<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE TO
(RULE 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1)
OR SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
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CAPSTEAD MORTGAGE CORPORATION
(NAME OF SUBJECT COMPANY (ISSUER))
FORTRESS CAP LLC
(NAMES OF FILING PERSONS (OFFEROR))
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
14067E 40 7
(CUSIP NUMBER OF CLASS OF SECURITIES)
RANDAL A. NARDONE
CHIEF OPERATING OFFICER AND SECRETARY
FORTRESS INVESTMENT GROUP LLC
1301 AVENUE OF THE AMERICAS
NEW YORK, NY 10019
TELEPHONE: (212) 798-6100
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF FILING PERSONS)
COPY TO:
J. GREGORY MILMOE, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
FOUR TIMES SQUARE
NEW YORK, NY 10036
TELEPHONE: (212) 735-3000
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CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
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<S> <C>
$40,000,000 $8,000
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</TABLE>
* For purposes of calculating amount of filing fee only. This amount assumes
the purchase of 5,000,000 outstanding publicly held shares of common stock
of Capstead Mortgage Corporation. The amount of the filing fee calculated in
accordance with Rule 0-11 of the Securities Exchange Act of 1934, as
amended, equals 1/50 of 1% of the transaction value.
[ ] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number or the Form or Schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C>
AMOUNT PREVIOUSLY PAID: N/A FORM OR REGISTRATION NO.: N/A
FILING PARTY: N/A DATE FILED: N/A
</TABLE>
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which
the statement relates:
[X] third-party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[ ] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]
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<PAGE> 2
This Tender Offer Statement on Schedule TO (this "Statement") relates to
the third-party tender offer by Fortress Cap LLC (the "Purchaser"), a Delaware
limited liability company, to purchase up to 5,000,000 shares of common stock,
par value $0.01 per share, of Capstead Mortgage Corporation, a Maryland
corporation ("Capstead"), at a price of $8.00 per share, net to the seller in
cash, without interest thereon, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated May 12, 2000 (the "Offer to Purchase"), a
copy of which is attached hereto as Exhibit (a)(1), and in the related Letter of
Transmittal, a copy of which is attached hereto as Exhibit (a)(2).
ITEM 1. SUMMARY TERM SHEET.
The information set forth in the section of the Offer to Purchase entitled
"Summary Term Sheet" is incorporated herein by reference.
ITEM 2. SUBJECT COMPANY INFORMATION.
(a) The name of the subject company is Capstead Mortgage Corporation, a
Maryland corporation ("Capstead"), and the address of its principal executive
offices is 8401 North Central Expressway, Suite 800, Dallas, Texas 75225. Its
telephone number is (214) 874-2323.
(b) This Statement relates to the offer by Fortress Cap LLC (the
"Purchaser"), a Delaware limited liability company, to purchase up to 5,000,000
shares of common stock of the Company, par value $0.01 per share, at $8.00 per
share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase and in the related Letter of Transmittal,
copies of which are attached hereto as Exhibits (a)(l) and (a)(2) (which are
herein collectively referred to as the "Offer"). The information set forth in
the introduction to the Offer to Purchase (the "Introduction") is incorporated
herein by reference.
(c) The information concerning the principal market in which the shares are
traded and certain high and low sales prices for the shares in such principal
market is set forth in "Price Range of Shares; Dividends" in the Offer to
Purchase and is incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND OF THE FILING PERSON.
(a), (b), (c) The information set forth in "Certain Information Concerning
the Purchaser" and Schedule I in the Offer to Purchase is incorporated herein by
reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a)(1)(i)-(iii), (v)-(viii), (xii) The information set forth under
"Introduction", "Terms of the Offer", "Background of the Offer; Past Contacts or
Negotiations with Capstead, "Purpose of the Offer; Plans for Capstead", "Certain
Information Concerning Capstead", "Certain Effects of the Offer", "Source and
Amount of Funds" and "Certain United States Federal Income Tax Consequences" in
the Offer to Purchase is incorporated herein by reference.
(a)(1) (iv) Not applicable
(a)(1) (ix) The information set forth under "Priority of Purchase;
Proration" in the Offer to Purchase is incorporated herein by reference.
(x) Not applicable
(xi) Not applicable
(a)(2) Not applicable
<PAGE> 3
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
The information set forth in "Background of the Offer; Past Contacts or
Negotiations with Capstead", "Certain Information Concerning the Purchaser" and
"Purpose of the Offer; Plans for Capstead" in the Offer to Purchase is
incorporated herein by reference.
ITEM 6. PURPOSE OF THE TRANSACTION AND PLANS OR PROPOSALS.
(a), (c)(1), (4-7) The information set forth in "Introduction", "Certain
Information Concerning Capstead", "Purpose of the Offer; Plans for Capstead",
and "Dividends and Distributions" in the Offer to Purchase is incorporated
herein by reference.
(c)(2) None
(3) None
ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in "Source and Amount of Funds" in the Offer
to Purchase is incorporated herein by reference.
(b) Not applicable
(d) Not applicable
ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
The information set forth in "Introduction", "Certain Information
Concerning Capstead", "Certain Information Concerning the Purchaser",
"Background of the Offer; Past Contracts or Negotiations with Capstead", and
Schedule I in the Offer to Purchase is incorporated herein by reference.
ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
The information set forth in "Introduction" and "Fees and Expenses" of the
Offer to Purchase is incorporated herein by reference.
ITEM 10. FINANCIAL STATEMENTS.
Not applicable
ITEM 11. ADDITIONAL INFORMATION.
Not applicable
ITEM 12. EXHIBITS.
The information in the Offer to Purchase, including all schedules and
annexes thereto, is hereby expressly incorporated by reference in response to
all of the items of this Statement, except as otherwise set forth below.
(a)(1) Offer to Purchase dated May 12, 2000.
(a)(2) Letter of Transmittal and instructions relating thereto.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Press Release issued by the Purchaser on May 12, 2000.
<PAGE> 4
(a)(8) Summary Advertisement as published in The New York Times on May 12,
2000.
(a)(9) Additional Instructions Relating to the Letter of Transmittal.
(b) Not applicable.
(d)(1) Supplemental Agreement, dated as of December 9, 1999, by and among
Capstead Mortgage Corporation and Fortress Investment Corp., incorporated herein
by reference to the Current Report on Form 8-K, dated December 15, 1999 filed by
Capstead Mortgage Corporation on December 16, 1999.
(d)(2) Form of Amendment No. 1 dated as of January 21, 2000 to the
Supplemental Agreement to the Stock Purchase agreement by and among Capstead
Mortgage Corporation and Fortress Cap LLC, incorporated herein by reference to
the Current Report on Form 8-K, dated February 2, 2000, filed by Capstead
Mortgage Corporation on February 3, 2000.
(d)(3) Series C and Series D Convertible Preferred Stock Purchase Agreement
dated as of December 9, 1999, by and among Capstead Mortgage Corporation, and
Fortress Investment Corp., incorporated herein by reference to the Current
Report on Form 8-K, dated December 15, 1999, filed by Capstead Mortgage
Corporation on December 16, 1999.
(g) Not applicable.
(h) Not applicable.
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SIGNATURE
After due 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.
FORTRESS CAP LLC
By: /s/ RANDAL A. NARDONE
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Name: Randal A. Nardone
Title: Chief Operating Officer
and Secretary
Dated: May 12, 2000
<PAGE> 6
EXHIBIT INDEX
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<CAPTION>
EXHIBIT
NO. EXHIBIT NAME
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<S> <C>
(a)(1) Offer to Purchase dated May 12, 2000
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9
(a)(7) Press Release issued by the Purchaser on May 12, 2000
(a)(8) Summary Advertisement as published in The New York Times on
May 12, 2000
(a)(9) Additional Instructions Relating to the Letter of
Transmittal
(b) Not applicable.
(d)(1) Supplemental Agreement, dated as of December 9, 1999, by and
among Capstead Mortgage Corporation and Fortress Investment
Corp., incorporated herein by reference to the Current
Report on Form 8-K, dated December 15, 1999 filed by
Capstead Mortgage Corporation on December 16, 1999.
(d)(2) Form of Amendment No. 1 dated as of January 21, 2000 to the
Supplemental Agreement to the Stock Purchase agreement by
and among Capstead Mortgage Corporation and Fortress Cap
LLC, incorporated herein by reference to the Current Report
on Form 8-K, dated February 2, 2000, filed by Capstead
Mortgage Corporation on February 3, 2000.
(d)(3) Series C and Series D Convertible Preferred Stock Purchase
Agreement dated as of December 9, 1999, by and among
Capstead Mortgage Corporation, and Fortress Investment
Corp., incorporated herein by reference to the Current
Report on Form 8-K, dated December 15, 1999, filed by
Capstead Mortgage Corporation on December 16, 1999.
(g) Not applicable.
(h) Not applicable.
</TABLE>
<PAGE> 1
Exhibit 99 (a)(1)
OFFER TO PURCHASE FOR CASH
UP TO 5,000,000 SHARES OF COMMON STOCK
OF
CAPSTEAD MORTGAGE CORPORATION
AT
$8.00 NET PER SHARE
BY
FORTRESS CAP LLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JUNE 9, 2000, UNLESS THE OFFER IS EXTENDED.
FORTRESS CAP LLC, A DELAWARE LIMITED LIABILITY COMPANY, HEREBY OFFERS TO
PURCHASE UP TO 5,000,000 SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE OF
CAPSTEAD MORTGAGE CORPORATION AT A PURCHASE PRICE OF $8.00 PER SHARE, NET TO THE
SELLER IN CASH, WITHOUT INTEREST. THE NUMBER OF SHARES AND THE PRICE PER SHARE
HAVE BEEN ADJUSTED FOR THE 1-FOR-2 REVERSE SPLIT OF CAPSTEAD'S COMMON STOCK,
EFFECTIVE AT THE CLOSE OF BUSINESS ON MAY 8, 2000. SHARES MUST BE TENDERED ON
THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THIS DOCUMENT AND IN THE
RELATED LETTER OF TRANSMITTAL. ALL SHARES PROPERLY TENDERED AND NOT PROPERLY
WITHDRAWN WILL BE PURCHASED AT THE PURCHASE PRICE, UPON THE TERMS AND SUBJECT TO
THE CONDITIONS OF THE OFFER, INCLUDING THE PRORATION PROVISIONS DESCRIBED
HEREIN.
FORTRESS CAP LLC RESERVES THE RIGHT, IN ITS SOLE DISCRETION, TO PURCHASE
MORE THAN 5,000,000 SHARES PURSUANT TO THE TENDER OFFER. SHARES NOT PURCHASED
BECAUSE OF THE PRORATION PROVISIONS WILL BE PROMPTLY RETURNED. SEE SECTION 4.
THE TENDER OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE TENDER OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 15.
Tendering holders of common stock will not be obligated to pay brokerage
commissions, solicitation fees, or, upon the terms and subject to conditions of
the offer, stock transfer taxes on the purchase of shares of common stock by
Fortress Cap LLC. However, any tendering stockholder or other payee required to
complete a Letter of Transmittal who fails to complete fully and sign the box
captioned "Substitute Form W-9" included in the Letter of Transmittal may be
subject to a required tax withholding of 31% of the gross proceeds paid to the
stockholder or other payee pursuant to the tender offer. Fortress Cap LLC will
pay all charges and expenses of Norwest Bank Minnesota, N.A., the Depositary,
Merrill Lynch & Co., the Dealer Manager, and Corporate Investor Communications,
Inc., the Information Agent, incurred in connection with the tender offer.
Tenders pursuant to the tender offer may be withdrawn at any time prior to
12:00 Midnight, June 9, 2000, the expiration date of the tender offer, and if
not yet accepted for payment, after July 10, 2000.
The common stock is listed for trading on the New York Stock Exchange under
the symbol "CMO." On May 11, 2000, the most recent practicable date prior to the
announcement of the offer, the closing per share price of the common stock, as
reported on the NYSE, was $6.44. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES. See Section 7.
THE DISINTERESTED MEMBERS OF THE BOARD OF DIRECTORS OF CAPSTEAD HAVE
APPROVED THE MAKING OF THE TENDER OFFER. YOU MUST, HOWEVER, MAKE YOUR OWN
DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. NONE OF
CAPSTEAD, ITS BOARD OF DIRECTORS OR THE DEALER MANAGER MAKES ANY RECOMMENDATION
TO YOU WITH RESPECT TO THE TENDER OFFER, AND NO PERSON HAS BEEN AUTHORIZED BY
CAPSTEAD OR ITS BOARD OF DIRECTORS TO MAKE ANY SUCH RECOMMENDATIONS. DIRECTORS
AND EXECUTIVE OFFICERS OF CAPSTEAD HAVE AGREED NOT TO PARTICIPATE IN THE TENDER
OFFER.
YOU SHOULD EVALUATE CAREFULLY ALL OF THE INFORMATION CONTAINED OR REFERRED
TO IN THIS DOCUMENT AND MAKE YOUR OWN DECISION WHETHER TO TENDER SHARES PURSUANT
TO THE TENDER OFFER. YOU ARE URGED TO CONSULT A TAX ADVISOR CONCERNING ANY
FEDERAL, STATE, LOCAL, OR FOREIGN TAX CONSEQUENCES OF A SALE OF COMMON STOCK
PURSUANT TO THE TENDER OFFER.
IMPORTANT
Any stockholder wishing to tender shares in the tender offer must (1)
complete and sign the Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions in the Letter of Transmittal and mail or
deliver the Letter of Transmittal and all other required documents to the
Depositary together with certificates representing the shares tendered or follow
the procedure for book-entry transfer set forth in Section 4 hereof or (2)
request such stockholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for the stockholder. A stockholder whose
shares are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact such person if such stockholder wishes to
tender such shares.
