley R. Edens Wesley R. Edens Chairman of the Board & Chief Executive Officer EX-99.A.4 3 y41310ex99-a_4.txt PRESS RELEASE 1 FOR IMMEDIATE RELEASE (REVISED PRESS RELEASE) Contact: Lilly H. Donohue Vice President, Fortress 212-798-6118 ICH SIGNS DEFINITIVE MERGER AGREEMENT SHAREHOLDERS TO RECEIVE $7.55 PER SHARE IN CASH NEW YORK, October 6, 2000 - Impac Commercial Holdings, Inc. (the "Company" or "ICH") (AMEX:"ICH"), today announced that it has signed a definitive merger agreement providing for the acquisition of all of the Company's outstanding shares of common stock not already owned by Fortress Investment Corp. ("Fortress") for $7.55 per share in cash. The all-cash transaction, which is structured as a $7.55 per share cash tender offer followed by a second-step merger of the Company with a subsidiary of Fortress, is valued at approximately $41.4 million excluding shares already owned by Fortress. The tender offer price reflects a 20.8% premium to yesterday's closing price and a 37.3% premium to the average price of the last 12 months. The tender offer is expected to commence on or about October 12, 2000 and conclude on November 15, 2000. The Company has approximately 8.0 million shares of common stock on a fully diluted basis, of which Fortress owns approximately 2.5 million shares. The Company's Board of Directors, acting upon the unanimous recommendation of a committee of independent directors composed entirely of non-management directors (the "Independent Committee"), unanimously recommends that the stockholders of the Company tender their shares pursuant to the tender offer. The Independent Committee received an opinion from Bear, Stearns & Co. Inc., the Independent 2 Committee's financial advisor, to the effect that the $7.55 per share price in the tender offer and the merger is fair to the stockholders (other than Fortress and its affiliates) of the Company from a financial point of view. The tender offer and merger will be subject to certain customary conditions; how ever, the tender offer is not subject to a financing condition or a condition that any minimum number of shares be tendered or a "break-up" or "commitment" fee other than an expense reimbursement payment of $400,000 payable in the event that the Independent Committee receives a higher offer from a third party and accepts that offer pursuant to the exercise of its fiduciary duties. The transaction is exempt from the requirements of the Hart-Scott-Rodino Act. ICH is a specialty commercial property finance company that elects to be taxed as a real estate investment trust for federal income tax purposes. Fortress is a private real estate investment trust formed in June 1998 to pursue real estate related investments worldwide. FIC is externally managed by Fortress Investment Group LLC, a global real estate investment and asset management company based in New York. The tender offer for the outstanding shares of common stock of the Company described in this announcement has not yet commenced, and this announcement is neither an offer to purchase nor a solicitation of an offer to sell securities. The tender offer will be made only through Fortress's offer to purchase and the related letter of transmittal. We urge investors and security holders to read the following documents when they become available, regarding the tender offer and the merger (described above), because they will contain important information: -- Fortress's tender offer statement on Schedule TO including the offer to purchase, letter of transmittal and notice of guaranteed delivery. -- The Company's solicitation/recommendation statement on Schedule 14D-9. These documents and amendments to these documents will be filed with the United States Securities and Exchange Commission when the tender offer commences. When these and other documents are filed with the SEC, they may be obtained free at the SEC's web site at www.sec.gov. You may also obtain for free each of these documents (when available) from the information agent for the offer, to be an- nounced. 2 3 This news release contains certain forward-looking statements. When used in this news release, the words "believes," "expects," "anticipates," "estimates" and similar words or expressions are generally intended to identify forward-looking statements. These forward-looking statements involve risks and uncertainties, such as the risks detailed in the Company's filings with the SEC. 3 4 FOR FURTHER INFORMATION: Lilly H. Donohue Vice President, Fortress Investment Fund LLC 212-798-6118 4 EX-99.E.1 4 y41310ex99-e_1.txt AGREEMENT AND PLAN OF MERGER 1 AGREEMENT AND PLAN OF MERGER by and among FORTRESS INVESTMENT CORP. FORTRESS IMPAC ACQUISITION CORP. and IMPAC COMMERCIAL HOLDINGS, INC. October 6, 2000 2 AGREEMENT AND PLAN OF MERGER
ARTICLE I THE OFFER AND MERGER Section 1.1 The Offer............................................................................. 2 Section 1.2 Company Actions....................................................................... 3 Section 1.3 The Merger............................................................................ 3 Section 1.4 Effective Time........................................................................ 4 Section 1.5 Closing............................................................................... 4 Section 1.6 Directors and Officers of the Surviving Corporation................................... 4 Section 1.7 Subsequent Actions.................................................................... 5 Section 1.8 Stockholders' Meeting; Short-Form Merger.............................................. 5 Section 1.9 Amendment of Rights Agreement......................................................... 6 Section 1.10 Effect of the Merger................................................................. 6 ARTICLE II CONVERSION OF SECURITIES Section 2.1 Conversion of Capital Stock........................................................... 7 Section 2.2 Surrender of Certificates............................................................. 8 Section 2.3 Dissenting Shares..................................................................... 10 Section 2.4 Option Plans.......................................................................... 10 ARTICLE III COVENANTS Section 3.1 Competing Acquisition Proposals....................................................... 11 Section 3.2 State Takeover Laws .................................................................. 12 Section 3.3 Directors' and Officers' Insurance and Indemnification ............................... 12 Section 3.4 Approvals and Consents; Cooperation................................................... 14 ARTICLE IV CONDITIONS PRECEDENT Section 4.1 Conditions to Each Party's Obligation to Effect the Merger............................ 14
3
ARTICLE V TERMINATION Section 5.1 Termination........................................................................... 15 Section 5.2 Effect of Termination................................................................. 17 ARTICLE VI MISCELLANEOUS Section 6.1 Amendment and Modification............................................................ 18 Section 6.2 Brokers............................................................................... 18 Section 6.3 Notices............................................................................... 19 Section 6.4 Interpretation........................................................................ 20 Section 6.5 Counterparts.......................................................................... 21 Section 6.6 Entire Agreement; Third Party Beneficiaries........................................... 21 Section 6.7 Severability.......................................................................... 21 Section 6.8 Governing Law......................................................................... 21 Section 6.9 Enforcement........................................................................... 21 Section 6.10 Assignment........................................................................... 22 Section 6.11 Expenses............................................................................. 22 Section 6.12 Headings............................................................................. 22 Section 6.13 Extension; Waiver.................................................................... 22 ANNEX A CONDITIONS TO THE OFFER.......................................................... A-1
