EXHIBIT NUMBER (A)(1)(E)
Published on January 8, 2003
FORM OF LETTER TO CLIENTS DATED JANUARY 8, 2003
Exhibit (a)(1)(E)
DYNEX CAPITAL, INC.
OFFER TO PURCHASE FOR CASH AND/OR SENIOR NOTES UP TO:
492,425 SHARES OF SERIES A PREFERRED STOCK
662,944 SHARES OF SERIES B PREFERRED STOCK
683,703 SHARES OF SERIES C PREFERRED STOCK
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON TUESDAY, FEBRUARY 11, 2003, UNLESS THE OFFER IS EXTENDED.
January 8, 2003
To Our Clients:
Enclosed for your consideration are the Offering Circular, dated
January 8, 2003 (the "Offering Circular"), and the related Letter of
Transmittal, which, as amended and supplemented from time to time, together
constitute the "Offer" by Dynex Capital, Inc., a Virginia corporation ("Dynex"),
to purchase up to 492,425 shares of its Series A Preferred Stock, 662,944 shares
of its Series B Preferred Stock, and 683,703 shares of its Series C Preferred
Stock, upon the terms and subject to the conditions set forth in its Offering
Circular, and in the related Letter of Transmittal.
All shares properly tendered at or before the "Expiration Time" (as
defined in the "The Offer -Expiration Time, Extensions, Termination and
Amendments" section of the Offering Circular), and not properly withdrawn, will
be purchased by Dynex, under any of the following options upon the terms and
subject to the conditions of the Offer, including the proration provisions
thereof:
Option 1 (for Cash consideration).
o $24.00 in cash per share of Series A Preferred Stock you tender, up to an
aggregate maximum of 202,763 shares of Series A Preferred Stock;
o $24.50 in cash per share of Series B Preferred Stock you tender, up to an
aggregate maximum of 272,977 such shares of Series B Preferred Stock; and
o $30.00 in cash per share of Series C Preferred Stock you tender, up to an
aggregate maximum of 281,525 shares of Series C Preferred Stock;
Under this Option 1 (Cash), the per share cash amount to be received
for each share of Preferred Stock tendered in the Offer is equal to 100% of the
original issue price of such share of Preferred Stock;
or
Option 2 (for Senior Notes consideration).
o $25.20 in principal amount of our 9.50% Senior Notes due February 28, 2005,
the principal of which will be paid back in eight equal quarterly
installments commencing May 31, 2003 (collectively, the "Senior Notes" and
each, a "Senior Note"), per share of Series A Preferred Stock tendered, up
to an aggregate maximum of 289,662 shares of Series A Preferred Stock;
o $25.725 in principal amount of the Senior Notes per share of Series B
Preferred Stock tendered, up to an aggregate maximum of 389,967 shares of
Series B Preferred Stock; and
o $31.50 in principal amount of the Senior Notes per share of Series C
Preferred Stock tendered, up to an aggregate maximum of 402,178 shares of
Series C Preferred Stock;
Under this Option 2 (Senior Notes), the per share principal amount of
Senior Notes to be received for each share of Preferred Stock tendered in the
Offer is equal to 105% of the original issue price of such share of Preferred
Stock. The Senior Notes will be issued in denominations of $25 or in integral
multiples of $25. In cases where the consideration for shares of each series you
tender is not divisible, in the aggregate, by the $25 denomination, you will
receive cash consideration for the amount in excess of the nearest $25 not to
exceed $24.99. For a more detailed description of the terms of the Senior Notes
being offered, please see "Description of Senior Notes" in the Offering
Circular;
or
Option 3 (for a combination of Cash and Senior Notes consideration).
A combination of Option 1 (Cash) and Option 2 (Senior Notes) in amounts
which you designate. You will receive consideration for shares tendered based on
the Option that is selected at the amounts set forth for that respective Option.