Any stockholder who wishes to tender shares and cannot deliver certificates
representing such shares and all other required documents to the Depositary
prior to the expiration of the tender offer or who cannot comply with the
procedures for book-entry transfer on a timely basis may tender such shares
pursuant to the guaranteed delivery procedure set forth in Section 4 hereof.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be obtained from the Information Agent at its
address and telephone number set forth on the back cover of this Offer to
Purchase. Stockholders may also contact their broker, dealer, commercial bank,
trust company or other nominee for copies of these documents.
The Dealer Manager for the Tender Offer is:
MERRILL LYNCH & CO.
May 12, 2000
<PAGE> 2
TABLE OF CONTENTS
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PAGE
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<C> <S> <C>
SUMMARY TERM SHEET................................................. 1
INTRODUCTION....................................................... 4
THE TENDER OFFER................................................... 6
1. Terms of the Offer.......................................... 6
2. Priority of Purchase; Proration............................. 7
3. Acceptance for Payment and Payment for Shares............... 8
4. Procedures for Accepting the Offer and Tendering Shares..... 9
5. Withdrawal Rights........................................... 11
6. Certain United States Federal Income Tax Consequences....... 12
7. Price Range of Shares; Dividends............................ 13
8. Certain Information Concerning Capstead..................... 13
9. Certain Information Concerning the Purchaser................ 17
10. Source and Amount of Funds.................................. 17
11. Background of the Offer; Past Contacts or Negotiations with 17
Capstead....................................................
12. Purpose of the Offer; Plans for Capstead.................... 18
13. Certain Effects of the Offer................................ 19
14. Dividends and Distributions................................. 19
15. Certain Conditions of the Offer............................. 19
16. Certain Legal Matters; Regulatory Approvals................. 21
17. Fees and Expenses........................................... 21
18. Miscellaneous............................................... 22
SCHEDULE I
Directors and Executive Officers of Fortress Investment Group
LLC.............................................................. I-1
</TABLE>
i
<PAGE> 3
SUMMARY TERM SHEET
Fortress Cap LLC is offering to purchase up to 5,000,000 shares of the
outstanding common stock of Capstead Mortgage Corporation at $8.00 net per share
in cash. The following are some of the questions you, as a stockholder of
Capstead, may have and answers to those questions. We urge you to read carefully
the remainder of this Offer to Purchase and the Letter of Transmittal because
the information in this summary term sheet is provided solely for your
convenience and is qualified by reference to the full text and more specific
details in the remainder of this Offer to Purchase and the Letter of
Transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
Our name is Fortress Cap LLC. We are a Delaware limited liability company.
We currently own 5,378,000 shares of Series C Cumulative Convertible Preferred
Stock of Capstead and 5,378,000 shares of Series D Cumulative Convertible
Preferred Stock of Capstead. In addition, Wesley R. Edens and Robert I.
Kauffman, officers and directors of affiliates of ours under common control with
us, currently serve as directors of Capstead. In addition, Mr. Edens was
recently appointed Chairman and Chief Executive Officer of Capstead. See Section
9 for certain information regarding us.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE
TENDER OFFER?
We are seeking to purchase up to 5,000,000 shares of the outstanding common
stock of Capstead. See the "Introduction" and Section 1. This number reflects
the 1-for-2 reverse split of Capstead's common stock which took effect at the
close of business on May 8, 2000.
HOW MUCH ARE YOU OFFERING TO PAY? WHAT IS THE FORM OF PAYMENT? WILL I HAVE TO
PAY ANY FEES OR COMMISSIONS?
We are offering to pay $8.00 per share, net to you, in cash. This price
reflects the 1-for-2 reverse split of Capstead's common stock which took effect
at the close of business on May 8, 2000. If you are the record owner of your
shares and you tender your shares to us in the tender offer, you will not have
to pay brokerage fees or similar expenses. If you own your shares through a
broker or other nominee, and your broker or nominee tenders your shares on your
behalf, your broker or nominee may charge you a fee for doing so. You should
consult your broker or nominee to determine whether any charges will apply.
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
If all 5,000,000 shares are tendered, $40,000,000 will be required to pay
for the purchase. We will obtain these funds from our indirect parent, Fortress
Investment Fund LLC, which has over $750,000,000 in uninvested committed equity
capital.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE TENDER OFFER?
Unless the tender offer is extended, you will have at least until 12:00
Midnight, New York City time, on Friday, June 9, 2000, to tender your shares in
the tender offer. Further, if you cannot deliver everything that is required in
order to make a valid tender by that time, you may be able to use a guaranteed
delivery procedure, which is described later in this Offer to Purchase. See
Sections 1 and 4.
HOW WILL I BE NOTIFIED IF THE TENDER OFFER IS EXTENDED?
If we extend the tender offer, we will inform Norwest Bank Minnesota, N.A.,
the depositary for the tender offer, of that fact and will make a public
announcement of the extension not later than 9:00 a.m., New York City time, on
the next business day after the day on which the tender offer was scheduled to
expire. See Section 1.
1
<PAGE> 4
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE TENDER OFFER?
We are not obligated to purchase shares that are validly tendered if, among
other things, there is a material adverse change in Capstead or its business.
The tender offer is also subject to a number of other conditions, including the
proration provisions, all of which may be waived at our discretion. See Section
15.
HOW DO I TENDER MY SHARES?
To tender shares, you must deliver the certificates representing your
shares, together with a completed Letter of Transmittal or a manually signed
facsimile thereof and any other documents required by the Letter of Transmittal,
to Norwest Bank Minnesota, N.A., the depositary for the tender offer, not later
than the time the tender offer expires. If your shares are held by a broker or
other nominee, the shares can be tendered by your broker or other nominee
through The Depository Trust Company. If you are unable to deliver any required
document or instrument to the depositary by the expiration of the tender offer,
you may gain some extra time by having a broker, a bank or other fiduciary that
is an eligible institution guarantee that the missing items will be received by
the depositary within three New York Stock Exchange trading days of the date of
execution of a Notice of Guaranteed Delivery. For the tender to be valid,
however, the depositary must receive the missing items within that three trading
day period. See Section 4.
UNTIL WHAT TIME MAY I WITHDRAW PREVIOUSLY TENDERED SHARES?
You may withdraw shares at any time until the tender offer has expired and,
if we have not accepted your shares for payment by July 10, 2000, you may
withdraw them at any time after that date. See Section 5.
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the depositary while you
still have the right to withdraw the shares. See Section 5.
WHAT IF MY SHARES HAVE NOT BEEN ADJUSTED FOR THE REVERSE STOCK SPLIT?
The accompanying Letter of Transmittal also permits you to tender your
shares even though you have not yet submitted them to Capstead to be adjusted
for the reverse split of Capstead's common stock, which was effective at the
close of business on May 8, 2000. THE LETTER OF TRANSMITTAL ACCOMPANYING THIS
OFFER SHOULD NOT BE USED UNLESS YOU INTEND TO TENDER YOUR SHARES. If you do not
want to tender your shares for sale to us, but wish to have your share
certificates adjusted to reflect the 1-for-2 reverse split of Capstead common
stock, use the documents which Capstead is sending to you under separate cover.
WHAT DOES THE CAPSTEAD BOARD OF DIRECTORS RECOMMEND REGARDING THE TENDER OFFER?
The disinterested members of the board of directors of Capstead have
approved the tender offer as a means by which we can satisfy in full a
contractual obligation to acquire not less than 2,500,000 shares of common stock
(such number of shares having been adjusted for the 1-for-2 reverse split of
Capstead's common stock effective at the close of business on May 8, 2000) and
acquire up to an additional 2,500,000 shares. If we do not acquire the 2,500,000
shares that we are obligated to acquire in the tender offer, we will seek to
acquire additional shares either through open market purchases or by converting
shares of our Series C and Series D Preferred Stock. Neither Capstead nor its
directors makes any recommendation as to whether you should tender shares
pursuant to this tender offer. You must make the decision whether to tender
shares and, if so, how many shares to tender. The directors and executive
officers of Capstead have agreed not to participate in the tender offer. See the
"Introduction" and Section 11.
2
<PAGE> 5
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On May 11, 2000, the last trading day before we announced and commenced the
tender offer, the closing per share sales price of Capstead common stock, as
reported on the NYSE, was $6.44. We encourage you to obtain a recent quotation
for shares of Capstead common stock in deciding whether to tender your shares.
See Section 7.
WHAT ARE CERTAIN TAX CONSEQUENCES OF TENDERING SHARES?
The receipt of cash for shares pursuant to the tender offer will be a
taxable transaction for United States federal income tax purposes and possibly
for state, local and foreign income tax purposes as well. In general, a
stockholder who sells shares pursuant to the tender offer will recognize gain or
loss for United States federal income tax purposes equal to the difference, if
any, between the amount of cash received and the stockholder's adjusted tax
basis in the shares sold pursuant to the tender offer. If the shares exchanged
constitute capital assets in the hands of the stockholder, such gain or loss
will be capital gain or loss. In general, capital gains recognized by an
individual will be subject to a maximum United States federal income tax rate of
20% if the shares were held for more than one year, and if held for one year or
less they will be subject to tax at ordinary income tax rates. See Section 6.
WILL I HAVE TO PAY A STOCK TRANSFER TAX IF I TENDER MY SHARES?
If you instruct the depositary in the Letter of Transmittal to make the
payment for the shares to the registered holder, you will not incur any stock
transfer tax.
TO WHOM MAY I SPEAK IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You may call Corporate Investor Communications, Inc. at (888) 568-9323
(toll free) or Merrill Lynch & Co. at (212) 236-3790 (call collect). Corporate
Investor Communications Inc. is acting as the Information Agent and Merrill
Lynch & Co. is acting as the Dealer Manager for our tender offer. See the back
cover of this Offer to Purchase.
3
<PAGE> 6
To the Holders of Shares of Common Stock
of Capstead Mortgage Corporation:
INTRODUCTION
Fortress Cap LLC, a Delaware limited liability company (the "Purchaser"),
hereby offers to purchase up to 5,000,000 outstanding shares of common stock,
par value $0.01 per share, of Capstead Mortgage Corporation, a Maryland
corporation ("Capstead"), at a price of $8.00 per share, net to the seller in
cash (the "Purchase Price"), upon the terms and subject to the conditions set
forth in this Offer to Purchase and in the related Letter of Transmittal (which,
together with any amendments or supplements hereto or thereto, collectively
constitute the "Offer"). The number of shares to be purchased and the Purchase
Price per share reflect the 1-for-2 reverse split of the Company's common stock,
which took effect at the close of business on May 8, 2000.
The Offer is being made, in part, to satisfy in full an obligation under
the Supplemental Agreement dated December 9, 1999, between an affiliate of the
Purchaser and Capstead (as amended, the "Supplemental Agreement") and because
the Purchaser believes that the shares are an attractive investment at the
Purchase Price. Pursuant to the Supplemental Agreement, which was entered into
in connection with the purchase of shares of Series C preferred stock and Series
D preferred stock of Capstead (the "Series C shares" and "Series D shares,"
respectively), the Purchaser (or an affiliate) is obligated to acquire, subject
to certain conditions which have all been satisfied, within six months from the
date of Capstead's annual meeting of stockholders, held on April 20, 2000, at
least 2,500,000 shares of common stock of Capstead (such number of shares having
been adjusted for the reverse stock split) through, at the Purchaser's option,
open market purchases, conversion of a portion of the Series C shares or Series
D shares, or any combination thereof. On May 9, 2000, the disinterested members
of the board of directors of Capstead approved the Offer as a means by which the
Purchaser could seek to satisfy in full this obligation and acquire up to an
additional 2,500,000 shares.
Tendering stockholders who are record owners of their shares and tender
directly to the Depositary (as defined below) will not be obligated to pay
brokerage fees or commissions or, except as otherwise provided in Instruction 6
of the Letter of Transmittal, stock transfer taxes with respect to the purchase
of shares by the Purchaser pursuant to the Offer. Stockholders who hold their
shares through a broker or other nominee bank should consult such institution as
to whether it charges any service fees. The Purchaser will pay all charges and
expenses of Merrill Lynch & Co., as dealer manager (the "Dealer Manager"),
Norwest Bank Minnesota, N.A., as depositary (the "Depositary"), and Corporate
Investor Communications, Inc., as information agent (the "Information Agent"),
incurred in connection with the Offer. See Section 17.
THE DISINTERESTED MEMBERS OF THE BOARD OF DIRECTORS OF CAPSTEAD HAVE
APPROVED THE MAKING OF THE OFFER. YOU MUST, HOWEVER, MAKE YOUR OWN DECISION
WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. NONE OF
CAPSTEAD, ITS BOARD OF DIRECTORS OR THE DEALER MANAGER MAKES ANY RECOMMENDATION
TO YOU WITH RESPECT TO THE OFFER, AND NO PERSON HAS BEEN AUTHORIZED BY CAPSTEAD,
ITS BOARD OF DIRECTORS OR THE DEALER MANAGER TO MAKE ANY SUCH RECOMMENDATION.
THE DIRECTORS AND EXECUTIVE OFFICERS OF CAPSTEAD HAVE AGREED NOT TO PARTICIPATE
IN THE OFFER. THE REASONS FOR THE BOARD'S POSITION ARE SET FORTH IN CAPSTEAD'S
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), WHICH IS BEING MAILED TO
STOCKHOLDERS CONCURRENTLY HEREWITH.
YOU SHOULD EVALUATE CAREFULLY ALL OF THE INFORMATION CONTAINED OR REFERRED
TO IN THIS DOCUMENT AND MAKE YOUR OWN DECISION WHETHER TO TENDER SHARES PURSUANT
TO THE OFFER. YOU ARE URGED TO CONSULT A TAX ADVISOR CONCERNING ANY FEDERAL,
STATE, LOCAL, OR FOREIGN TAX CONSEQUENCES OF A SALE OF SHARES PURSUANT TO THE
OFFER.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO THE SATISFACTION OF CERTAIN OTHER
CONDITIONS. SEE SECTION 15.