4 INDEX OF DEFINED TERMS Acquiring Person ........................................... 1.9 Acquisition Proposal ....................................... 3.1(c) Agreement .................................................. Preamble Articles of Merger ......................................... 1.4 Board ...................................................... Preamble Certificates ............................................... 2.2(b) Claim ...................................................... 3.3(a) Closing .................................................... 1.5 Closing Date ............................................... 1.5 Company .................................................... Preamble Company Acquisition Agreement .............................. 3.1(b) Company Common Stock ....................................... Preamble Company Notice ............................................. 3.1(a) Convertible Stock .......................................... Preamble Dissenting Shares .......................................... 2.3 Effective Time ............................................. 1.4 Excess Share Provision Waiver .............................. 1.2 Exchange Act ............................................... 1.1(a) Indemnified Parties ........................................ 3.3(a) Indemnified Party .......................................... 3.3(a) Independent Committee ...................................... Preamble Independent Counsel ........................................ 3.3(b) Initial Expiration Date .................................... 1.1(a) Merger ..................................................... Preamble Merger Agreement ........................................... Annex A Merger Consideration ....................................... 2.1(b) MGCL ....................................................... Preamble Offer ...................................................... Preamble Offer Price ................................................ Preamble Option ..................................................... 2.4(a) Option Plan ................................................ 2.4(1) Parent ..................................................... Preamble Paying Agent ............................................... 2.2(a) Potential Acquiror ......................................... 3.1(a) Proxy Statement ............................................ 1.8(a) Public Stockholders ........................................ Preamble Purchaser .................................................. Preamble 5 SDAT ....................................................... 1.4 Section 3-602 Approval ..................................... 1.2 Shares ..................................................... Preamble Special Meeting ............................................ 1.8(a) Superior Proposal .......................................... 3.1(d) Surviving Corporation ...................................... 1.3 Third Party Acquiror ....................................... 5.2(b) Transaction Expenses ....................................... 5.2(b) 6 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER, dated as of October 6, 2000 (this "Agreement"), by and among Fortress Investment Corp., a Maryland corporation ("Parent"), Fortress Impac Acquisition Corp., a Maryland corporation and a wholly-owned subsidiary of Parent ("Purchaser"), and Impac Commercial Holdings, Inc., a Maryland corporation (the "Company"). WHEREAS, the Board of Directors of Parent, the Board of Directors of Purchaser and the Committee of Independent Directors, consisting entirely of nonmanagement directors unaffiliated with Parent or Purchaser (the "Independent Committee"), of the Board of Directors of the Company (the "Board") have determined that it is advisable and in the best interests of their respective corporations for Purchaser to acquire the Company upon the terms and subject to the conditions set forth herein; WHEREAS, in furtherance of such acquisition, Purchaser has agreed to commence a tender offer (the "Offer") to purchase for cash any and all of the issued and outstanding shares of common stock, par value $0.01 per share, of the Company ("Company Common Stock") not already owned by Parent, Purchaser or any wholly owned subsidiary of Purchaser (collectively, the "Shares"), at a price of $7.55 per share, net to the seller in cash (such price, or such higher price per share as may be paid in the Offer, being referred to herein as the "Offer Price"), less any amounts required by law to be withheld and paid to governmental entities, upon the terms and subject to the conditions of this Agreement; WHEREAS, the Board, acting upon the unanimous recommendation of the Independent Committee, the Board of Directors of Parent and the Board of Directors of Purchaser, have each approved the making of the Offer, and the Board has determined to recommend that stockholders of the Company (other than Parent, Purchaser and their respective affiliates) (the "Public Stockholders") tender their Shares pursuant to the Offer; WHEREAS, Parent is the owner of 832,400 shares of Company Common Stock and 479,999 shares of the Company's Series B 8.5% Cumulative Convertible Preferred Stock ($25 liquidation preference per share) (the "Convertible Stock") which is convertible into 1,683,635 shares of Company Common Stock, constituting in the aggregate 31.5% of the Company's outstanding voting stock and Parent has agreed to contribute cash, the 832,400 shares of Company Common Stock 7 it already owns and the Convertible Stock to Purchaser in order to facilitate the making of the Offer and the other transactions contemplated by this Agreement; WHEREAS, it is further proposed that following the consummation of the Offer, Parent will cause Purchaser to merge with and into the Company (the "Merger") in accordance with the Maryland General Corporation Law, as amended (the "MGCL"); WHEREAS, the Independent Committee has determined that this Agreement and the transactions contemplated hereby, including the Offer and the Merger, are advisable and in the best interests of the Public Stockholders, and the Board, acting upon the unanimous recommendation of the Independent Committee, (i) has approved the Offer, the Merger, this Agreement and the other transactions contemplated hereby and (ii) has recommended that the Public Stockholders approve this Agreement and the Merger; and WHEREAS, in furtherance of such transactions, the Offer, the Merger and the other transactions contemplated hereby have been approved by the Board of Directors of Purchaser and by all required corporate action of Parent upon the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the foregoing and the agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I THE OFFER AND MERGER Section 1.1 The Offer. (a) As promptly as practicable Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")), the Offer to purchase for cash any and all of the Shares at the Offer Price. Purchaser shall, on the terms and subject to the prior satisfaction or waiver of the conditions of the Offer, accept for payment and pay for all Shares validly tendered and not withdrawn pursuant to the Offer as soon as it is legally permitted to do so under applicable law. The Offer shall be made by means of 2 8 an offer to purchase containing the terms set forth in this Agreement and having only the conditions set forth in Annex A hereto. Purchaser shall not decrease the Offer Price or decrease the number of Shares sought in the Offer, change the form of consideration to be paid for Shares pursuant to the Offer, or amend or add any other term or condition of the Offer (including the conditions set forth in Annex A hereto), in each case, in any manner adverse to the holders of the Shares without the prior written consent of the Company. The initial expiration date of the Offer shall be the twenty-fifth business day following the date that the Offer is commenced within the meaning of Rule 14d-2 under the Exchange Act (the "Initial Expiration Date"). The Company and the Independent Committee and their counsel shall be given a reasonable opportunity to review and comment on any