If proration of tendered shares of a series is required as a result of
more shares being tendered than Dynex is willing to purchase, Dynex will
determine the proration factor as soon as practicable following the Expiration
Time. Proration for each stockholder tendering shares of a series shall be based
on the ratio of (A) the number of shares of such series that Dynex is offering
to purchase to (B) the total number of shares of such series properly tendered
and not properly withdrawn by all stockholders of a series.
In addition, if either the cash consideration or Senior Notes
consideration is oversubscribed within a series, proration for each stockholder
tendering shares for the oversubscribed consideration shall be based on the
ratio of (A) the number of shares of such series that Dynex is offering to
purchase for the oversubscribed consideration to (B) the total number of shares
of such series properly tendered and not properly withdrawn by all stockholders
of the series for the oversubscribed consideration.
If the consideration you select is oversubscribed, regardless of
whether that is the cash consideration or the Senior Notes consideration, you
may elect to allocate any shares not accepted for that consideration, to the
other undersubscribed consideration.
Shares not purchased because of proration will be returned at Dynex's
expense to the stockholders who tendered such shares promptly after the
Expiration Time. Dynex reserves the right, in its sole discretion, to purchase
any and all of the excess shares tendered so long as the excess number accepted
by Dynex does not exceed two percent (2%) of the issued and outstanding shares
of such series of Preferred Stock.
A TENDER OF YOUR SHARES CAN BE MADE ONLY BY US AS THE SHAREHOLDER OF RECORD
THEREOF AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER
YOUR SHARES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to tender
any or all of the shares held by us for your account, upon the terms and subject
to the conditions of the Offer.
Please note the following:
1. The Offer is not conditioned upon any minimum number of shares
being tendered. The Offer is, however, subject to certain
other conditions set forth in the "The Offer - Conditions to
the Offer" of the Offer to Purchase.
2. The Offer, proration period and withdrawal rights will expire
at 5:00 p.m., New York City time, on February 11, 2003, unless
the Offer is extended.
3. The Offer is for (i) 492,425 shares of Series A Preferred
Stock, (ii) 662,944 shares of Series B Preferred Stock, and
(iii) 683,703 shares of Series C Preferred Stock.
4. Tendering stockholders who are registered stockholders or who
tender their shares directly to Wachovia Bank, the exchange
agent for the Offer, will not be obligated to pay any
brokerage commissions or fees, solicitation fees, or, except
as set forth in the Offering Circular and the Letter of
Transmittal, stock transfer taxes on Dynex's purchase of
shares under the Offer.
5. The board of directors of Dynex has approved the Offer.
However, neither Dynex nor its board of directors makes any
recommendation to stockholders as to whether to tender or
refrain from tendering their shares or as to the price or
prices at which stockholders may choose to tender their
shares. Stockholders must make their own decision as to
whether to tender their shares and, if so, how many shares to
tender and the price or prices at which such shares should be
tendered. At least one Dynex director has indicated that he
will participate in the offer.
6. If you fail to make properly such an election with respect to
any shares of Preferred Stock you tender, you will be deemed
to have tendered such shares for cash. In addition, if the
consideration you select is oversubscribed, whether that is
the cash consideration or the Senior Notes consideration, you
may elect to allocate any shares not exchanged for that
particular consideration to the other consideration, instead
of having your shares of Preferred Stock that are not
exchanged for the oversubscribed consideration returned to
you.
7. A separate Instruction Form is provided for the tendering of
Series A Preferred Stock, Series B Preferred Stock and Series
C Preferred Stock. Please select, complete, execute and submit
the appropriate Instruction Form for the specific series of
Dynex Preferred Stock you are tendering.
If you wish to have us tender any or all of your shares of Preferred
Stock, please so instruct us by completing, executing, detaching and returning
to us the appropriate Instruction Form for the series of Dynex Preferred Stock
you are tendering. An envelope to return your Instruction Form to us is
enclosed. If you authorize us to tender your shares, all such shares will be
tendered unless otherwise indicated on the attached Instruction Form.
YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT
US TO SUBMIT A TENDER ON YOUR BEHALF BEFORE THE EXPIRATION TIME OF THE OFFER.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, FEBRUARY 11, 2003, UNLESS THE OFFER IS EXTENDED.
The Offer is being made solely under the Offer to Purchase and the
related Letter of Transmittal and is being made to all holders of shares of
Dynex Preferred Stock. The Offer is not being made to, nor will tenders be
accepted from or on behalf of, holders of shares residing in any jurisdiction in
which the making of the Offer or acceptance thereof would not be in compliance
with the securities, blue sky or other laws of such jurisdiction.
INSTRUCTION FORM WITH RESPECT TO THE OFFER TO PURCHASE
UP TO 492,425 SHARES OF SERIES A PREFERRED STOCK
OF DYNEX CAPITAL, INC.
FOR CASH AND/OR SENIOR NOTES
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offering Circular and the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer"), in connection
with the offer by Dynex Capital, Inc., a Virginia corporation ("Dynex"), to
purchase up to 492,425 shares of Series A Preferred Stock.
This will instruct you to tender to Dynex the number of shares of
Series A Preferred Stock indicated below held by you for the account or benefit
of the undersigned (or, if no amount is indicated below, for all of the shares
of Series A Preferred Stock held by you for the account of the undersigned) upon
the terms and subject to the conditions set forth in the Offer, including
proration provisions described in the Offering Circular.
As set forth in "The Offer" section of the Offering Circular, you may
tender your shares of Series A Preferred Stock for cash, Senior Notes or a
combination of those two forms of payment.
Aggregate number of shares of Series A Preferred Stock to be tendered
by you for the account of the undersigned:
_________________*
I wish to allocate the shares of Series A Preferred Stock that I have
tendered in the following manner:
[____] CASH OPTION: I hereby tender the number of shares of Series A Preferred
Stock set forth above for cash in the amount of $24.00 per tendered
share, net, without interest, subject to proration and upon the terms
and subject to the conditions set forth in Dynex's Offering Circular,
dated January 8, 2003;
or
[____] NOTE OPTION: I hereby tender the number of shares of Series A Preferred
Stock set forth above for $25.20 in principal amount per tendered share
of the Senior Notes, subject to proration and upon the terms and
subject to the conditions set forth in Dynex's Offering Circular, dated
January 8, 2003. The Senior Notes will be issued in $25.00
denominations and any integral multiple thereof. In cases where the
consideration for shares tendered is not divisible, in the aggregate,
by the $25 denomination, you will receive cash consideration for the
amount in excess of the nearest $25 denomination not to exceed $24.99;
or
[____] COMBINATION OF CASH AND SENIOR NOTES CONSIDERATION: I hereby tender the
number of shares set forth above in the following manner:
Cash: _______ shares of Series A Preferred Stock for cash, in
the amount of $24.00 per share, net, without
interest, subject to proration and upon the
terms and subject to the conditions set forth
in Dynex's Offering Circular, dated January 8,
2003;
AND
Senior Notes: ______ shares of Series A Preferred Stock for $25.20
in principal amount per tendered share of the
Senior Notes, subject to proration and upon
the terms and subject to the conditions set
forth in Dynex's Offering Circular, dated
January 8, 2003.
OVERSUBSCRIPTION ALLOCATION:
After Dynex has determined which shares to accept pursuant to the terms
of the Offering Circular, if the particular consideration which you select is
oversubscribed, whether the cash consideration or the Senior Notes
consideration, you may elect to allocate any shares not exchanged for that
particular consideration to the other consideration, instead of having your
shares of Series A Preferred Stock that are not exchanged for the oversubscribed
consideration returned to you. Please place an "X" in the box provided below if
you wish any shares which were not exchanged due to an oversubscription, to be
allocated to the undersubscribed option, if available.
[____] Oversubscription Allocation: Please allocate any shares that I tendered
and which were not exchanged because the consideration I chose has been
oversubscribed, to the undersubscibed consideration, if available, regardless of
whether that is the cash consideration or the Senior Notes consideration.