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Capstead has advised the Purchaser that, as of the close of business on May
8, 2000, 22,590,431 shares of common stock were issued and outstanding and
984,754 shares of common stock were subject to stock option grants. Except for
the 5,378,000 Series C and 5,378,000 Series D shares owned by the Purchaser,
which are convertible on a one-half-for-one basis into an aggregate of 5,378,000
shares of common stock (after the adjustment for the reverse stock split)
neither the Purchaser nor any person listed on Schedule I hereto beneficially
owns any shares.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
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<PAGE> 8
THE TENDER OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including the
proration provisions and, if the Offer is extended or amended, the terms and
conditions of such extension or amendment), the Purchaser will accept for
payment and pay for all shares validly tendered prior to the Expiration Date and
not properly withdrawn as permitted under Section 5. The term "Expiration Date"
means 12:00 Midnight, New York City time, on Friday, June 9, 2000, unless the
Purchaser extends the period during which the Offer is open, in which event the
term "Expiration Date" means the latest time and date on which the Offer, as so
extended, expires.
The Offer is conditioned upon the satisfaction of the conditions set forth
in Section 15. The Purchaser may waive any or all of the conditions to its
obligation to purchase shares pursuant to the Offer. If by the initial
Expiration Date or any subsequent Expiration Date any or all of the conditions
to the Offer have not been satisfied or waived, the Purchaser may, subject to
the rules and regulations of the Securities and Exchange Commission (the "SEC"),
elect to (i) terminate the Offer and return all tendered shares to tendering
stockholders, (ii) waive all of the unsatisfied conditions and, subject to any
required extension, purchase all shares validly tendered by the Expiration Date
and not properly withdrawn or (iii) extend the Offer and, subject to the right
of stockholders to withdraw shares until the new Expiration Date, retain the
shares that have been tendered until the expiration of the Offer as extended. If
the Purchaser accepts for payment any shares pursuant to the Offer, it will,
subject to the proration provisions, accept for payment all shares validly
tendered prior to the Expiration Date and not properly withdrawn, and will
promptly pay for all shares so accepted for payment.
The Purchaser may (i) extend the Offer beyond the scheduled Expiration Date
if any of the conditions to the Purchaser's obligation to accept for payment and
to pay for the shares are not satisfied or waived or (ii) extend the Offer for
any period required by any rule, regulation or interpretation of the SEC or its
staff applicable to the Offer, other than Rule 14e-5 promulgated under the
Exchange Act. An extension described in clause (i) of the preceding sentence
will not exceed the lesser of (a) ten business days or (b) such smaller number
of days that the Purchaser reasonably believes is necessary to cause the
conditions of the Offer to be satisfied.
The rights reserved by the Purchaser by the preceding paragraph are in
addition to the Purchaser's rights pursuant to Section 15. Any extension, delay,
termination, waiver or amendment will be followed as promptly as practicable by
public announcement thereof, such announcement in the case of an extension to be
made no later than 9:00 a.m., New York City time, on the next business day after
the previously scheduled Expiration Date, in accordance with the public
announcement requirements of Rule 14e-1(d) under the Exchange Act. Subject to
applicable law (including Rules 14d-4(d) and 14d-6(c) under the Exchange Act,
which require that material changes be promptly disseminated to stockholders in
a manner reasonably designed to inform them of such changes) and without
limiting the manner in which the Purchaser may choose to make any public
announcement, the Purchaser shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by issuing a press
release to the Dow Jones News Service.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment for shares or it is unable to pay for
shares pursuant to the Offer for any reason, then, without prejudice to the
Purchaser's rights under the Offer, the Depositary may retain tendered shares on
behalf of the Purchaser, and such shares may not be withdrawn except to the
extent tendering stockholders are entitled to withdrawal rights as described
herein under Section 5. However, the ability of the Purchaser to delay the
payment for shares that the Purchaser has accepted for payment is limited by
Rule 14e-1(c) under the Exchange Act, which requires that a bidder pay the
consideration offered or return the securities deposited by or on behalf of
stockholders promptly after the termination or withdrawal of such bidder's
offer.
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<PAGE> 9
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Purchaser will disseminate additional tender offer materials and
extend the Offer to the extent required by Rules 14d-4(d), 14d-6(c) and 14e-1
under the Exchange Act. The minimum period during which an offer must remain
open following material changes in the terms of the Offer, other than a change
in price, percentage of securities sought or inclusion of or changes to a
dealer's soliciting fee, will depend upon the facts and circumstances, including
the materiality, of the changes. In the SEC's view, an offer should remain open
for a minimum of five (5) business days from the date the material change is
first published, sent or given to stockholders and, if material changes are made
with respect to information that approaches the significance of price and share
levels, a minimum of ten (10) business days may be required to allow for
adequate dissemination to stockholders. Accordingly, if, prior to the Expiration
Date, the Purchaser increases (in excess of 2% of the issued and outstanding
shares of common stock) or decreases the number of shares being sought or
decreases or increases the consideration offered pursuant to the Offer, and if
the Offer is scheduled to expire at any time earlier than the tenth business day
from the date that notice of such increase or decrease is first published, sent
or given to stockholders, the Offer will be extended at least until the
expiration of such tenth business day.
This Offer to Purchase and the related Letter of Transmittal will be mailed
to record holders of shares of the Capstead's common stock whose names appear on
Capstead's stockholder list as of May 8, 2000 and will be furnished, for
subsequent transmittal to beneficial owners of shares, to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the stockholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing. Because
the mailing of the Offer closely follows the effective date for the reverse
stock split, which was effective at the close of business on May 8, 2000, the
Letter of Transmittal accompanying this Offer also provides for the tendering of
shares that have not yet been adjusted for the reverse stock split.
2. PRIORITY OF PURCHASE; PRORATION.
If the number of shares validly tendered and not properly withdrawn prior
to the Expiration Date is less than or equal to 5,000,000 shares (or such
greater number of shares as Purchaser may elect to purchase in accordance with
the Offer), the Purchaser will, upon the terms and subject to the conditions of
the Offer, purchase all shares so tendered. In the event of an over-subscription
of the Offer, shares validly tendered and not properly withdrawn prior to the
Expiration Date will be purchased on a pro-rata basis, disregarding fractions
that arise as a result of such prorating, according to the number of shares
tendered by each stockholder prior to the Expiration Date; provided, however,
that the Purchaser reserves the right to elect to purchase any and all of the
excess shares tendered; and so long as the excess number accepted by the
Purchaser does not exceed two percent (2%) of the issued and outstanding shares
of common stock, no extension of the Offer period and no further notice to the
stockholders will be required or given. If the Purchaser elects to purchase
excess tendered shares, but less than all of the tendered shares, then the
shares tendered shall be purchased on a pro-rata basis, as described above.
If proration of tendered shares is required, the Purchaser will determine
the proration factor as soon as practicable following the Expiration Date.
Proration for each stockholder tendering shares will be based on the ratio of
the number of shares properly tendered and not properly withdrawn by such
stockholder to the total number of shares properly tendered and not properly
withdrawn by all stockholders. Because of the difficulty in quickly determining
the number of shares properly tendered and not properly withdrawn, the Purchaser
expects that it will not be able to announce the final proration factor or
commence payment for any shares purchased pursuant to the Offer until
approximately five (5) business days after the Expiration Date.
For purposes of determining shares validly tendered, any shares tendered
that have not been adjusted for the 1-for-2 reverse stock split, which was
effective at the close of business on May 8, 2000, will be adjusted accordingly.
Any fractional shares created upon adjusting the tendered shares for the reverse
stock split will also be deemed to be tendered for the appropriate fractional
portion of the Purchase Price.
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<PAGE> 10
3. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment) and the satisfaction or earlier waiver of all the conditions to
the Offer set forth in Section 15, the Purchaser will accept for payment and
will pay for the number of shares as determined in accordance with Section 2 as
soon as it is permitted to do so under applicable law. Subject to compliance
with Rule 14e-1(c) under the Exchange Act, the Purchaser expressly reserves the
right to delay payment for shares in order to comply in whole or in part with
any applicable law. See Section 16.
In all cases, payment for shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) the certificates
evidencing such shares (the "Share Certificates") or confirmation (a "Book-Entry
Confirmation") of a book-entry transfer of such shares into the Depositary's
account at The Depository Trust Company (the "Book-Entry Transfer Facility")
pursuant to the procedures set forth in Section 4, (ii) the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees or, in the case of a book-entry transfer, an
Agent's Message (as defined below) in lieu of the Letter of Transmittal and
(iii) any other documents required by the Letter of Transmittal.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such shares pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, payment
for shares accepted for payment pursuant to the Offer will be made by deposit of
the aggregate Purchase Price therefor with the Depositary, which will act as
agent for tendering stockholders for the purpose of receiving payments from the
Purchaser and transmitting such payments to tendering stockholders whose shares
have been accepted for payment. If, for any reason whatsoever, acceptance for
payment of any shares tendered pursuant to the Offer is delayed, or the
Purchaser is unable to accept for payment shares tendered pursuant to the Offer,
then, without prejudice to the Purchaser's rights under Section 1 hereof, the
Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
shares, and such shares may not be withdrawn, except to the extent that the
tendering stockholders are entitled to withdrawal rights as described in Section
5 and as otherwise required by Rule 14e-1(c) under the Exchange Act.
UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE
PAID, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are submitted
evidencing more shares than are tendered, Share Certificates evidencing
unpurchased shares will be returned, without expense to the tendering
stockholder (or, in the case of shares tendered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility pursuant to the
procedure set forth in Section 4, such shares will be credited to an account
maintained at the Book-Entry Transfer Facility), promptly following the
expiration or termination of the Offer. Any shares tendered that have not been
adjusted for the 1-for-2 reverse stock split, which was effective at the close
of business on May 8, 2000, and are not accepted for payment will be adjusted
for the reverse stock split prior to being returned.
No fractional shares will be issued or returned in connection with the
Offer. Any holder of fractional shares will receive cash in lieu of such
fractional shares at a price equal to the fraction to which the stockholder
would otherwise be entitled multiplied by the Purchase Price if such shares are
accepted by the Purchaser, or, if such shares are withdrawn, the cash amount
paid by Capstead in connection with the adjustment for the 1-for-2 reverse stock
split.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of its affiliates, the right to purchase
all or any portion of the shares tendered pursuant to the Offer, but any such
transaction or assignment will not relieve the Purchaser of its obligations
under the Offer and
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will in no way prejudice the rights of tendering stockholders to receive payment
for shares validly tendered and accepted for payment pursuant to the Offer.
4. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
Valid Tenders. In order to validly tender shares pursuant to the Offer, a
tendering stockholder must either (1) properly complete and duly execute the
Letter of Transmittal (or a facsimile thereof), together with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message in lieu of the Letter of Transmittal) and any other documents required
by the Letter of Transmittal must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and either the
Share Certificates evidencing tendered shares must be received by the Depositary
at such address or such shares must be tendered pursuant to the procedure for
book-entry transfer described below and a Book-Entry Confirmation must be
received by the Depositary, in each case prior to the Expiration Date, or (2)
must comply with the guaranteed delivery procedures described below. The Letter
of Transmittal also provides for the tendering of shares that have not yet been
adjusted for the reverse stock split.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility, to and received by, the Depositary and forming a part of a
Book-Entry Confirmation, that states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the shares that are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that the Purchaser may enforce such
agreement against such participant.
Book-Entry Transfer. The Depositary will establish an account with respect
to the shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of the Book-Entry Transfer
Facility may tender shares in accordance with the Book-Entry Transfer Facility
Automated Tender Offer Program ("ATOP") to the extent it is available to such
participants for the shares they wish to tender by making book-entry delivery of
the shares by causing the Book-Entry Transfer Facility to transfer shares into
the Depositary's account in accordance with the Book-Entry Transfer Facility's
procedures for transfer. A stockholder tendering through ATOP must expressly
acknowledge that the stockholder has received and agreed to be bound by the
Letter of Transmittal and that the Letter of Transmittal may be enforced against
such stockholder. In order to tender shares by means of ATOP, the procedures for
ATOP delivery must be duly and timely completed prior to 5:00 p.m. New York City
time, on the day of the Expiration Date. Alternatively, nominees may also
complete the Letter of Transmittal and deliver shares as provided above.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (1) if the Letter of Transmittal is signed by the registered holder
of the shares tendered therewith, unless such holder has completed the box
entitled "Special Payment Instructions" on the Letter of Transmittal or (2) if
the shares are tendered for the account of a firm that is participating in the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program or
by any other "eligible guarantor institution," as such term is defined in Rule
17Ad-15 under the Exchange Act (each an "Eligible Institution" and collectively
"Eligible Institutions"). In all other cases, all signatures on a Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 1 of
the Letter of Transmittal. If a Share Certificate is registered in the name of a
person or persons other than the signer of the Letter of Transmittal, or if
payment is to be made to, or a Share Certificate not accepted for payment or not
tendered is to be issued in the name of a person other than the registered
holder(s), then the Share Certificate must be endorsed or accompanied by
appropriate duly executed stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear on the Share Certificate, with the
signature(s) on such Share Certificate or stock powers
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<PAGE> 12
guaranteed by an Eligible Institution as provided in the Letter of Transmittal.
See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender shares pursuant to
the Offer and the Share Certificates evidencing such stockholder's shares are
not immediately available or such stockholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such stockholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, such shares may nevertheless be
tendered; provided that all of the following conditions are satisfied:
(1) such tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Purchaser, is
received prior to the Expiration Date by the Depositary as provided below;
and
(3) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees (or, in the case
of a book-entry transfer, an Agent's Message), and any other documents
required by the Letter of Transmittal are received by the Depositary within
three New York Stock Exchange trading days after the date of execution of
such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile transmission or mailed to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the form of Notice
of Guaranteed Delivery made available by the Purchaser.