documents that will be filed with the SEC in connection with the Offer and related transactions prior to such filing. (b) Parent shall cause Purchaser to have available on a timely basis the funds necessary to accept for payment, and pay for, any shares that Purchaser becomes obligated to pay for pursuant to the Offer or Article I hereof. Section 1.2 Company Actions. The Company hereby approves of and consents to the Offer and represents and warrants that the Independent Committee has determined that this Agreement and the transactions contemplated hereby, including the Offer and the Merger, are advisable and in the best interests of the Public Stockholders, and the Board, at a meeting duly called and held and acting on the unanimous recommendation of the Independent Committee, has (i) duly approved this Agreement and the transactions contemplated hereby, including the Offer and the Merger; and (ii) resolved to recommend that the Public Stockholders accept the Offer, tender their Shares thereunder and approve this Agreement and the Merger. The Company further represents and warrants that by resolution of the Board, dated May 5, 1999, Parent and its affiliates are permanently exempt from (x) the ownership limits contained in Article VII, Section 7.2.1 of the Company's Charter, which generally prohibits any party from beneficially owning in excess of 9.8% of the Company's capital stock (the "Excess Share Provision Waiver") and (y) the limitations on business combinations with interested stockholders under Section 3-602 of the MGCL (the "Section 3-602 Approval"). Section 1.3 The Merger. Subject to the terms and conditions of this Agreement, at the Effective Time (as defined in Section 1.4 hereof), the Company and Purchaser shall consummate the Merger pursuant to which (a) Purchaser or a wholly-owned subsidiary of Purchaser shall be merged with and into the Company and the separate corporate existence of Purchaser, or such wholly-owned subsidiary as the case may be, shall thereupon cease, (b) the Company shall be the successor or 3 9 surviving corporation in the Merger (the "Surviving Corporation") and shall continue to be governed by the laws of the State of Maryland, and (c) the separate existence of the Company with all its rights, privileges, immunities, powers and franchises shall continue unaffected by the Merger. Purchaser may assign its rights under this Agreement to a wholly-owned subsidiary of Purchaser which assumes all applicable obligations of Purchaser hereunder. Pursuant to the Merger, (x) the Charter of the Company, as in effect immediately prior to the Effective Time, shall be the Charter of the Surviving Corporation until thereafter amended as provided by law and (y) the Bylaws of the Company, as in effect immediately prior to the Effective Time, shall be the Bylaws of the Surviving Corporation until thereafter amended as provided by law. Section 1.4 Effective Time. As soon as practicable, on the date of the Closing (as defined in Section 1.5 hereof), or on such other date as the parties may agree, Purchaser and the Company will cause articles of merger (the "Articles of Merger") to be executed and filed with the State Department of Assessments and Taxation of the State of Maryland (the "SDAT") as provided in the MGCL. The Merger shall become effective on the date on which the Articles of Merger are accepted for record by the SDAT or such other subsequent time as is agreed upon by the parties and specified in the Articles of Merger (the time the Merger becomes effective is referred to herein as the "Effective Time"). Section 1.5 Closing. The closing of the Merger (the "Closing") will take place at 10:00 a.m. (New York City time) on a date to be specified by the parties, which shall be no later than the second business day after satisfaction or waiver (subject to applicable law) of all of the conditions set forth in Article IV hereof (the "Closing Date"), at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New York, unless another date or place is agreed to in writing by the parties hereto. Section 1.6 Directors and Officers of the Surviving Corporation. The directors of the Company at the Effective Time shall, from and after the Effective Time, be the directors of the Surviving Corporation until their successors shall have been duly elected and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation's Charter and Bylaws. The officers of the Company at the Effective Time shall, from and after the Effective Time, be the officers of the Surviving Corporation until their successors shall have been duly elected and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation's Charter and Bylaws. 4 10 Section 1.7 Subsequent Actions. If at any time after the Effective Time the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of either of the Company or Purchaser acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of either the Company or Purchaser, all such deeds, bills of sale, instruments of conveyance, assignments and assurances and to take and do, in the name and on behalf of the Company or Purchaser or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out this Agreement. Section 1.8 Stockholders' Meeting; Short-Form Merger. (a) If required by applicable law in order to consummate the Merger, the Company, acting through the Board, shall, in accordance with its Charter and Bylaws and applicable law: (i) duly call, give notice of, convene and hold a special meeting of its stockholders (the "Special Meeting") as soon as practicable following the acceptance for payment and purchase of Shares by Purchaser pursuant to the Offer for the purpose of considering and taking action upon the approval of the Merger; (ii) prepare and file with the SEC a preliminary proxy or information statement relating to the Merger and this Agreement and use its reasonable best efforts to obtain and furnish the information required to be included by the SEC in the Proxy Statement (as hereinafter defined) and, after consultation with Purchaser, to respond as soon as reasonably practicable to any comments made by the SEC with respect to the preliminary proxy or information statement and cause a definitive proxy or information statement (the "Proxy Statement") to be mailed to its stockholders; (iii) include in the Proxy Statement the recommendation of the Board that stockholders of the Company vote in favor of the approval of the Merger and this Agreement; and 5 11 (iv) use its reasonable best efforts to solicit from holders of Shares proxies in favor of the Merger and take all other action reasonably necessary or advisable to secure any vote or consent of stockholders required by the MGCL to effect the Merger. (b) Purchaser agrees that it will promptly provide the Company, in writing, with the information concerning Parent and Purchaser required to be included in the Proxy Statement and will vote at the Special Meeting, or cause to be voted at the Special Meeting, all of the shares of Company Common Stock and Convertible Stock then owned by it, Purchaser or any of its other subsidiaries and affiliates in favor of the approval of the Merger and this Agreement. (c) Notwithstanding the provisions of Section 1.8(a) and (b) hereof, in the event that Parent, Purchaser and any other subsidiary of Parent (or any of them) shall collectively acquire at least 90% of the outstanding shares of Company Common Stock pursuant to the Offer or otherwise (including shares of Company Common Stock currently owned by Purchaser and its affiliates), the parties hereto agree to take all necessary and appropriate action to cause the Merger to become effective promptly after the acceptance for payment of and payment for Shares by Purchaser pursuant to the Offer without a meeting of stockholders of the Company, in accordance with Section 3-106 of the MGCL. Section 1.9 Amendment of Rights Agreement. The Company, acting through its Board, in accordance with its Charter and Bylaws and applicable law, shall amend the Rights Agreement adopted by the Company on October 7, 1998, as amended, permanently to except Parent and its affiliates from the definition of "Acquiring Person" as defined therein. Section 1.10 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of the MGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all the property, rights, privileges, powers and franchises of the Company and Purchaser shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Purchaser shall become the debts, liabilities and duties of the Surviving Corporation. 