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE ELECTION AND RISK OF
THE UNDERSIGNED. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE DELIVERY.
SIGN HERE:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please type or print name(s)
Date: _________________________, 2003
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Unless otherwise indicated, it will be assumed that we should tender
all of the shares held by us for your account.
INSTRUCTION FORM WITH RESPECT TO THE OFFER TO PURCHASE
UP TO 662,944 SHARES OF SERIES B PREFERRED STOCK
OF DYNEX CAPITAL, INC.
FOR CASH AND/OR SENIOR NOTES
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offering Circular and the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer"), in connection
with the offer by Dynex Capital, Inc., a Virginia corporation ("Dynex"), to
purchase up to 662,944 shares of Series B Preferred Stock.
This will instruct you to tender to Dynex the number of shares of
Series B Preferred Stock indicated below held by you for the account or benefit
of the undersigned (or, if no amount is indicated below, for all of the shares
of Series B Preferred Stock held by you for the account of the undersigned) upon
the terms and subject to the conditions set forth in the Offer, including
proration provisions described in the Offering Circular.
As set forth in "The Offer" section of the Offering Circular, you may
tender your shares of Series B Preferred Stock for cash, Senior Notes or a
combination of those two forms of payment.
Aggregate number of shares of Series B Preferred Stock to be tendered
by you for the account of the undersigned:
_________________*
I wish to allocate the shares of Series B Preferred Stock that I have
tendered in the following manner:
[____] CASH OPTION: I hereby tender the number of shares of Series B Preferred
Stock set forth above for cash in the amount of $24.50 per tendered
share, net, without interest, subject to proration and upon the terms
and subject to the conditions set forth in Dynex's Offering Circular,
dated January 8, 2003;
or
[____] NOTE OPTION: I hereby tender the number of shares of Series B Preferred
Stock set forth above for $25.725 in principal amount per tendered
share of the Senior Notes, subject to proration and upon the terms and
subject to the conditions set forth in Dynex's Offering Circular, dated
January 8, 2003. The Senior Notes will be issued in $25.00
denominations and any integral multiple thereof. In cases where the
consideration for shares tendered is not divisible, in the aggregate,
by the $25 denomination, you will receive cash consideration for the
amount in excess of the nearest $25 denomination not to exceed $24.99;
or
[____] COMBINATION OF CASH AND SENIOR NOTES CONSIDERATION: I hereby tender the
number of shares set forth above in the following manner:
Cash: ______ shares of Series B Preferred Stock for cash,
in the amount of $24.50 per share, net, without
interest, subject to proration and upon the
terms and subject to the conditions set forth in
Dynex's Offering Circular, dated January 8,
2003;
AND
Senior Notes: ______ shares of Series B Preferred Stock for $25.725
in principal amount per tendered share of the
Senior Notes, subject to proration and upon
the terms and subject to the conditions set
forth in Dynex's Offering Circular, dated
January 8, 2003.
OVERSUBSCRIPTION ALLOCATION:
After Dynex has determined which shares to accept pursuant to the terms
of the Offering Circular, if the particular consideration which you select is
oversubscribed, whether the cash consideration or the Senior Notes
consideration, you may elect to allocate any shares not exchanged for that
particular consideration to the other consideration, instead of having your
shares of Series B Preferred Stock that are not exchanged for the oversubscribed
consideration returned to you. Please place an "X" in the box provided below if
you wish any shares which were not exchanged due to an oversubscription, to be
allocated to the undersubscribed option, if available.
[____] Oversubscription Allocation: Please allocate any shares that I tendered
and which were not exchanged because the consideration I chose has been
oversubscribed, to the undersubscibed consideration, if available, regardless of
whether that is the cash consideration or the Senior Notes consideration.
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE ELECTION AND RISK OF
THE UNDERSIGNED. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE DELIVERY.