In the case where the Share Certificate has been previously submitted for
the purpose of effecting the reverse stock split, a stockholder should deliver
the Letter of Transmittal to the Depositary indicating that the shares being
tendered have been previously submitted.
In all cases, shares will not be deemed validly tendered unless a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) is received by the Depositary.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, RECEIPT OF A BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of shares will be determined by the Purchaser in its sole discretion, which
determination shall be final and binding on all parties. The Purchaser reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may, in the opinion of its
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any defect or irregularity in the tender of any shares of any particular
stockholder, whether or not similar defects or irregularities are waived in the
case of other stockholders. No tender of shares will be deemed to have been
validly made until all defects and irregularities have been cured or waived to
the satisfaction of the Purchaser. None of the Purchaser, Capstead, the Dealer
Manager, the Depositary, the Information Agent or any other person will be under
any duty to give notification of any defects or irregularities in tenders or
incur any liability for failure to give any such notification. The Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the instructions thereto) will be final and binding.
Other Requirements. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of the Purchaser
as such stockholder's proxies, each with full power of substitution, in the
manner set forth in the Letter of Transmittal, to the full extent of such
stockholder's rights with respect to the shares tendered by such stockholder and
accepted for payment by
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the Purchaser (including, with respect to any and all other shares or other
securities issued or issuable in respect of such shares on or after the date of
this Offer to Purchase). All such proxies shall be considered coupled with an
interest in the tendered shares. Such appointment will be effective when, and
only to the extent that, the Purchaser accepts such shares for payment. Upon
such acceptance for payment, all prior proxies given by such stockholder with
respect to such shares (and such other shares and securities) will be revoked
without further action, and no subsequent proxies may be given nor any
subsequent written consent executed by such stockholder (and, if given or
executed, will not be deemed to be effective) with respect thereto. The
designees of the Purchaser will, with respect to the shares for which the
appointment is effective, be empowered to exercise all voting and other rights
of such stockholder as they in their sole discretion may deem proper at any
annual or special meeting of the Capstead stockholders or any adjournment or
postponement thereof, by written consent in lieu of any such meeting or
otherwise. The Purchaser reserves the right to require that, in order for shares
to be deemed validly tendered, immediately upon the Purchaser's payment for such
shares, the Purchaser must be able to exercise full voting rights with respect
to such shares.
The tender of shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the Offer, as well as
the tendering stockholder's representation and warranty that such stockholder
has the full power and authority to tender and assign the shares tendered, as
specified in the Letter of Transmittal. The Purchaser's acceptance for payment
of shares tendered pursuant to the Offer will constitute a binding agreement
between the tendering stockholder and the Purchaser upon the terms and subject
to the conditions of the Offer.
Backup Withholding. Under the "backup withholding" provisions of United
States federal income tax law, the Depositary may be required to withhold 31% of
the amount of any payments pursuant to the Offer. In order to prevent backup
Federal income tax withholding with respect to payments to certain stockholders
of the Purchase Price of shares purchased pursuant to the Offer, each such
stockholder must provide the Depositary with such stockholder's correct taxpayer
identification number ("TIN") and certify that such stockholder is not subject
to backup withholding by completing the Substitute Form W-9 in the Letter of
Transmittal. Certain stockholders (including, among others, all corporations and
certain foreign individuals and entities) are not subject to backup withholding.
If a stockholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service may impose a
penalty on the stockholder and payment of cash to the stockholder pursuant to
the Offer may be subject to backup withholding. Stockholders surrendering shares
pursuant to the Offer should complete and sign the Substitute Form W-9 included
in the Letter of Transmittal to provide the information necessary to avoid
backup withholding. Foreign stockholders should generally complete and sign a
Form W-8 Certificate of Foreign Status (a copy of which may be obtained from the
Depositary) in order to avoid backup withholding. See Instruction 8 of the
Letter of Transmittal.
5. WITHDRAWAL RIGHTS.
Tenders of shares made pursuant to the Offer are irrevocable, except that
such shares may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by the Purchaser pursuant to the Offer,
may also be withdrawn at any time after Monday, July 10, 2000.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover page of this Offer to Purchase.
Any such notice of withdrawal must specify the name, address and taxpayer
identification number of the person who tendered the shares to be withdrawn, the
number of shares to be withdrawn and the name of the registered holder of such
shares, if different from that of the person who tendered such shares. If Share
Certificates evidencing shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such Share
Certificates, the serial numbers shown on such Share Certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution, unless such shares have been
tendered for the account of an Eligible Institution. If shares have been
tendered pursuant to the procedure for book-entry transfer as set forth in
Section 4 hereof, any notice of withdrawal must also specify the
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name and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn shares.
If the Purchaser extends the Offer, is delayed in its acceptance for
payment of shares or is unable to accept shares for payment pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer, the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered shares, and such shares may not be withdrawn except to the extent that
tendering stockholders are entitled to withdrawal rights as described herein.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of the
Purchaser, Capstead, the Dealer Manager, the Depositary, the Information Agent
or any other person will be under duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
Withdrawals of shares may not be rescinded. Any shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn shares may be re-tendered at any time prior to the
Expiration Date by following one of the procedures described in Section 4
hereof. All shares withdrawn will be returned after affecting the reverse stock
split.
6. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of certain United States federal income tax
consequences to holders whose shares are sold pursuant to the Offer. The
discussion is for general information only and does not purport to consider all
aspects of United States federal income taxation that may be relevant to holders
of shares. The discussion is based on current provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), Treasury regulations issued thereunder,
and administrative and judicial interpretations thereof, all of which are
subject to change. The discussion applies only to stockholders in whose hands
the shares are capital assets -- generally property held for investment -- and
may not apply to shares received pursuant to the exercise of employee stock
options or otherwise as compensation, or to certain types of holders of shares
(including, but not limited to, insurance companies, tax-exempt organizations,
financial institutions or broker-dealers) who may be subject to special rules
under the United States federal income tax laws. This discussion does not
discuss the United States federal income tax consequences to a holder of shares
who, for United States federal income tax purposes, is a non-resident alien
individual, a foreign corporation, a foreign partnership or a foreign estate or
trust, nor does it consider the effect of any state, local or foreign income or
other tax laws.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH STOCKHOLDER OF SHARES
SHOULD CONSULT HIS OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES
DISCUSSED BELOW TO SUCH HOLDER AND THE PARTICULAR TAX EFFECTS TO SUCH HOLDER OF
THE OFFER, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL OR FOREIGN
INCOME OR OTHER TAX LAWS, AND THE POSSIBLE EFFECT OF ANY CHANGES IN TAX LAWS.
The receipt of cash for shares pursuant to the Offer will be a taxable
transaction for United States federal income tax purposes, and, in general, a
holder of shares will recognize gain or loss equal to the difference between (i)
the holder's adjusted tax basis in the shares sold pursuant to the Offer and
(ii) the amount of cash received therefor. Gain or loss must be determined
separately for each block of shares (i.e. shares acquired at the same cost in a
single transaction) sold pursuant to the Offer. Such gain or loss will be
long-term capital gain or loss if the holding period for the shares exceeds one
year at the time of the sale. Long-term capital gains derived by individuals are
eligible for reduced rates of taxation (generally a 20% maximum rate under
current law), while the tax rate on short-term capital gains is the same as for
ordinary income (currently a 39.6% maximum rate). Long-term and short-term
capital gains of taxpayers that are corporations are taxed at the same rate as
ordinary income (currently a 35% maximum rate). The deductibility of capital
losses is restricted and, in general, may only be used to reduce capital gains
to the extent thereof. However, taxpayers who are individuals may generally
deduct $3,000 of capital losses annually in excess of their capital gains.
12
<PAGE> 15
7. PRICE RANGE OF SHARES; DIVIDENDS.
The shares trade on the New York Stock Exchange (the "NYSE") under the
symbol "CMO." The following table sets forth, for the periods indicated, the
high and low sale prices per share of common stock as well as the dividends paid
to stockholders for the periods indicated adjusted to give effect to the 1-for-2
reverse stock split effected by Capstead at the close of business on May 8,
2000. Share prices are as reported on the NYSE based on published financial
sources.
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------
HIGH LOW DIVIDENDS
------- ------- ---------
<S> <C> <C> <C>
Fiscal Year 1998:
First Quarter............................................. $43.375 $37.000 $1.00
Second Quarter............................................ 43.000 15.875 1.00
Third Quarter............................................. 16.750 4.375 --
Fourth Quarter............................................ 9.250 4.250 --
Fiscal Year 1999:
First Quarter............................................. 12.000 8.000 $0.28
Second Quarter............................................ 12.375 10.250 0.30
Third Quarter............................................. 11.500 7.750 0.32
Fourth Quarter............................................ 8.750 7.375 0.24
Fiscal Year 2000:
First Quarter............................................. 9.125 7.000 $0.22
Second Quarter (through May 11, 2000)..................... 7.875 6.000 --
</TABLE>
On May 11, 2000, the last trading day before we announced and commenced the
tender offer, the last closing price of Capstead common stock reported on the
New York Stock Exchange was $6.44 per share. STOCKHOLDERS ARE URGED TO OBTAIN A
CURRENT MARKET QUOTATION FOR THE SHARES.
8. CERTAIN INFORMATION CONCERNING CAPSTEAD.
General. Capstead Mortgage Corporation was incorporated on April 5, 1985
in Maryland and commenced operations in September 1985. Capstead's principal
offices are located at 8401 North Central Expressway, Suite 800, Dallas, Texas
75225, and its telephone number is (214) 874-2323.
Initially, Capstead structured and managed residential mortgage
investments. From 1992 through 1998, Capstead also operated a residential
mortgage servicing operation that was sold in December 1998. Recently,
Capstead's primary business consisted of managing a leveraged portfolio of
single family residential mortgage-backed securities issued by
government-sponsored entities, either Fannie Mae, Freddie Mac or Ginnie Mae
("Agency Securities"). With the investment in Capstead by Fortress, the recent
election of the new members of Capstead's board of directors and the appointment
of Wesley R. Edens as Chairman and Chief Executive Officer of Capstead, Capstead
has announced that it is modifying its investment strategy to focus on short
maturity and adjustable-rate assets including, but not limited to,
credit-sensitive commercial and residential mortgage-backed securities and
adjustable-rate Agency Securities. Credit-sensitive mortgage securities
generally earn higher yields than those typically earned on Capstead's existing
mortgage assets, due largely to a higher risk of default by the underlying
borrowers and, to a lesser extent, reduced liquidity.
In connection with this modification, Capstead also announced that it
intends to dispose of approximately $1.0 billion of its fixed-rate mortgage
investments and approximately $1.1 billion of its medium-term and
adjustable-rate securities. As a result, Capstead has stated that it anticipates
recognizing a second quarter loss on the sale of these securities of $85 million
to $90 million, all of which is already reflected in book value per common share
at March 31, 2000. Most of these sales are expected to be completed by year-end.
Pending final sale, these securities will be classified as trading securities
and further changes in market value, if any, will be reflected in operating
results. Capital made available
13
<PAGE> 16
because of these sales is expected to be redeployed over the next several
quarters into suitable investments in keeping with the new investment strategy.
With the recent change in leadership of Capstead, Capstead incurred
non-recurring severance charges of approximately $3.4 million related to the
settlement of obligations to Ronn K. Lytle, the former chairman and chief
executive officer of Capstead, under the terms of a 1992 employment agreement
and $225,000 related to the termination of several other employees of Capstead,
which according to Capstead, will be charged to expense in the second quarter of
2000.
Available Information. The shares are registered under the Exchange Act.
Accordingly, Capstead is subject to the informational reporting requirements of
the Exchange Act and, in accordance therewith, is required to file periodic
reports, proxy statements and other information with the SEC relating to its
business, financial condition and other matters. Such reports, proxy statements
and other information can be inspected and copied at the public reference
facilities maintained by the SEC at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the SEC's regional offices located at Seven World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Information regarding the
public reference facilities may be obtained from the SEC by telephoning
1-800-SEC-0330. Capstead's filings are also available to the public on the SEC's
Internet site (http://www.sec.gov). Copies of such materials may also be
obtained by mail from the Public Reference Section of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates.
Summary Financial Information. The following summary financial information
relating to Capstead has been taken from Capstead's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999 filed with the SEC on March 16, 2000
and Capstead's Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 2000 filed with the SEC on May 5, 2000. These financial statements do not
reflect the 1-for-2 reverse split of Capstead's common stock effective May 8,
2000. In addition, the results for the quarter ended March 31, 2000 do not
reflect the portfolio restructuring and severance charges referred to above.
More comprehensive financial information is included in Capstead's Annual Report
on Form 10-K and quarterly reports on Form 10-Q and other documents filed by
Capstead with the SEC, and the financial information set forth below is
qualified in its entirety by reference to such reports and other documents and
all of the financial statements and notes contained therein. Such reports and
other documents may be examined and copies may be obtained from the offices of
the SEC in the manner set forth above.