6 12 ARTICLE II CONVERSION OF SECURITIES Section 2.1 Conversion of Capital Stock. As of the Effective Time, by virtue of the Merger and without any action on the part of the holders of any shares of Company Common Stock: (a) Cancellation of Parent and Purchaser-Owned Stock. Each share of Company Common Stock and Convertible Stock owned by Parent, Purchaser or any wholly-owned subsidiary of Purchaser (other than shares in trust accounts, managed accounts, custodial accounts and the like that are beneficially owned by third parties) shall automatically be cancelled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor. (b) Conversion of Shares. Each issued and outstanding Share (other than any Dissenting Shares (if applicable and as defined in Section 2.3 hereof)) shall automatically be converted into the right to receive the Offer Price, payable to the holder thereof, without interest (the "Merger Consideration"), less any amounts required by law to be withheld and paid to governmental entities, upon surrender of the certificate formerly representing such Share in the manner provided in Section 2.2 hereof. All such Shares, when so converted, shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a certificate formerly representing any such Shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration therefor upon the surrender of such certificate in accordance with Section 2.2 hereof. Notwithstanding the foregoing, if between the date of this Agreement and the Effective Time the Shares shall have been changed into a different number of shares or a different class, by reason of any stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares, the Merger Consideration will be correspondingly adjusted on a per-share basis to reflect such stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares. (c) Purchaser Common Stock. Each issued and outstanding share of Purchaser Common Stock (or if Purchaser has assigned its rights hereunder to a wholly-owned subsidiary, each issued and outstanding share of such subsidiary) shall automatically be converted into and become one fully paid and nonassessable share of common stock of the Surviving Corporation. 7 13 Section 2.2 Surrender of Certificates. (a) Paying Agent. Purchaser shall designate a bank or trust company reasonably acceptable to the Company to act as agent for the holders of Shares in connection with the Merger (the "Paying Agent") to receive the funds to which holders of Shares shall become entitled pursuant to Section 2.1(b) hereof. Prior to the Effective Time, Purchaser shall deposit or cause to be deposited with the Paying Agent such aggregate funds for timely payment of the consideration to which such holders shall be entitled hereunder. Such funds shall be invested as directed by Purchaser or the Surviving Corporation pending payment thereof by the Paying Agent to holders of the Shares. Earnings from such investments shall be the sole and exclusive property of Purchaser and the Surviving Corporation, and no part of such earnings shall accrue to the benefit of holders of the Shares. If the amount of funds deposited with the Paying Agent by or on behalf of Purchaser is insufficient to pay all of the amounts required to be paid pursuant to Sections 2.1(b) and 2.3(b) hereof, Purchaser from time to time after the Effective Time shall take all steps necessary to enable and cause the Surviving Corporation to legally deposit in trust additional cash with the Paying Agent sufficient to make all required cash payments. (b) Surrender Procedures. Promptly after the Effective Time but in no event more than ten business days thereafter, Purchaser shall cause the Paying Agent to mail to each holder of record of a certificate or certificates, which immediately prior to the Effective Time represented outstanding Shares (the "Certificates"), whose Shares were converted pursuant to Section 2.1(b) hereof into the right to receive the Merger Consideration (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Paying Agent and shall be in such form and have such other provisions not inconsistent with this Agreement as Purchaser and the Company may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for payment of the Merger Consider- ation. Upon surrender of a Certificate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Purchaser, together with such letter of transmittal, duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration for each Share formerly represented by such Certificate and the Certificate so surrendered shall forthwith be cancelled. If payment of the Merger Consideration is to be made to a person other than the person in whose name the surrendered Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the person requesting such payment shall have paid any transfer and other taxes required by reason of the payment of the Merger Consideration to a person other than the registered holder of the Certificate 8 14 surrendered or shall have established to the satisfaction of the Surviving Corporation that such tax either has been paid or is not applicable. Until surrendered as contemplated by this Section 2.2, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration in cash as contemplated by this Section 2.2. (c) Transfer Books; No Further Ownership Rights in the Shares. At the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of Shares on the records of the Company. From and after the Effective Time, the holders of Certificates representing Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Shares, except as otherwise provided for herein or by applicable law. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be cancelled and exchanged as provided in this Article II. (d) Termination of Fund; No Liability. At any time following 180 days after the Effective Time, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds (including any interest received with respect thereto) which had been made available to the Paying Agent and which have not been disbursed to holders of Certificates, and thereafter such holders shall be entitled to look to the Surviving Corporation (subject to abandoned property, escheat or other similar laws) only as general creditors thereof with respect to the Merger Consideration payable upon due surrender of their Certificates, without any interest thereon. Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying Agent shall be liable to any holder of a Certificate for Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. (e) Lost Certificates. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such person of a bond in such reasonable amount as the Surviving Corporation may direct or otherwise indemnify the Surviving Corporation in a manner satisfactory to it against any claim that may be made against it with respect to such Certificate, the Paying Agent shall pay in exchange for such lost, stolen, or destroyed Certificate the Merger Consideration pursuant to this Agreement. 