SIGN HERE:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Please type or print name(s)
Date: _______________________, 2003
Area Code and Telephone Number:
- -------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
* Unless otherwise indicated, it will be assumed that we should tender
all of the shares held by us for your account.
INSTRUCTION FORM WITH RESPECT TO THE OFFER TO PURCHASE
UP TO 683,703 SHARES OF SERIES C PREFERRED STOCK
OF DYNEX CAPITAL, INC.
FOR CASH AND/OR SENIOR NOTES
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offering Circular and the related Letter of Transmittal (which, as amended or
supplemented from time to time, together constitute the "Offer"), in connection
with the offer by Dynex Capital, Inc., a Virginia corporation ("Dynex"), to
purchase up to 683,703 shares of Series C Preferred Stock.
This will instruct you to tender to Dynex the number of shares of
Series C Preferred Stock indicated below held by you for the account or benefit
of the undersigned (or, if no amount is indicated below, for all of the shares
of Series C Preferred Stock held by you for the account of the undersigned) upon
the terms and subject to the conditions set forth in the Offer, including
proration provisions described in the Offering Circular.
As set forth in "The Offer" section of the Offering Circular, you may
tender your shares of Series C Preferred Stock for cash, Senior Notes or a
combination of those two forms of payment.
Aggregate number of shares of Series C Preferred Stock to be tendered
by you for the account of the undersigned:
_________________*
I wish to allocate the shares of Series C Preferred Stock that I have
tendered in the following manner:
[____] CASH OPTION: I hereby tender the number of shares of Series C Preferred
Stock set forth above for cash in the amount of $30.00 per tendered
share, net, without interest, subject to proration and upon the terms
and subject to the conditions set forth in Dynex's Offering Circular,
dated January 8, 2003;
or
[____] NOTE OPTION: I hereby tender the number of shares of Series C Preferred
Stock set forth above for $31.50 in principal amount per tendered share
of the Senior Notes, subject to proration and upon the terms and
subject to the conditions set forth in Dynex's Offering Circular, dated
January 8, 2003. The Senior Notes will be issued in $25.00
denominations and any integral multiple thereof. In cases where the
consideration for shares tendered is not divisible, in the aggregate,
by the $25 denomination, you will receive cash consideration for the
amount in excess of the nearest $25 denomination not to exceed $24.99;
or
[____] COMBINATION OF CASH AND SENIOR NOTES CONSIDERATION: I hereby tender the
number of shares set forth above in the following manner:
Cash: ______ shares of Series C Preferred Stock for cash, in
the amount of $30.00 per share, net, without
interest, subject to proration and upon the
terms and subject to the conditions set forth in
Dynex's Offering Circular, dated January 8,
2003;
AND
Senior Notes: ______ shares of Series C Preferred Stock for $31.50
in principal amount per tendered share of the
Senior Notes, subject to proration and upon
the terms and subject to the conditions set
forth in Dynex's Offering Circular, dated
January 8, 2003.
OVERSUBSCRIPTION ALLOCATION:
After Dynex has determined which shares to accept pursuant to the terms
of the Offering Circular, if the particular consideration which you select is
oversubscribed, whether the cash consideration or the Senior Notes
consideration, you may elect to allocate any shares not exchanged for that
particular consideration to the other consideration, instead of having your
shares of Series C Preferred Stock that are not exchanged for the oversubscribed
consideration returned to you. Please place an "X" in the box provided below if
you wish any shares which were not exchanged due to an oversubscription, to be
allocated to the undersubscribed option, if available.
[____] Oversubscription Allocation: Please allocate any shares that I tendered
and which were not exchanged because the consideration I chose has been
oversubscribed, to the undersubscibed consideration, if available, regardless of
whether that is the cash consideration or the Senior Notes consideration.
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE ELECTION AND RISK OF
THE UNDERSIGNED. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE DELIVERY.
SIGN HERE:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Please type or print name(s)
Date: _________________________, 2003
Area Code and Telephone Number:
- -------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
* Unless otherwise indicated, it will be assumed that we should tender
all of the shares held by us for your account.