14
<PAGE> 17
CAPSTEAD MORTGAGE CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, QUARTER ENDED
------------------------------- MARCH 31,
1997 1998 1999 2000
-------- --------- -------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C>
INTEREST INCOME:
Mortgage securities and other investments.... $339,980 $ 311,807 $293,841 $ 84,900
CMO collateral and investments............... 354,279 355,391 269,318 57,929
-------- --------- -------- --------
Total interest income................ 694,259 667,198 563,159 142,829
-------- --------- -------- --------
INTEREST AND RELATED EXPENSE:
Borrowings under repurchase arrangements:
Mortgage securities and other
investments............................. 300,391 291,125 232,852 71,908
CMO investments........................... 29,244 22,733 -- --
Collateralized mortgage obligations.......... 281,497 340,248 270,081 57,903
Mortgage insurance and other................. 5,155 5,469 2,014 403
-------- --------- -------- --------
Total interest and related expense... 616,287 659,575 504,947 130,214
-------- --------- -------- --------
Net margin on mortgage assets and
other investments.................. 77,972 7,623 58,212 12,615
-------- --------- -------- --------
NET MARGIN ON MORTGAGE BANKING OPERATIONS...... 59,422 11,821 -- --
-------- --------- -------- --------
OTHER OPERATING REVENUE (EXPENSE):
Gain (loss) on sale of mortgage assets and
related derivative financial
instruments............................... 27,737 (245,261) 1,738 --
Impairment on CMO investments................ -- (4,051) -- --
CMO administration and other................. 4,000 4,598 4,083 784
Other operating expense...................... (9,205) (9,494) (6,124) (1,729)
-------- --------- -------- --------
Total other operating revenue
(expense).......................... 22,532 (254,208) (303) (945)
-------- --------- -------- --------
NET INCOME (LOSS).............................. $159,926 $(234,764) $ 57,909 $ 11,670
======== ========= ======== ========
Net Income (loss).............................. $159,926 $(234,764) $ 57,909 $ 11,670
Less cash dividends on preferred stock......... (25,457) (22,342) (22,556) (6,271)
-------- --------- -------- --------
Net income (loss) available to common
stockholders................................. $134,469 $(257,106) $ 35,353 $ 5,399
======== ========= ======== ========
NET INCOME (LOSS) PER COMMON SHARE:
Basic........................................ $ 2.62 $ (4.22) $ 0.61 $ 0.11
Diluted...................................... 2.35 (4.22) 0.60 0.11
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic........................................ 51,257 60,948 58,348 48,633
Diluted...................................... 68,023 60,948 59,046 54,032
</TABLE>
15
<PAGE> 18
CAPSTEAD MORTGAGE CORPORATION
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ MARCH 31,
1998 1999 2000
---------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Mortgage securities and other investments............ $2,369,602 $5,408,714 $5,339,935
CMO collateral and investments....................... 4,571,274 3,318,886 3,455,238
---------- ---------- ----------
6,940,876 8,727,600 8,795,193
Prepaids, receivables and other...................... 59,526 48,451 46,205
Restricted cash and cash equivalents................. 26,500 2,500 2,500
Cash and cash equivalents............................ 73,385 28,488 9,389
---------- ---------- ----------
$7,100,287 $8,807,039 $8,853,267
========== ========== ==========
LIABILITIES
Borrowings under repurchase arrangements............. $1,839,868 $4,872,392 $4,855,340
Collateralized mortgage obligations.................. 4,521,324 3,289,584 3,427,653
Accounts payable and accrued expenses................ 58,894 30,673 18,100
---------- ---------- ----------
6,420,086 8,192,649 8,301,093
---------- ---------- ----------
PREFERRED STOCK SUBJECT TO REPURCHASE
$0.10 par value; 10,756 shares authorized, issued and
outstanding ($52,735 aggregate repurchase
amount)........................................... -- 50,584 50,458
---------- ---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock -- $0.10 par value; 89,244 shares
authorized:
$1.60 Cumulative Preferred Stock, Series A, 374
issued and outstanding ($6,134 aggregate
liquidation preference)......................... 5,228 5,228 5,230
$1,26 Cumulative Convertible Preferred Stock,
Series B, 17,298, 16,673 and 16,428 shares
issued and outstanding ($186,951 aggregate
liquidation preference)......................... 193,196 186,248 183,503
Common stock -- $0.01 par value; 100,000 shares
authorized; 60,546, 56,856 and 45,358 shares
issued and outstanding............................ 605 569 454
Paid-in capital...................................... 787,677 769,617 716,700
Accumulated deficit.................................. (305,287) (304,568) (299,174)
Accumulated other comprehensive income (loss)........ (1,218) (93,288) (104,997)
---------- ---------- ----------
680,201 563,806 501,716
---------- ---------- ----------
$7,100,287 $8,807,039 $8,853,267
========== ========== ==========
</TABLE>
16
<PAGE> 19
9. CERTAIN INFORMATION CONCERNING THE PURCHASER.
The Purchaser was formed in January 2000 and is wholly owned by its sole
member, Fortress Registered Investment Trust, a Delaware business trust
("Fortress Trust"). Fortress Trust was established to make private equity
investments in residential and commercial real estate-related assets. Fortress
Trust is in turn owned by Fortress Investment Fund LLC, a Delaware limited
liability company, which has over $750,000,000 in uninvested committed equity
capital. The address of the Purchaser, Fortress Trust and Fortress Investment
Fund LLC, is 1301 Avenue of the Americas, 42nd Floor, New York, New York 10019.
The name, citizenship, business address, business phone number, principal
occupation or employment and five-year employment history for the trustees and
executive officers of Fortress Investment Group LLC, which manages Fortress
Trust and Fortress Cap LLC, and certain other information are set forth in
Schedule I to this Offer to Purchase.
Except as described in this Offer to Purchase, (1) none of the Purchaser or
its affiliates nor, to the best knowledge of the Purchaser, any of the persons
listed in Schedule I to this Offer to Purchase beneficially owns or has any
right to acquire, directly or indirectly, any shares and (2) none of the
foregoing has effected any transaction in the shares during the past 60 days.
Except as provided in the Supplemental Agreement described in Section 11
hereof and as otherwise described in this Offer to Purchase, none of the
Purchaser or its affiliates nor, to the best knowledge of the Purchaser, any of
the persons listed in Schedule I to this Offer to Purchase, has any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of Capstead, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting of
such securities, finder's fees, joint ventures, loan or option arrangements,
puts or calls, guarantees of loans, guarantees against loss, guarantees of
profits, division of profits or loss or the giving or withholding of proxies.
Except as provided in the Supplemental Agreement and as otherwise described
in this Offer to Purchase, none of the Purchaser or its affiliates nor, to the
best knowledge of the Purchaser, any of the persons listed on Schedule I hereto,
has had any business relationship or transaction with Capstead or any of its
executive officers, directors or affiliates that is required to be reported
under the rules and regulations of the SEC applicable to the Offer. Except as
set forth in this Offer to Purchase, there have been no contracts, negotiations
or transactions between the Purchaser or its affiliates nor, to the best
knowledge of the Purchaser, any of the persons listed in Schedule I to this
Offer to Purchase, on the one hand, and Capstead or its affiliates, on the other
hand, concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other transfer
of a material amount of assets. None of the persons listed in Schedule I has,
during the past five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors). None of the persons listed in
Schedule I has, during the past five years, been a party to any judicial or
administrative proceeding (except for matters that were dismissed without
sanction of settlement) that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of
federal or state securities laws.
10. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by the Purchaser to purchase shares
pursuant to the Offer is estimated to be approximately $40 million. We will
obtain these funds from our indirect parent, Fortress Investment Fund LLC, which
has over $750,000,000 in uninvested committed equity capital. The Purchaser
neither needs nor has made any other arrangement for financing.
11. BACKGROUND OF THE OFFER; PAST CONTACTS OR NEGOTIATIONS WITH CAPSTEAD.
On December 9, 1999, an affiliate of the Purchaser under common control
with the Purchaser, made a $51,200,000 investment in Capstead through the
purchase of 5,378,000 shares of newly-created Series C
17
<PAGE> 20
Cumulative Convertible Preferred Stock of Capstead and 5,378,000 shares of
newly-created Series D Cumulative Convertible Preferred Stock of Capstead. In
connection with the sale of these shares, the Capstead board of directors (i)
increased its size from six to eight members, (ii) elected Wesley R. Edens, the
Chairman and Chief Executive Officer of Fortress Trust and other affiliates of
the Purchaser under common control with the Purchaser, and Robert I. Kauffman,
the President of Fortress Trust and other affiliates of the Purchaser under
common control with the Purchaser, to serve as directors of Capstead and (iii)
agreed to submit to Capstead's stockholders at Capstead's annual meeting of
stockholders the election of Messrs. Edens, Kauffman and Lytle and Paul M. Low,
Michael G. O'Neil, Howard Rubin and Mark S. Whiting to serve as directors.
Messrs. Rubin and Whiting were recommended to the nominating committee of
Capstead's board of directors by Messrs. Edens and Kauffman. Mr. O'Neil was
recommended to the nominating committee of Capstead's board of directors by Mr.
Lytle, Capstead's Chairman and Chief Executive officer at the time, and Mr. Low,
a director at the time. The Series C shares and Series D shares (including the
rights and obligations associated therewith under the Supplemental Agreement)
were subsequently assigned to the Purchaser.
In connection with the purchase of the Series C shares and Series D shares,
the parties entered into the Supplemental Agreement, pursuant to which the
Purchaser is now obligated, subject to certain conditions which have all been
satisfied, to acquire not less than 2,500,000 shares of common stock of Capstead
(such number of shares having been adjusted for the 1-for-2 reverse split of
Capstead's common stock effective at the close of business on May 8, 2000)
within six months from the date of Capstead's annual meeting held on April 20,
2000, through, at the Purchaser's option, open market purchases, conversion of a
portion of its Series C shares or Series D shares, or any combination thereof.
On April 20, 2000, at Capstead's annual meeting of stockholders, the
stockholders of Capstead elected Messrs. Edens, Kauffman, Low, Lytle, O'Neil,
Rubin and Whiting to the board of directors of Capstead. Subsequent thereto, the
Capstead board of directors (i) appointed Mr. Edens to the positions of Chairman
and Chief Executive Officer of Capstead and (ii) appointed Mr. Lytle to the
position of Vice Chairman of Capstead. On May 9, 2000 the disinterested members
of the Board of Directors of Capstead approved the making of this Offer as a
mechanism by which the Purchaser could satisfy its obligation in full under the
Supplemental Agreement to acquire additional shares of Capstead common stock and
acquire up to an additional 2,500,000 shares.
12. PURPOSE OF THE OFFER; PLANS FOR CAPSTEAD.
Purpose of the Offer. The purpose of the Offer is to acquire up to
5,000,000 shares of common stock to (i) satisfy in full the obligation under the
Supplemental Agreement described above and (ii) acquire up to an additional
2,500,000 shares which the Purchaser believes are an attractive investment at
the Purchase Price.
Plans for Capstead. Capstead's primary business has recently consisted of
managing a leveraged portfolio of Agency Securities. With the investment in
Capstead by the Purchaser, the recent election of the new members of Capstead's
board of directors and the appointment of Mr. Edens as Chairman and Chief
Executive Officer of Capstead, Capstead has announced that it is currently
modifying its investment strategy to focus on short maturity and adjustable-rate
assets including, but not limited to, credit-sensitive commercial and
residential mortgage-backed securities and adjustable-rate Agency Securities.
Credit-sensitive mortgage securities generally earn higher yields than those
typically earned on Capstead's existing mortgage assets, due largely to a higher
risk of default by the underlying borrowers and, to a lesser extent, reduced
liquidity.
In connection with this modification, Capstead also announced that it
intends to dispose of approximately $1.0 billion of its fixed-rate mortgage
investments and approximately $1.1 billion of its medium-term and
adjustable-rate securities. As a result, Capstead has stated that it anticipates
recognizing a second quarter loss on the sale of these securities of $85 million
to $90 million, all of which is already reflected in book value per common share
at March 31, 2000. Most of these sales are expected to be completed by year-end.
Pending final sale, these securities will be classified as trading securities
and
18
<PAGE> 21
further changes in market value, if any, will be reflected in operating results.
Capital made available because of these sales is expected to be redeployed over
the next several quarters into suitable investments in keeping with the new
investment strategy.
13. CERTAIN EFFECTS OF THE OFFER.
Market for the Shares. The purchase of shares pursuant to the Offer will
reduce the number of holders of shares of Capstead common stock and the number
of shares that might otherwise trade publicly, which could adversely affect the
liquidity and market value of the remaining shares held by stockholders other
than the Purchaser. The Purchaser cannot predict whether the reduction in the
number of shares that might otherwise trade publicly would have an adverse or
beneficial effect on the market price for, or marketability of, the shares or
whether such reduction would cause future market prices to be greater or less
than the Purchase Price.
Margin Regulations. The shares are currently "margin securities" under the
Regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the shares. Although we do not
believe that this will result, depending upon factors similar to those described
above regarding the market for the shares, it is possible that, following the
Offer, the shares would no longer constitute "margin securities" for the
purposes of the margin regulations of the Federal Reserve Board and therefore
could no longer be used as collateral for loans made by brokers.
14. DIVIDENDS AND DISTRIBUTIONS.
The Purchaser intends to consider dividends consistent with past practices
of Capstead. According to Capstead's quarterly report on Form 10-Q for the
quarter ended March 31, 2000:
"With or without this new investment strategy, the remainder of the year
will likely be very difficult for Capstead from a net income and dividend
perspective should the Federal Reserve continue to increase interest rates.
Although the overall yield on mortgage assets is currently anticipated to
increase in future quarters with the acquisition of higher yielding assets
in connection with the new investment strategy and the reset of interest
rates on ARM [Adjustable-Rate Mortgage] securities to levels more
reflective of the current interest rate environment, borrowing rates are
also expected to increase, which may further reduce net interest margins.
Depending on the timing and extent of any future increases in interest
rates over the next several quarters, it may be necessary to again reduce
the dividend on the Company's common stock."
15. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) promulgated under the Exchange
Act (relating to the Purchaser's obligation to pay for or return shares promptly
after termination or withdrawal of the Offer), pay for, and may postpone the
acceptance for payment of and payment for shares tendered, and terminate the
Offer as to any shares not then paid for if at any time prior to the Expiration
Date any of the following events has occurred (or shall have been determined by
the Purchaser to have occurred) and, in the Purchaser's judgment makes it
inadvisable to proceed with the Offer or with such acceptance for payment:
(a) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or any other person, domestic
or foreign, before any court, authority, agency or tribunal that directly
or indirectly (i) challenges the making of the Offer, the acquisition of
some or all of the shares pursuant to the Offer or otherwise relates in any
manner to the Offer, or (ii) in the Purchaser's reasonable judgment, could
(A) materially and adversely affect the business, condition (financial or
other), assets, income, operations or prospects of the Purchaser and its
subsidiaries, taken as a whole, or otherwise materially impair in any way
the contemplated future conduct of the business of the Purchaser or any of
its
19
<PAGE> 22
subsidiaries or materially impair the contemplated benefits of the Offer to
the Purchaser, (B) make the acceptance for payment of, or payment for, some
or all of the tendered shares illegal or otherwise restrict or prohibit
consummation of the Offer or (C) delay or restrict the ability of the
Purchaser, or render the Purchaser unable, to accept for payment or pay for
some or all of the tendered shares;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or the Purchaser
or any of its subsidiaries, by any court or any authority, agency or
tribunal that, in the Purchaser's reasonable judgment, would or might
directly or indirectly result in any of the consequences referred to in
clauses (i) or (ii) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market, (ii) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States, (iv) any limitation (whether or not mandatory) by any
government or governmental, regulatory or administrative agency, authority
or tribunal on, or any event that, in the Purchaser's reasonable judgment,
might affect, the extension of credit by banks or other lending
institutions in the United States, (v) any significant decrease in the
market price of the common stock or any change in the general political,
market, economic or financial conditions in the United States or abroad
that could, in the reasonable judgment of the Purchaser, have a material
adverse effect on the Purchaser's business condition (financial or other),
assets, income, operations or prospects or the trading in the common stock,
(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, or
(vii) any decline in either the Dow Jones Industrial Average or the
Standard and Poor's Index of 500 Industrial Companies by an amount in
excess of 10% measured from the close of business on May 11, 2000;
(d) a tender or exchange offer for any or all of the shares of common
stock of Capstead (other than the Offer), or any merger, business
combination or other similar transaction with or involving Capstead or any
subsidiary, shall have been proposed, announced or made by any person;
(e)(i) any person, entity or "group" (as that term is used in Section
13(d)(3) of the Exchange Act) shall have acquired or proposed to acquire
beneficial ownership of more than 5% of the outstanding shares of any class
of common stock of Capstead (other than (A) any such person, entity or
group who has a Schedule 13G on file with the Commission as of May 11, 2000
relating to share ownership in Capstead and does not effect a change in
filing status to Schedule 13D, or (B) the acquisition of additional common
stock by Fortress Cap LLC or its affiliates) or (ii) any person, entity or
group shall have made a public announcement reflecting an intent to acquire
Capstead or any of its subsidiaries or any of their respective assets or
securities;
(f) any change or changes shall have occurred in the business,
condition (financial or other), assets, income, operations, prospects or
stock ownership of the Purchaser or its subsidiaries that, in the
Purchaser's reasonable judgment, is or may be material to the Purchaser or
its subsidiaries;
(g) the Purchaser determines that the consummation of the Offer and
the purchase of shares of common stock may cause the common stock to be
delisted from the NYSE or to be eligible for deregistration under the
Exchange Act; or
(h) the Purchaser determines that the consummation of the Offer and
the purchase of shares of common stock may cause Capstead to no longer meet
the necessary requirements to continue as a real estate investment trust
under the Code.
Any determination by the Purchaser concerning any events described in this
section and any related judgment or decision by the Purchaser regarding the
inadvisability of proceeding with the purchase of or the payment for any shares
tendered shall be final and binding upon all parties. The foregoing conditions
are for the sole benefit of the Purchaser and may be asserted by the Purchaser
in circumstances giving rise
20
<PAGE> 23
to those conditions or may be waived by the Purchaser in whole or in part. The
Purchaser's failure at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right, and each such right shall be deemed an
ongoing right that may be asserted at any time and from time to time.
16. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
The Purchaser is not aware of any pending legal proceeding relating to the
Offer. Except as described in this Section 16, based on its examination of
publicly available information filed by Capstead with the SEC and other publicly
available information concerning Capstead, the Purchaser is not aware of any
governmental license or regulatory permit that appears to be material to
Capstead's business that might be adversely affected by the Purchaser's
acquisition of shares as contemplated herein or of any approval or other action
by any governmental, administrative or regulatory authority or agency, domestic
or foreign, that would be required for the acquisition or ownership of shares by
the Purchaser as contemplated herein. Should any such approval or other action
be required, the Purchaser currently contemplates that such approval or other
action will be sought. While the Purchaser does not currently intend to delay
acceptance for payment of shares tendered pursuant to the Offer pending the
outcome of any such matter, there can be no assurance that any such approval or
other action, if needed, would be obtained or would be obtained without
substantial conditions or that if such approvals were not obtained or such other
actions were not taken, adverse consequences might not result to Capstead's
business, or certain parts of Capstead's business might not have to be disposed
of, any of which could cause the Purchaser to elect to terminate the Offer
without the purchase of shares thereunder under certain conditions. See Section
15.
17. FEES AND EXPENSES.
Merrill Lynch & Co. is acting as the exclusive Dealer Manager in connection
with the Offer. Merrill Lynch & Co. will receive reasonable and customary
compensation for its services relating to the Offer and be reimbursed for
certain out-of-pocket expenses, which will be paid by the Purchaser. The
Purchaser will indemnify the Dealer Manager and certain related persons against
certain liabilities and expenses in connection with its engagement, including
certain liabilities under the federal securities laws. Merrill Lynch & Co. has
been retained by the Purchaser to render, and in the past has rendered various
investment banking and other advisory services to the Purchaser, for which it
has received compensation, and may render similar services to the Purchaser in
the future.
The Purchaser has retained Corporate Investor Communications, Inc. to be
the Information Agent and Norwest Bank Minnesota, N.A. to be the Depositary in
connection with the Offer. The Information Agent may contact holders of shares
by mail, telephone, telecopy, telegraph and personal interview and may request
banks, brokers, dealers and other nominees to forward materials relating to the
Offer to beneficial owners of shares. The Information Agent and the Depositary
each will receive reasonable and customary compensation for their respective
services in connection with the Offer and will be reimbursed for reasonable
out-of-pocket expenses, which will be paid by the Purchaser. The Purchaser will
indemnify the Information Agent and the Depositary against certain liabilities
and expenses in connection therewith, including certain liabilities under
federal securities laws.
The Purchaser will not pay any fees or commissions to any broker or dealer
or to any other person (other than to the Dealer Manager, the Depositary and the
Information Agent) in connection with the solicitation of tenders of shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
will, upon request, be reimbursed by the Purchaser for customary mailing and
handling expenses incurred by them in forwarding offering materials to their
customers.
21
<PAGE> 24
18. MISCELLANEOUS.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, the Purchaser may, in its discretion, take such action as
it may deem necessary to make the Offer in any such jurisdiction and extend the
Offer to holders of shares in such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER NOT CONTAINED HEREIN OR IN THE LETTER
OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser has filed with the SEC a Tender Offer Statement on Schedule
TO pursuant to Rule 14d-3 of the rules and regulations under the Exchange Act,
together with exhibits furnishing certain additional information with respect to
the Offer, and may file amendments thereto. In addition, Capstead has filed with
the SEC a Solicitation/Recommendation Statement on Schedule 14D-9, together with
exhibits, pursuant to Rule 14d-9 under the Exchange Act, setting forth the
recommendation of the Capstead Board with respect to the Offer and the reasons
for such recommendation and furnishing certain additional related information. A
copy of such documents, and any amendments thereto, may be examined at, and
copies may be obtained from, the SEC (but not the regional offices of the SEC)
in the manner set forth under Section 8 above.
Fortress Cap LLC
May 12, 2000
22
<PAGE> 25
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF FORTRESS INVESTMENT GROUP LLC
1. DIRECTORS OF FORTRESS INVESTMENT GROUP LLC.
The following table sets forth the name, present principal occupation or
employment and material occupations, positions, offices or employments for the
past five years of each of the directors and executive officers of Fortress
Investment Group LLC, manager of Fortress Trust and with the Purchaser. Unless
otherwise indicated, the current business address of each person is 1301 Avenue
of the Americas, 42nd Floor, New York, New York 10019. Unless otherwise
indicated, each such person is a citizen of the United States of America and
each occupation set forth opposite an individual's name refers to employment
with the Purchaser.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; MATERIAL
NAME AND BUSINESS ADDRESS POSITIONS HELD DURING THE PAST FIVE YEARS
- ------------------------- ------------------------------------------------------------
<S> <C>
WESLEY R. EDENS...................... Chief Executive Officer and Chairman since April 1998;
Fortress Investment Group LLC Chairman and Chief Executive Officer of Impac Commercial
1301 Avenue of the Americas Holdings, Inc. since May 1999; Head of the Global Principal
42nd Floor Finance group of UBS Securities LLC ("GPF"), as well as
New York, NY 10019 Managing Director of Union Bank of Switzerland ("UBS") from
May 1997 to May 1998; Principal and Managing Director of
BlackRock Capital Finance LP ("BCF"), the operating
subsidiary of Black Rock Asset Investors ("BAI") from
October 1993.
RANDAL A. NARDONE.................... Chief Operating Officer and Secretary since February 6,
Fortress Investment Group LLC 1998; Head of structured finance and contract finance
1301 Avenue of the Americas departments of GPF and Managing Director of UBS from May
42nd Floor 1997 to May 1998; Principal and Managing Director of BCF and
New York, NY 10019 BAI from 1994.
ROBERT I. KAUFFMAN................... President since April 1998; President and a Director of
Fortress Investment Group LLC Impac Commercial Holdings, Inc. since May 1999; Head of
1301 Avenue of the Americas acquisitions and risk management departments of GPF as well
42nd Floor as a Managing Director of UBS from May 1997 to May 1998;
New York, NY 10019 Principal and Managing Director of BCF and BAI from 1994.
ERIK P. NYGAARD...................... Chief Information Officer and Treasurer since February 6,
Fortress Investment Group LLC 1998; Head of financial engineering department of GPF as
1301 Avenue of the Americas well as Managing Director of UBS from May 1997 to May 1998;
42nd Floor Principal and Managing Director of BCF and BAI from 1994.
New York, NY 10019
GREGORY F. HUGHES.................... Chief Financial Officer since August 1999; Chief Financial
Fortress Investment Group LLC Officer of Wellsford Real Properties, Inc. from 1997 to
1301 Avenue of the Americas 1999. Chief Financial Officer of Wellsford Residential
42nd Floor Property Trust from 1993 to 1997.
New York, NY 10019
</TABLE>
I-1
<PAGE> 26
Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly executed, will be accepted. The Letter of Transmittal,
certificates for shares and any other required documents should be sent or
delivered by each stockholder or such stockholder's broker, dealer, commercial
bank, trust company or other nominee to the Depositary at one of the addresses
set forth below:
The Depositary for the Offer is:
NORWEST BANK MINNESOTA, N.A.
<TABLE>
<S> <C>
BY MAIL: BY OVERNIGHT COURIER and HAND DELIVERY:
Norwest Shareowner Services Norwest Shareowner Services
Reorganization Department Reorganization Department
P.O. Box 64858 161 North Concord Exchange
St. Paul, MN 55164-0858 South St. Paul, MN 55075
</TABLE>
TELEPHONE NUMBER:
(800) 468-9716
BY FACSIMILE TRANSMISSION:
(651) 450-4163
CONFIRM FACSIMILE BY TELEPHONE:
(651) 450-4110
Questions or requests for assistance may be directed to the Information Agent or
the Dealer Manager, at the addresses and telephone numbers set forth below.
Additional copies of this Offer to Purchase, the Letter of Transmittal, the
Notice of Guaranteed Delivery and related materials may be obtained from the
Information Agent as set forth below and will be furnished promptly at the
Purchaser's expense. Stockholders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
The Information Agent for the Offer is:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road
Carlstadt, NJ 07072-2586
Call Toll Free (888) 568-9323
Banks and Brokers please call (201) 896-1900
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
World Financial Center
South Tower
New York, NY 10281
(212) 236-3790 (call collect)
<PAGE> 1
Exhibit 99 (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
CAPSTEAD MORTGAGE CORPORATION
AT
$8.00 NET PER SHARE
PURSUANT TO THE OFFER TO PURCHASE DATED MAY 12, 2000
BY
FORTRESS CAP LLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON
FRIDAY, JUNE 9, 2000, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
NORWEST BANK MINNESOTA, N.A.
<TABLE>
<S> <C>
By Mail: By Overnight Courier and By Hand:
Norwest Shareowner Services Norwest Shareowner Services
Reorganization Department Reorganization Department
P.O. Box 64858 161 North Concord Exchange
St. Paul, MN 55164-0858 South St. Paul, MN 55075
</TABLE>
For help completing this Letter of Transmittal, call Corporate Investor
Communications at:
(877) 977-6199
DO NOT USE THIS LETTER OF TRANSMITTAL UNLESS YOU INTEND TO TENDER YOUR
SHARES.