9 15 Section 2.3 Dissenting Shares. (a) Notwithstanding any provision of this Agreement to the contrary, any Shares as to which the holder thereof is entitled to and has demanded to receive payment of the fair value therefor with respect to the Merger in accordance with Title 3, Subtitle 2 of the MGCL, and as of the Effective Time has neither effectively withdrawn nor lost his right to such fair value ("Dissenting Shares"), shall not be converted into or represent a right to receive cash pursuant to Section 2.1, but the holder thereof shall be entitled to only such rights as are granted by Title 3, Subtitle 2 of the MGCL. (b) Notwithstanding the provisions of Section 2.3(a), if any holder of Shares who demands to receive payment of the fair value for his Shares under the MGCL effectively withdraws or loses (through failure to perfect or otherwise) his right to fair value, then as of the Effective Time or the occurrence of such event, whichever later occurs, such holder's Shares shall automatically be converted into and represent only the right to receive the Merger Consideration as provided in Section 2.1(b), without interest, upon surrender of the Certificate or Certificates representing such Shares pursuant to Section 2.2. Section 2.4 Option Plans. (a) The Company shall cause, at or immediately prior to the Effective Time, each then outstanding stock option (each, an "Option") granted to certain employees and directors of the Company under the Stock Options and Awards Plan, adopted in 1997 (the "Option Plan"), whether or not then vested or exercisable, to be cancelled. In consideration of such cancellation of Options with an exercise price of less than the Offer Price, the Company (or, at Parent's option, Purchaser), at or immediately prior to the Effective Time, shall pay to such holders of Options an amount in respect thereof equal to the product of (A) the excess, if any, of the Offer Price over the exercise price of such Options and (B) the number of Shares subject to such vested or unvested Options immediately prior to their cancellation (such payment to be net of withholding taxes, if any, and without interest). (b) The Board or any committee thereof responsible for the administration of the Option Plan shall take all actions necessary so that the Option Plan and all such Options with strike prices higher than the Offer Price shall terminate as of the Effective Time. 10 16 ARTICLE III COVENANTS Section 3.1 Competing Acquisition Proposals. (a) The Company shall promptly (but in any event within 48 hours) advise Purchaser in writing (each such writing, a "Company Notice") of any negotiations, or any proposals or requests for non-public information received on or after the date of this Agreement, in each case relating to any Acquisition Proposal (as defined in Section 3.1(c) hereof), the material terms and conditions thereof and the identity of the person submitting the Acquisition Proposal (the "Potential Acquiror"). The Company shall promptly advise Purchaser of any development relating to any inquiries, discussions, negotiations, proposals or requests for information relating to an Acquisition Proposal, on or after the date of this Agreement. The Company shall keep Purchaser reasonably informed of the status of any such negotiations, request or Acquisition Proposal and will further update, to the extent of any developments, the information required to be provided in each Company Notice upon the request of Purchaser. The Company agrees that any non-public information furnished to any such Potential Acquiror will be pursuant to a customary confidentiality agreement and a standstill agreement. (b) Except as expressly permitted by this Section 3.1, the Independent Committee shall not (i) withdraw or modify or propose publicly to withdraw or modify, in any manner adverse to Parent or Purchaser, the approval or recommendation of such Independent Committee of this Agreement, the Offer or the Merger, (ii) approve or recommend, or propose publicly to approve or recommend, any Acquisition Proposal or (iii) cause the Company to enter into any letter of intent or agreement (each, a "Company Acquisition Agreement") related to any Acquisition Proposal. Notwithstanding the foregoing, in the event that (A) the Independent Committee determines in good faith, after receiving advice from its financial advisor, that any such Acquisition Proposal is a Superior Proposal (as defined in Section 3.1(d) below) and (B) the Independent Committee determines in good faith, based upon advice of its outside legal counsel, that such action is necessary for the Independent Committee to comply with its duties to the Public Stockholders under applicable law, the Independent Committee may (x) withdraw or adversely modify its approval or recommendation of this Agreement, the Offer and the Merger or the matters to be considered at the Special Meeting, (y) approve or recommend such Superior Proposal and/or (z) terminate this Agreement in accordance with Section 5.1(c)(i) and prior to or substantially contemporaneously with such termination, cause the Company to enter into a Company Acquisition Agreement with respect to such Superior Proposal. (c) For purposes of this Agreement, "Acquisition Proposal" shall mean any bona fide proposal in writing made by a third party to acquire "benefi- 11 17 cial ownership" (as defined under Rule 13(d) of the Exchange Act) of all or substantially all of the assets of, or a majority or more of the equity interest in, the Company or its subsidiaries pursuant to a merger, consolidation or other business combination, sale of shares of capital stock, sale of assets, tender offer or exchange offer or similar transaction involving the Company or its material subsidiaries including, without limitation, any single or multi-step transaction or series of related transactions which is structured to permit such third party to acquire beneficial ownership of all or substantially all of the assets of, or a majority or more of the equity interest in, the Company or its material subsidiaries (other than the transactions contemplated by this Agreement). (d) For purposes of this Agreement, "Superior Proposal" shall mean any bona fide proposal to acquire, directly or indirectly, for consideration consisting of cash and/or securities, more than a majority of the Shares then outstanding or all or substantially all the assets of the Company, and otherwise on terms which the Independent Committee determines in good faith to be more favorable to the Public Stockholders, from a financial point of view, than the Offer and the Merger (after consultation with the Independent Committee's financial advisor), for which financing, to the extent required, is then committed. Section 3.2 State Takeover Laws. Notwithstanding any other provision in this Agreement, in no event shall the Section 3-602 Approval or the Excess Share Provision Waiver be withdrawn, revoked or modified by the Board. If any state takeover statute other than Section 3-602 of the MGCL becomes or is deemed to become applicable to the Agreement, the Offer, the acquisition of Shares pursuant to the Offer or the Merger or any other transaction provided for or contemplated by this Agreement, the Company shall take all such action as may be necessary or advisable to obtain such approvals and take such actions as are necessary or advisable so that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to minimize the effects of any such statute on the transactions contemplated hereby. Section 3.3 Directors' and Officers' Insurance and Indemnification. (a) From and after the Effective Time, Purchaser and the Surviving Corporation (or any successor to the Surviving Corporation) shall jointly and severally indemnify, defend and hold harmless the current five members of the Board, Wesley R. Edens, Robert I. Kauffman, Joseph R. Tomkinson, Christopher W. Mahowald and Frank P. Filipps (each, an "Indemnified Party," and collectively, the "Indemnified Parties") of the Company and its subsidiaries against all losses, claims, damages, liabilities, costs, fees and expenses (including attorneys' fees and expenses), judgments, fines, losses, 12 18 and amounts incurred in connection with any actual or threatened action, suit, claim, proceeding or investigation (each a "Claim") to the extent that any such Claim is based on, or arises out of, (i) the fact that such person is or was a director, officer, employee or agent of the Company or any of its subsidiaries or is or was serving at the request of the Company or any of its subsidiaries as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or (ii) this Agreement, or any of the transactions contemplated hereby, in each case to the extent that any such Claim pertains to any matter or fact arising, existing, or occurring prior to or at the Effective Time, to the fullest extent permitted under Maryland law, the Company's Charter or Bylaws or any applicable indemnification agreements in effect at the date hereof. (b) In the event of any such loss, expense, claim, damage or liability (whether or not arising prior to the Effective Time), (i) Parent shall pay the reasonable fees and expenses of counsel for the Indemnified Parties, which counsel may also serve as counsel to Parent and which counsel shall be reasonably satisfactory to Parent, promptly after statements therefor are received and otherwise advance to such Indemnified Party upon request reimbursement of documented expenses reasonably incurred, in either case to the extent not prohibited by the MGCL, (ii) Parent will reasonably cooperate in the defense of any such matter and (iii) any determination required to be made with respect to whether an Indemnified Party's conduct complies with the standards set forth under the MGCL and the Charter or Bylaws of the Company shall be made by independent counsel mutually acceptable to Parent and the Indemnified Party (the "Independent Counsel"). The Indemnified Parties as a group may retain only one law firm with respect to each related matter except to the extent there is, in the written opinion of the Independent Counsel, under applicable standards of professional conduct, a conflict on any significant issue between positions of such Indemnified Party and any other Indemnified Party or Indemnified Parties. (c) The Charter and the Bylaws of the Surviving Corporation shall not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would adversely affect the indemnification rights thereunder of the Indemnified Parties, unless such modification is required by law. This Section 3.3 shall survive the Merger and shall continue in full force and effect. (d) Purchaser or the Surviving Corporation shall maintain the Company's existing officers' and directors' liability insurance policy for the Indemnified Parties for a period of not less than six years after the Effective Date; provided, 13 19 however, that Parent may substitute therefor policies of substantially similar coverage and amounts containing terms no less advantageous to the Indemnified Parties. (e) If the Surviving Corporation or any of its successors or assigns (i) shall consolidate with or merge into any other corporation or entity and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) shall transfer all or substantially all of its properties and assets to any individual, corporation or other entity, then, and in each such case, proper provisions shall be made so that the successors and assigns of the Surviving Corporation shall assume all of the obligations set forth in this Section 3.3. The provisions of this Section 3.3 are intended to be (x) in addition to any other rights to which an Indem- nified Party may be entitled under any agreement, as a matter of law or otherwise, as to any action in the Indemnified Party's capacity as a director or officer of the Company and (y) for the benefit of, and shall be enforceable by, each of the Indemnified Parties, their heirs and their representatives. Section 3.4 Approvals and Consents; Cooperation. (a) The parties hereto shall use their respective reasonable best efforts, and cooperate with each other, to obtain as promptly as practicable all governmental and third party authorizations, approvals, consents or waivers required in order to consummate the transactions contemplated by this Agreement. (b) The Company, Parent and Purchaser shall take all actions necessary to file as soon as practicable all notifications, filings and other documents required to obtain all governmental authorizations, approvals, consents or waivers, and to respond as promptly as practicable to any inquiries received from any governmental entity for additional information or documentation and to respond as promptly as practicable to all inquiries and requests received from any State Attorney General or other governmental entity in connection therewith. ARTICLE IV CONDITIONS PRECEDENT Section 4.1 Conditions to Each Party's Obligation to Effect the Merger. The respective obligation of each party to effect the Merger shall be subject to the satisfaction or waiver (subject to applicable law) at or prior to the Effective Time of the following conditions: (a) Stockholder Approval. The Merger shall have been 14 20 approved by the requisite vote of the holders of the Company Common Stock, if required by applicable law and the Company's Charter and Bylaws; (b) Regulatory Approvals. All regulatory approvals and consents of third parties, if any, shall have been obtained, except where the failure to have obtained any such approvals and third party consents would not have a material adverse effect on the Company; (c) Statutes; Court Orders. No statute, rule, regulation, order, decree or injunction shall have been enacted, promulgated or issued by any governmental entity or court which prohibits the consummation of the Merger; and (d) Purchase of Shares in Offer. Parent, Purchaser or their affiliates shall have accepted for payment and paid for all of the Shares validly tendered and not withdrawn pursuant to the Offer. ARTICLE V TERMINATION Section 5.1 Termination. This Agreement may be terminated and the Merger contemplated herein may be abandoned at any time prior to the Effective Time, whether before or after any necessary stockholder approval thereof: (a) By the mutual written consent of Purchaser and the Company; or (b) By the Company or Purchaser: (i) if the Offer shall have expired in accor- dance with the terms of this Agreement or Purchaser shall have terminated the Offer, in each case without any Shares being purchased pursuant thereto; provided, however, that the right to terminate this Agreement under this Section 5.1(b)(i) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of Purchaser to purchase the Shares pursuant to the Offer on or promptly after the applicable expiration date; 15 21 (ii) if any governmental entity shall have issued an order, decree or ruling or taken any other action (which order, decree, ruling or other action the parties hereto shall use their respective best efforts to lift), which permanently restrains, enjoins or otherwise prohibits (x) the acceptance for payment of, or payment for, Shares pursuant to the Offer or (y) the Merger and such order, decree, ruling or other action shall have become final and non-appealable; or (c) By the Company: (i) if, prior to the purchase of Shares pursuant to the Offer, a third party shall have made an Acquisition Proposal that the Independent Committee determines in good faith, after consultation with its financial advisor, is a Superior Proposal and, subject to the Company's compliance with Section 3.1(b), a Company Acquisition Agreement shall have been, or substantially contemporaneously with such termination shall be, executed pursuant to such Superior Proposal; or (ii) if Purchaser shall have failed to commence the Offer on or prior to fifteen business days following the date of the initial public announcement of the Offer; provided, however, that the Company may not terminate this Agreement pursuant to this Section 5.1(c)(ii) if the cause of such failure was the Company's material breach of its obligations under this Agreement; or (iii) if, prior to the purchase of Shares pursuant to the Offer, Parent or Purchaser shall have breached or failed to perform in any material respect any of their respective covenants or other obligations contained in this Agreement; provided, however, that the Company may not terminate this Agreement pursuant to this Section 5.1(c)(iii) if the Company is then in material breach of its covenants or other obligations under this Agreement. (d) By Purchaser: (i) if, prior to the purchase of Shares pursuant to the Offer, the Independent Committee shall have withdrawn, modified or changed in a manner adverse to Parent or Purchaser its approval or recommendation of the Offer, this Agreement or the Merger 16 22 or shall have recommended an Acquisition Proposal or the Company shall have executed an agreement in principle or definitive agreement relating to an Acquisition Proposal with a person or entity other than Parent, Purchaser or their affiliates (or the Independent Committee resolves to do any of the foregoing); or (ii) if, due to an occurrence not involving a breach by Parent or Purchaser of their respective obligations hereunder, which makes it impossible to satisfy any of the conditions set forth in Annex A hereto, Purchaser shall have failed to commence the Offer in accordance with this Agreement; or (iii) if, prior to the purchase of Shares pursuant to the Offer, the Company shall have breached or failed to perform any of its covenants or other obligations contained in this Agreement; provided, however, that Purchaser may not terminate this Agreement pursuant to this Section 