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER
THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED
THEREFOR BELOW, WITH SIGNATURE GUARANTEE IF REQUIRED, AND COMPLETE THE
SUBSTITUTE FORM W-9 INCLUDED HEREWITH.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL AND THE
INSTRUCTIONS RELATING TO THE LETTER OF TRANSMITTAL INCLUDED HEREWITH SHOULD BE
READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES CERTIFICATE(S) AND SHARE(S) TENDERED
(PLEASE FILL IN, IF BLANK) (PLEASE ATTACH ADDITIONAL SIGNED LIST, IF NECESSARY)
- -------------------------------------------------------------------------------------------------------------------
[ ] INDICATES PERMANENT ADDRESS CHANGE TOTAL NUMBER
OF SHARES
SHARES CERTIFICATE REPRESENTED BY NUMBER OF SHARES
NUMBER(S)(2) CERTIFICATE(S)(2) TENDERED(3)
<S> <C> <C> <C>
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
TOTAL SHARES TENDERED
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Shares are on a pre-split basis unless otherwise noted by checking here [
]
(2) Need not be completed by stockholders who deliver shares by book-entry
transfer ("Book-Entry Stockholders").
(3) Unless otherwise indicated, all shares represented by certificates
delivered to the Depositary will be deemed to have been tendered. See
Instruction 4.
[ ] CHECK HERE IF CERTIFICATES HAVE BEEN LOST OR MUTILATED. SEE INSTRUCTION
11.
- --------------------------------------------------------------------------------
The names and addresses of the registered holders of the tendered shares
should be printed, if not already printed above, exactly as they appear on the
Share Certificates tendered hereby.
<PAGE> 2
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of shares
accepted for payment and/or certificates representing shares not tendered
or accepted for payment are to be issued in the name of someone other than
the undersigned.
Issue: [ ] Check
[ ] Certificate(s) to
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR
SOCIAL SECURITY NUMBER)
(ALSO COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREWITH)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the check for the purchase price of shares
accepted for payment and/or certificates representing shares not tendered
or accepted for payment are to be sent to someone other than the
undersigned or to the undersigned at an address other than that shown
under "Description of Shares Tendered."
Mail: [ ] Check
[ ] Certificate(s) to
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
TENDER OF SHARES
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY
DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution:
- --------------------------------------------------------------------------------
Account Number:
- --------------------------------------------------------------------------------
Transaction Code Number:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s):
- --------------------------------------------------------------------------------
Window Ticket Number (if any):
- --------------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
- --------------------------------------------------------------
Name of Eligible Institution that Guaranteed Delivery:
- ------------------------------------------------------------
2
<PAGE> 3
PAYER'S NAME: NORWEST BANK MINNESOTA, N.A.
<TABLE>
<C> <S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Name
----------------------------------------------------------------------------------
Address
SUBSTITUTE
FORM W-9 --------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY -------------------------------------------------------------------------------------
INTERNAL REVENUE SERVICE (NUMBER AND STREET)
PAYER'S REQUEST FOR TAXPAYER -------------------------------------------------------------------------------------
IDENTIFICATION NUMBER (TIN) (CITY) (STATE) (ZIP
CODE)
-----------------------------------------------------------------------------------------
PART 1(A) -- PLEASE PROVIDE YOUR TIN IN TIN
THE BOX AT RIGHT AND CERTIFY BY SIGNING --------------------------------------
AND DATING BELOW. ---------------------------------------
(Social Security Number or
Employer Identification Number)
-----------------------------------------------------------------------------------------
PART 1(B) -- PLEASE CHECK THE BOX AT RIGHT IF YOU HAVE APPLIED FOR, AND ARE AWAITING
RECEIPT OF, YOUR TIN [ ]
-----------------------------------------------------------------------------------------
PART 2 -- FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING PLEASE WRITE "EXEMPT" HERE (SEE
INSTRUCTIONS)
-----------------------------------------------------------------------------------------
PART 3 -- CERTIFICATION. UNDER PENALTIES OF PERJURY, I CERTIFY THAT: (X) The number
shown on this form is my correct TIN (or I am waiting for a number to be issued to
me) and (Y) I am not subject to backup withholding because: (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal Revenue Service
(the "IRS") that I am subject to backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
SIGN HERE SIGNATURE -------------------------------------------------------------------------
DATE
---------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
1(b) OF THE SUBSTITUTE FORM W-9 INDICATING YOU HAVE APPLIED FOR, AND ARE
AWAITING RECEIPT OF, YOUR TIN.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION NUMBER HAS
NOT BEEN ISSUED TO ME, AND EITHER (1) I HAVE MAILED OR DELIVERED AN APPLICATION
TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE INTERNAL REVENUE
SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE OR (2) I INTEND TO MAIL
OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I UNDERSTAND THAT IF I DO NOT
PROVIDE A TAXPAYER IDENTIFICATION NUMBER TO THE PAYER BY THE TIME OF PAYMENT, 31
PERCENT OF ALL REPORTABLE PAYMENTS MADE TO ME PURSUANT TO THIS OFFER WILL BE
WITHHELD.
- -------------------------------------- ------------------------------, 2000
SIGNATURE DATE
CERTIFICATION OF INSTRUCTIONS -- You must cross out Item (Y) of Part 3
above if you have been notified by the IRS that you are currently subject to
backup withholding because of underreporting interest or dividends on your tax
return. However, if after being notified by the IRS that you were subject to
backup withholding you received another notification from the IRS that you are
no longer subject to backup withholding, do not cross out Item (Y).
3
<PAGE> 4
IMPORTANT
SHAREHOLDER: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF OWNER(S))
Name(s) ------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Capacity (Full Title)
----------------------------------------------------------------
(SEE INSTRUCTIONS)
Address-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
-----------------------------------------------------
Taxpayer Identification or
Social Security Number
-------------------------------------------------------------
(SEE SUBSTITUTE FORM W-9)
Dated:
- --------------------------- , 2000
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by the person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, please set forth full title and see
Instruction 5.)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature(s)
-------------------------------------------------------------
Name --------------------------------------------------------------------------
Name of Firm
---------------------------------------------------------------------
Address-------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
-----------------------------------------------------
Dated:
- --------------------------- , 2000
4
<PAGE> 5
This Letter of Transmittal is to be used by stockholders of Capstead Mortgage
Corporation, a Maryland corporation ("Capstead"), if certificates for shares are
to be forwarded herewith or, unless an Agent's Message (as defined in Section 4
of the Offer to Purchase) is utilized, if delivery of shares is to be made by
book-entry transfer to an account maintained by the Depositary at the Book-Entry
Transfer Facility (as defined in Section 3 of the Offer to Purchase and pursuant
to the procedures set forth in Section 4 thereof).
Holders of shares whose certificates for such shares (the "Share Certificates")
are not immediately available, or who cannot complete the procedure for
book-entry transfer on a timely basis, or who cannot deliver all other required
documents to the Depositary prior to the Expiration Date (as defined in the
Offer to Purchase), must tender their shares according to the guaranteed
delivery procedure set forth in Section 4 of the Offer to Purchase. See
Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY WILL
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
5
<PAGE> 6
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF
TRANSMITTAL CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Fortress Cap LLC, a Delaware limited
liability company (the "Purchaser"), the above-described shares of common stock,
par value $0.01 per share, of Capstead Mortgage Corporation, a Maryland
corporation ("Capstead"), pursuant to the Purchaser's offer to purchase up to
5,000,000 shares, at a purchase price of $8.00 per share, net to the seller in
cash, without interest thereon, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated May 12, 2000, and in this Letter of
Transmittal (which together with any amendments or supplements thereto or
hereto, collectively constitute the "Offer"). Receipt of the Offer is hereby
acknowledged. The undersigned understands that these amounts reflect the 1-for-2
reverse split of Capstead's common stock which took effect at the close of
business on May 8, 2000. The undersigned further understands that any shares
tendered that have not been adjusted for the reverse stock split will be
adjusted accordingly.
Upon the terms and subject to the conditions of the Offer (and if the Offer
is extended or amended, the terms of any such extension or amendment), and
effective upon acceptance for payment of the shares tendered herewith in
accordance with the terms of the Offer, the undersigned hereby sells, assigns
and transfers to or upon the order of the Purchaser all right, title and
interest in and to all of the shares that are being tendered hereby (and any and
all dividends (other than regular quarterly cash dividends not in excess of
$0.10 per share declared and paid in accordance with past practice, including
the establishment of record and payment dates, with a record date prior to the
date of acceptance for payment of the shares in the Offer), distributions,
rights, other shares or other securities issued or issuable in respect thereof
on or after the date hereof (collectively, "Distributions")) and irrevocably
constitutes and appoints Norwest Bank Minnesota, N.A. (the "Depositary") the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such shares (and all Distributions), with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (i) deliver certificates for such shares (and any and all Distributions) or
transfer ownership of such shares (and any and all Distributions) on the account
books maintained by the Book-Entry Transfer Facility, together, in any such
case, with all accompanying evidences of transfer and authenticity, to or upon
the order of the Purchaser, (ii) present such shares (and any and all
Distributions) for transfer on the books of Capstead, and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
shares (and any and all Distributions), all in accordance with the terms of the
Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints designees of the Purchaser, the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to vote at any annual or
special meeting of Capstead's stockholders or any adjournment or postponement
thereof or otherwise in such manner as each such attorney-in-fact and proxy or
his or her substitute shall in his or her sole discretion deem proper with
respect to, to execute any written consent concerning any matter as each such
attorney-in-fact and proxy or his or her substitute shall in his or her sole
discretion deem proper with respect to, and to otherwise act as each such
attorney-in-fact and proxy or his or her substitute shall in his or her sole
discretion deem proper with respect to, all of the shares (and any and all
Distributions) tendered hereby and accepted for payment by the Purchaser. This
appointment will be effective if and when, and only to the extent that, the
Purchaser accepts such shares for payment pursuant to the Offer. This power of
attorney and proxy are irrevocable and are granted in consideration of the
acceptance for payment of such shares in accordance with the terms of the Offer.
Such acceptance for payment shall, without further action, revoke any prior
powers of attorney and proxies granted by the undersigned at any time with
respect to such shares (and any and all Distributions), and no subsequent powers
of attorney, proxies, consents or revocations may be given by the undersigned
with respect thereto (and, if given, will not be deemed effective). The
Purchaser reserves the right to require that, in order for the shares or other
securities to be deemed validly tendered, immediately upon the Purchaser's
acceptance for payment of such shares, the Purchaser must be able to exercise
full voting, consent and other rights with respect to such shares (and any and
all Distributions), including voting at any meeting of Capstead's stockholders.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the shares
tendered hereby and all Distributions and that, when the same are accepted for
payment by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title thereto and to all Distributions, free
6
<PAGE> 7
and clear of all liens, restrictions, charges and encumbrances and the same will
not be subject to any adverse claims. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Depositary or the
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the shares tendered hereby and all Distributions. In addition, the
undersigned shall remit and transfer promptly to the Depositary for the account
of the Purchaser all Distributions in respect of the shares tendered hereby,
accompanied by appropriate documentation of transfer, and, pending such
remittance and transfer or appropriate assurance thereof, the Purchaser shall be
entitled to all rights and privileges as owner of each such Distribution and may
withhold the entire purchase price of the shares tendered hereby or deduct from
such purchase price, the amount or value of such Distribution as determined by
the Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, personal
representatives, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the terms and conditions of the Offer, this
tender is irrevocable.
The undersigned understands that the valid tender of the shares pursuant to
any one of the procedures described in Section 4 of the Offer to Purchase and in
the Instructions hereto will constitute a binding agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions of
the Offer (and if the Offer is extended or amended, the terms or conditions of
any such extension or amendment). The undersigned recognizes that under certain
circumstances set forth in the Offer to Purchase, the Purchaser may not be
required to accept for payment any of the shares tendered hereby. The
undersigned further understands that any shares tendered that have not been
adjusted for the 1-for-2 reverse split of Capstead's common stock which was
effective at the close of business on May 8, 2000 and are not accepted for
payment will be adjusted for the reverse stock split prior to being returned.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of all of the shares purchased and/or
issue any certificates for the shares not tendered or accepted for payment in
the name(s) of the registered holder(s) appearing above under "Description of
Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery
Instructions," please mail the check for the purchase price of all of the shares
purchased and/or issue any certificates for the shares not tendered or not
accepted for payment (and any accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing above under "Description of
Shares Tendered." In the event that the boxes entitled "Special Payment
Instructions" and "Special Delivery Instructions" are both completed, please
issue the check for the purchase price of all shares purchased and/or return any
certificates evidencing Shares not tendered or not accepted for payment (and any
accompanying documents, as appropriate) in the name(s) of, and deliver such
check and/or return any such certificates (and any accompanying documents, as
appropriate) to, the person(s) so indicated. Unless otherwise indicated herein
in the box entitled "Special Payment Instructions," please credit any shares
tendered herewith by book-entry transfer that are not accepted for payment by
crediting the account at the Book-Entry Transfer Facility designated above. The
undersigned recognizes that the Purchaser has no obligation, pursuant to the
"Special Payment Instructions," to transfer any shares from the name of the
registered holder thereof if the Purchaser does not accept for payment any of
the shares so tendered.
7
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Section, includes any
participant in the Book-Entry Transfer Facility's systems whose name appears on
a security position listing as the owner of the shares) of shares tendered
herewith, unless such registered holder(s) has completed the box entitled
"Special Payment Instructions" on the Letter of Transmittal or (b) if such
shares are tendered for the account of a financial institution (including most
commercial banks, savings and loan associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program or by any other "eligible guarantor institution," as such term
is defined in Rule 17Ad-15 under the Exchange Act (each, an "Eligible
Institution"). In all other cases, all signatures on this Letter of Transmittal
must be guaranteed by an Eligible Institution. See Instruction 5.