5.1(d)(iii) if Parent or Purchaser is then in material breach of its covenants or other obligations under this Agreement; or (e) By either the Company or Purchaser if the Merger has not been consummated on or before June 30, 2001, which date may be extended by the mutual written consent of the Company and Purchaser. Section 5.2 Effect of Termination. (a) In the event of the termination of this Agreement as provided in Section 5.1, written notice thereof shall forthwith be given to the other party specifying the provision hereof pursuant to which such termination is made, and this Agreement shall forthwith become null and void, and there shall be no liability on the part of Parent, Purchaser or the Company or their respective directors, officers, employees, stockholders, representatives, agents or advisors other than, with respect to Parent, Purchaser and the Company, the obligations pursuant to this Section 5.2 and Article IV. Nothing contained in this Section 5.2 shall relieve Parent, Purchaser, or the Company from liability for willful breach of this Agreement. (b) In the event that this Agreement is terminated by the Company pursuant to Section 5.1(c)(i) hereof or by Purchaser pursuant to Section 5.1(d)(i) hereof, the Company shall promptly (but in any event within five (5) business days following such termination) pay to Purchaser by wire transfer to an account designated by Purchaser promptly following receipt of a request therefor, an amount 17 23 equal to actual fees and expenses not to exceed $400,000 incurred by Parent and Purchaser in connection with the Offer, the Merger, this Agreement and the consummation of the transactions contemplated hereby, including, but not limited to, the reasonable fees and expenses payable to Parent's counsel, and all banks, investment banking firms, other financial institutions and their respective agents and counsel incurred in connection with acting as Parent's or Purchaser's financial advisor with respect to, or arranging or committing to provide or providing any financing for the transactions contemplated hereby ("Transaction Expenses"); provided, however, that in no event shall such Transaction Expenses be payable more than once. In addition, and only in the event that the Transaction Expenses were not paid or payable pursuant to the immediately preceding sentence, the Company shall pay Purchaser the Transaction Expenses if this Agreement is terminated for any reason (other than as a result of a breach by Parent or Purchaser that resulted in the termination of this Agreement, or a willful breach by Parent or Purchaser of their obligations hereunder) at any time after an Acquisition Proposal has been made by a third party (a "Third Party Acquiror") that the Company has not rejected prior to such termination of this Agreement and, within six months after such a termination, the Company completes a merger, consolidation or other business combination with any such Third Party Acquiror. ARTICLE VI MISCELLANEOUS Section 6.1 Amendment and Modification. Subject to applicable law, this Agreement may be amended, modified and supplemented in any and all respects, whether before or after any vote of the stockholders of the Company contemplated hereby, by written agreement of the parties hereto, or by action taken by their respective Boards of Directors at any time prior to the Closing Date with respect to any of the terms contained herein; provided, however, that after the approval of this Agreement by the stockholders of the Company, no such amendment, modification or supplement shall reduce or change the Merger Consideration or adversely affect the rights of the Public Stockholders hereunder without the approval of such Public Stockholders. Section 6.2 Brokers. Parent and Purchaser represent and warrant to the Company that no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by and on behalf of Parent or the 18 24 Purchaser. The Company represents and warrants to Parent and Purchaser that, except as to Bear Stearns & Co., Inc., no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by and on behalf of the Company. Section 6.3 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, by telecopier (which is confirmed) or sent by an overnight courier service, such as Federal Express, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): If to Parent/Purchaser: c/o Fortress Investment Group LLC 1301 Avenue of the Americas 42nd Floor New York, New York 10019 Attention: Randal A. Nardone Facsimile No.: (212) 798-6133 Copy to: Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036-6522 Attention: J. Gregory Milmoe, Esq. Facsimile No.: (212) 735-2000 If to the Company: Impac Commercial Holdings, Inc. c/o Willkie Farr & Gallagher 787 Seventh Avenue New York, New York 10019 Attention: Christopher E. Manno, Esq. Facsimile No.: (212) 728-8111 19 25 Copy to: Willkie Farr & Gallagher 787 Seventh Avenue New York, New York 10019 Attention: Christopher E. Manno, Esq. Facsimile No.: (212) 728-8111 Section 6.4 Interpretation. The words "hereof," "herein" and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, paragraph, exhibit, annexes and schedule references are to the articles, sections, paragraphs, exhibits, annexes and schedules of this Agreement unless otherwise specified. Whenever the words "include," "includes" or "including" are used in this Agreement they shall be deemed to be followed by the words "without limitation." The words describing the singular number shall include the plural and vice versa, and words denoting any gender shall include all genders and words denoting natural persons shall include corporations and partnerships and vice versa. The phrase "to the best knowledge of" or any similar phrase shall mean such facts and other information which as of the date of determination are actually known to any executive vice president, chief financial officer, general counsel, chief compliance officer and any officer superior to any of the foregoing, of the referenced party after the conduct of a reasonable investigation under the circumstances by such officer. The phrase "made available" in this Agreement shall mean that the information referred to has been made available if requested by the party to whom such information is to be made available. The phrases "the date of this Agreement," "the date hereof" and terms of similar import, unless the context otherwise requires, shall be deemed to refer to the date on the first page of this Agreement. As used in this Agreement, the word "subsidiary" or "subsidiaries" means, with respect to any party, any corporation, partnership or other entity or organization, whether incorporated or unincorporated, of which (i) such party or any other subsidiary of such party is a general partner (excluding such partnerships where such party or any subsidiary of such party do not have a majority of the voting interest in such partnership) or (ii) at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such party or by any one or more of its subsidiaries, or by such party and one or more of its subsidiaries. As used in this Agreement, the term "affiliate" or "affiliates" shall have the meaning set forth in Rule l2b-2 of the 20 26 Exchange Act. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement. Section 6.5 Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. Section 6.6 Entire Agreement; Third Party Beneficiaries. This Agreement and Annex A hereto (a) constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties hereto with respect to the subject matter hereof, and (b) except as provided in Article II and Sections 3.1 and 3.3, is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder. Section 6.7 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and conditions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Section 6.8 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to the principles of conflicts of law thereof. Section 6.9 Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the United States located in the State of Maryland or in Maryland state court, this being in addition to any other remedy to which they are entitled at law or in equity. In addition, each of the parties hereto (a) consents to submit itself to the personal jurisdiction of any federal court located in the State of Maryland or any Maryland state court in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (b) will 21 27 not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (c) will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than a federal or state court sitting in the State of Maryland. Section 6.10 Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties, provided, however, that Purchaser may assign its rights in connection with the Offer to its wholly-owned subsidiary without such consent. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective permitted successors and assigns. Section 6.11 Expenses. Except as set forth in Section 5.2 hereof, all costs and expenses incurred in connection with the Offer, the Merger, this Agreement and the consummation of the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Offer or the Merger is consummated. Section 6.12 Headings. Headings of the Articles and Sections of this Agreement are for convenience of the parties only, and shall be given no substantive or interpretative effect whatsoever. Section 6.13 Extension; Waiver. Subject to Section 6.1, at any time prior to the Effective Time, the parties may (a) extend the time for the performance of any of the obligations or other acts of the other parties, (b) waive any inaccuracies in any document, instrument, certificate or other writing delivered pursuant to this Agreement or (c) waive compliance by the other parties with any of the agreements or conditions contained in this Agreement. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights. [signature page follows] 22 28 IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this Agreement to be signed by their respective officers hereunto duly authorized as of the date first written above. FORTRESS INVESTMENT CORP. By: /s/ Randal A. Nardone ------------------------------------ Name: Randal A. Nardone Title: Chief Operating Officer & Secretary FORTRESS IMPAC ACQUISITION CORP. By: /s/ Randal A. Nardone ------------------------------------ Name: Randal A. Nardone Title: Secretary & Treasurer IMPAC COMMERCIAL HOLDINGS, INC. By: /s/ Randal A. Nardone ------------------------------------ Name: Randal A. Nardone Title: Chief Operating Officer & Secretary 29 ANNEX A CONDITIONS TO THE OFFER The capitalized terms used in this Annex A shall have the meanings set forth in the Agreement to which it is annexed, except that the term "Merger Agreement" shall mean the Agreement to which this Annex A is annexed. Notwithstanding any other provisions of the Offer, subject to the provisions of the Merger Agreement, Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, including Rule 14e-l(c) under the Exchange Act, pay for, and may delay the acceptance for payment of or, subject to the restriction referred to above, the payment for, any tendered Shares, and may, subject to the terms of the Merger Agreement, terminate the Offer and not accept for payment any tendered Shares if at any time on or after the date of the Merger Agreement, and before the time of acceptance of Shares for payment pursuant to the Offer, any of the following events shall occur: (a) there shall be pending any suit, action or proceeding or there shall be threatened by any governmental entity any suit, action or proceeding (i) seeking to prohibit or impose any material limitations on Parent's or Purchaser's ownership or operation (or that of any of their respective subsidiaries or affiliates) of all or a material portion of the business or assets of the Company, or to compel Parent or Purchaser or their respective subsidiaries and affiliates to dispose of or hold separate any material portion of the businesses or assets of the Company, (ii) challenging the acquisition by Parent or Purchaser of any Shares under the Offer, seeking to restrain or prohibit the making or consummation of the Offer or the Merger or the performance of any of the other transactions contemplated by the Merger Agreement, or seeking to obtain from the Company, Parent or Purchaser any damages that are material in relation to the Company, (iii) seeking to impose material limitations on the ability of Purchaser, or rendering Purchaser unable, to accept for payment, pay for or purchase some or all of the Shares pursuant to the Offer and the Merger, (iv) seeking to impose material limitations on the ability of Purchaser or Parent effectively to exercise full rights of ownership of the Shares, including, without limitation, the right to vote the Shares purchased by it on all matters properly presented to the Public Stockholders, or (v) which otherwise is reasonably likely to have a material adverse effect on the financial results or condition of the Company; (b) there shall be any statute, rule, regulation, judgment, order or injunction enacted, entered, enforced or promulgated applicable to the Offer or the Merger, other than the application to the Offer or the Merger of applicable 30 waiting periods under the HSR Act, that is reasonably likely to result, directly or indirectly, in any of the consequences referred to in clauses (i) through (v) of paragraph (a) above; (c) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities in the American Stock Exchange, for a period in excess of 6 hours (excluding suspensions or limitations resulting solely from physical damage or interference with such exchanges not related to market conditions), (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) a commencement of a war, armed hostilities or other international or national calamity directly involving the United States, (iv) any limitation (whether or not mandatory) by any United States or foreign governmental authority on the extension of credit by banks or other financial institutions, (v) a change in general financial bank or capital market conditions which materially or adversely affects the ability of financial institutions in the United States to extend credit or syndicate loans, or (vi) in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof; (d) there shall have occurred any material adverse change (or any development that, insofar as reasonably can be foreseen, is reasonably likely to result in any material adverse change) in the financial results or condition of the Company; (e) the Board or the Independent Committee (i) shall have withdrawn or modified in a manner adverse to Parent or Purchaser its approval or recommendation of the Offer, this Agreement or the Merger, (ii) shall have recommended the approval or acceptance of an Acquisition Proposal from, or similar business combination with, a person or entity other than Parent, Purchaser or any of their affiliates, or (iii) shall have executed any agreement relating to an Acquisition Proposal from, or similar business combination with, a person or entity other than Parent, Purchaser or their affiliates; (f) the Company shall have failed to perform in any material respect or to comply in any material respect with any material obligation, agreement or covenant of the Company to be performed or complied with by it under the Merger Agreement; or (g) all consents necessary to the consummation of the Offer including, without limitation, consents from parties to loans, contracts, leases or other 31 agreements and consents from governmental agencies, whether federal, state or local shall not have been obtained, other than consents the failure of which to obtain would not have a material adverse effect on the financial results or condition of the Company; (h) the Merger Agreement shall have been terminated in accordance with its terms; which in the reasonable judgment of Parent or Purchaser, in any such case, and regardless of the circumstances giving rise to such condition, makes it inadvisable to proceed with the Offer and/or with such acceptance for payment of or payment for Shares. The foregoing conditions are for the sole benefit of Purchaser and Parent and, subject to the Merger Agreement, may be asserted or may be waived by Parent or Purchaser, in whole or in part at any time and from time to time in the good faith judgment of Parent or Purchaser. The failure by Parent or Purchaser at any time to exercise any such rights shall not be deemed a waiver of any right and each right shall be deemed an ongoing right which may be asserted at any time and from time to time. -----END PRIVACY-ENHANCED MESSAGE-----