2. Requirements of Tender. This Letter of Transmittal is to be completed
by stockholders if certificates are to be forwarded herewith or, unless an
Agent's Message is utilized, if tenders are to be made pursuant to the procedure
for tender by book-entry transfer set forth in Section 4 of the Offer to
Purchase. Share Certificates evidencing tendered shares, or timely confirmation
(a "Book-Entry Confirmation") of a book-entry transfer of shares into the
Depositary's account at the Book-Entry Transfer Facility, as well as this Letter
of Transmittal (or a facsimile hereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message in connection with
a book-entry transfer, and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth herein prior to the Expiration Date (as defined in Section 1 of the Offer
to Purchase). Stockholders whose Share Certificates are not immediately
available, or who cannot complete the procedure for delivery by book-entry
transfer on a timely basis or who cannot deliver all other required documents to
the Depositary prior to the Expiration Date, may tender their shares by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedure set forth in Section 4 of the Offer to Purchase.
Pursuant to such procedure: (i) such tender must be made by or through an
Eligible Institution; (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by the Purchaser,
must be received by the Depositary prior to the Expiration Date; and (iii) the
Share Certificates (or a Book-Entry Confirmation) evidencing all tendered
shares, in proper form for transfer, in each case together with the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or, in the case of a book-entry delivery, an
Agent's Message) and any other documents required by this Letter of Transmittal,
must be received by the Depositary within three New York Stock Exchange trading
days after the date of execution of such Notice of the Guaranteed Delivery. If
Share Certificates are forwarded separately to the Depositary, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND THE RISK OF THE TENDERING STOCKHOLDER
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY (INCLUDING, IN THE CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted. All
tendering stockholders, by execution of this Letter of Transmittal (or a
facsimile hereof), waive any right to receive any notice of the acceptance of
their shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate signed schedule attached hereto.
4. Partial Tenders (not applicable to stockholders who tender by
book-entry transfer). If fewer than all of the Shares evidenced by any Share
Certificate are to be tendered, fill in the number of Shares that are to be
tendered in the box entitled "Number of Shared Tendered." In this case, new
Share Certificates for the Shares that were evidenced by your old Share
Certificates, but were not tendered by you, will be sent to you, unless
otherwise provided in the appropriate box on this Letter of Transmittal, as soon
as practicable after the Expiration Date. All Shares represented by Share
Certificates delivered to the Depositary will be deemed to have been tendered
unless indicated.
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<PAGE> 9
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without alteration, enlargement or any change
whatsoever.
If any of the shares tendered hereby are held of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations.
If this Letter of Transmittal or any certificates or stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Purchaser of the authority of such person so to act must be
submitted. If this Letter of Transmittal is signed by the registered holder(s)
of the shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made or certificates
for shares not tendered or not accepted for payment are to be issued in the name
of a person other than the registered holder(s). Signatures on any such Share
Certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed and transmitted hereby, the
certificate(s) must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name(s) of the registered holder(s) appear(s)
on the certificate(s). Signature(s) on any such Share Certificates or stock
powers must be guaranteed by an Eligible Institution.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction
6, the Purchaser will pay all stock transfer taxes with respect to the transfer
and sale of any shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price is to be made to, or if certificate(s) for shares
not tendered or not accepted for payment are to be registered in the name of,
any person other than the registered holder(s), or if tendered certificate(s)
are registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder(s) or such other person) payable on account of the
transfer to such other person will be deducted from the purchase price of such
shares purchased unless evidence satisfactory to the Purchaser of the payment of
such taxes, or exemption therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificate(s) evidencing the shares
tendered hereby.
7. Special Payment and Delivery Instructions. If a check is to be issued
in the name of, and/or certificates for shares not tendered or not accepted for
payment are to be issued to, a person other than the signer of this Letter of
Transmittal or if a check and/or such certificates are to be returned to a
person other than the person(s) signing this Letter of Transmittal or to an
address other than that shown in this Letter of Transmittal, the appropriate
boxes on this Letter of Transmittal must be completed.
8. Substitute Form W-9. A tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on
Substitute Form W-9, included herewith, and to certify, under penalties of
perjury, that such number is correct and that such stockholder is not subject to
backup withholding of federal income tax. If a tendering stockholder is subject
to backup withholding, the stockholder must cross out Item (Y) of Part 3 of the
Substitute Form W-9. Failure to provide the information on the Substitute Form
W-9 may subject the tendering stockholder to federal income tax withholding of
31% of any payments made to the stockholder. If backup withholding results in an
overpayment of federal income tax, a refund may be obtained from the Internal
Revenue Service.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding. See the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for more instructions. Foreign stockholders should submit an
appropriate and properly completed IRS Form W-8, a copy of which may be obtained
from the Depositary, in order to avoid backup withholding.
9. Requests for Assistance or Additional Copies. Questions and requests
for assistance or for additional copies of the Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery and other tender offer materials
may be directed to the Information Agent at the telephone number and location
listed below, and will be furnished promptly at
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<PAGE> 10
the Purchaser's expense. You may also contact your broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Offer.
10. Waiver of Conditions. The Purchaser reserves the right, in its sole
discretion, to waive, at any time or from time to time, any of the specified
conditions of the Offer, in whole or in part, in the case of any shares
tendered.
11. Lost, Destroyed or Stolen Certificates. If any certificate
representing shares has been lost, destroyed or stolen, the stockholder should
promptly notify Norwest Bank Minnesota, N.A., in its capacity as transfer agent
for the shares (toll-free telephone number: (800) 468-9716). The stockholder
will then be instructed as to the steps that must be taken in order to replace
the certificate. THIS LETTER OF TRANSMITTAL AND RELATED DOCUMENTS CANNOT BE
PROCESSED UNTIL THE PROCEDURES FOR REPLACING LOST OR DESTROYED CERTIFICATES HAVE
BEEN FOLLOWED.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE
HEREOF) TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A
BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST
BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER
CERTIFICATES FOR TENDERED SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES
MUST BE DELIVERED PURSUANT TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH
CASE PRIOR TO THE EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH
THE PROCEDURES FOR GUARANTEED DELIVERY.
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<PAGE> 11
IMPORTANT TAX INFORMATION
Under the Federal income tax law, a stockholder whose tendered shares are
accepted for payment is required to provide the Depositary with such
stockholder's correct TIN. If such stockholder is an individual, the TIN is such
stockholder's Social Security Number. If the Depositary is not provided with the
correct TIN or an adequate basis for an exemption, such stockholder may be
subject to penalties imposed by the Internal Revenue Service and backup
withholding in an amount equal to 31% of the gross proceeds received under the
Offer. To prevent backup withholding, each tendering stockholder must provide
such stockholder's correct TIN by completing the Substitute Form W-9 included
herewith, certifying that the TIN provided is correct, or that such stockholder
is awaiting a TIN, and that (i) the stockholder is exempt from backup
withholding, (ii) the stockholder has not been notified by the Internal Revenue
Service that such stockholder is subject to backup withholding as a result of a
failure to report all interest or dividends, or (iii) the Internal Revenue
Service has notified the stockholder that such stockholder is no longer subject
to backup withholding. If a tendering stockholder is subject to backup
withholding, such stockholder must cross out Item (Y) of Part 3 of the
Substitute Form W-9.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. Exempt stockholders, other than foreign persons, should furnish
their TIN, write "Exempt" in Part 2 of the Substitute Form W-9 included herewith
and sign, date and return the Substitute Form W-9 to the Depositary. In order
for a foreign person to qualify as an exempt stockholder, such person must
submit an appropriate and properly completed IRS Form W-8, attesting to that
person's exempt status. Such a Form W-8 may be obtained from the Depositary. See
the enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to withholding will be reduced
by the amount of tax withheld. If backup withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
WHAT NUMBER TO GIVE THE DEPOSITARY
A tendering stockholder is required to give the Depositary the TIN of the
record holder of the shares. If the shares are in more than one name, or are not
in the name of the actual owner, consult the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional guidelines on which number to report. If the tendering stockholder
does not have a TIN, such stockholder should (i) consult the enclosed Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9 for
instructions on applying for a TIN, (ii) write "Applied For" in the space
provided in Part 1(a) of the Substitute Form W-9 and check the appropriate box
in Part 1(b), and (iii) sign and date the Substitute Form W-9 and the
Certificate of Awaiting Taxpayer Identification Number included herewith. Note
that writing "Applied For" on the Substitute Form W-9 means that the stockholder
has already applied for a TIN or that such stockholder intends to apply for one
in the near future. If the box in Part 1(b) is checked, the Depositary will
withhold 31% of payments made to the stockholder.
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
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<PAGE> 12
MANUALLY SIGNED FACSIMILE COPIES OF THE LETTER OF TRANSMITTAL WILL BE
ACCEPTED. THE LETTER OF TRANSMITTAL, CERTIFICATES FOR SHARES AND ANY OTHER
REQUIRED DOCUMENTS SHOULD BE SENT OR DELIVERED BY EACH STOCKHOLDER OF THE
COMPANY OR SUCH STOCKHOLDER'S BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR
OTHER NOMINEE TO THE DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH ON THE FIRST
PAGE.
NORWEST BANK MINNESOTA, N.A.
BY FACSIMILE TRANSMISSION:
(For Eligible Institutions Only)
(651) 450-4163
CONFIRM FACSIMILE BY TELEPHONE:
(For Confirmation Only)
(651) 450-4110
Questions and requests for assistance or for additional copies of the Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
other tender offer materials may be directed to the Information Agent at the
telephone number and location listed below, and will be furnished promptly at
the Purchaser's expense. You may also contact your broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road
Carlstadt, NJ 07072-2586
Call Toll Free (888) 568-9323
Banks and Brokers please call (201) 896-1900
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
World Financial Center
South Tower
New York, NY 10281
(212) 236-3790 (Call Collect)
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<PAGE> 1
Exhibit 99 (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK OF
CAPSTEAD MORTGAGE CORPORATION
TO
FORTRESS CAP LLC
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JUNE 9, 2000, UNLESS THE OFFER IS EXTENDED.
This Notice of Guaranteed Delivery, or a form substantially equivalent
hereto, must be used to accept the Offer (as defined below) if certificates for
shares are not immediately available, if the procedure for book-entry transfer
cannot be completed on a timely basis, or if time will not permit all required
documents to reach Norwest Bank Minnesota, N.A. (the "Depositary") on or prior
to the Expiration Date (as defined in Section 1 of the Offer to Purchase dated
May 12, 2000 (the "Offer to Purchase"). This form may be delivered by hand,
transmitted by facsimile transmission or mailed to the Depositary. See Section 4
of the Offer to Purchase.
The Depositary for the Offer is:
NORWEST BANK MINNESOTA, N.A.
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Overnight Courier and By Hand:
Norwest Shareowner Services (For Eligible Institutions Only) Norwest Shareowner Services
Reorganization Department (651) 450-4163 Reorganization Department
P.O. Box 64858 161 North Concord Exchange
St. Paul, MN 55164-0858 Confirm Facsimile By Telephone: South St. Paul, MN 55075
(651) 450-4110
(For Confirmation Only)
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN ONE
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER
THAN THE FACSIMILE NUMBER SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY
TO THE DEPOSITARY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" (AS DEFINED IN THE OFFER TO PURCHASE)
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEES MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal or an
Agent's Message (as defined in the Offer to Purchase) and certificates for
shares (or a Book-Entry Confirmation (as defined in the Offer to Purchase)) to
the Depositary within the time period described therein. Failure to do so could
result in a financial loss to such Eligible Institution.
THE GUARANTEE ON THE REVERSE SIDE MUST BE COMPLETED.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Fortress Cap LLC, a Delaware limited
liability company, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated May 12, 2000 and the related Letter of Transmittal,
receipt of which is hereby acknowledged, the number of shares of common stock,
par value $0.01 per share of Capstead Mortgage Corporation, a Maryland
corporation, set forth below, pursuant to the guaranteed delivery procedures set
forth in the Offer to Purchase.
Number of Shares Tendered:
Certificate No(s) (if available):
-----------------------------------------------------
-----------------------------------------------------
[ ] Check if securities will be tendered by book-entry transfer
Name of Tendering Institution:
-----------------------------------------------------
Account No.: -----------------------------------------
Dated: ----------------------------------------, 2000
SIGN HERE
Name(s) of Record Holder(s)
- -----------------------------------------------------
- -----------------------------------------------------
(please print)
Address(es): ----------------------------------------
- -----------------------------------------------------
(Zip Code)
Area Code and Telephone No(s):
- -----------------------------------------------------
Signature(s): ---------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity that is a member in good standing of the Securities Transfer
Agents Medallion Program, (a) represents that the above named person(s) "own(s)"
the shares tendered hereby within the meaning of Rule 14e-4 under the Securities
Exchange Act of 1934, as amended ("Rule 14e-4"), (b) represents that such tender
of shares complies with Rule 14e-4 and (c) guarantees to deliver to the
Depositary either the certificates evidencing all tendered shares, in proper
form for transfer, or to deliver shares pursuant to the procedure for book-entry
transfer into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility"), in either case together with the Letter of
Transmittal (or a facsimile thereof) properly completed and duly executed, with
any required signature guarantees or an Agent's Message (as defined in the Offer
to Purchase) in the case of a book-entry delivery, and any other required
documents, all within three New York Stock Exchange trading days after the date
hereof.
Name of Firm: ---------------------------------------
-----------------------------------------------------
(Authorized Signature)
Address: --------------------------------------------
-----------------------------------------------------
Zip Code
Title: -----------------------------------------------
Name: ------------------------------------------------
(Please type or print)
Area Code and Tel. No. -------------------------------
Date: ----------------------------------------- , 2000
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE> 1
Exhibit 99 (a)(4)
Merrill Lynch & Co.
World Financial Center
South Tower
New York, NY 10281
OFFER TO PURCHASE FOR CASH
UP TO 5,000,000 SHARES OF COMMON STOCK
OF
CAPSTEAD MORTGAGE CORPORATION
AT
$8.00 NET PER SHARE
BY
FORTRESS CAP LLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JUNE 9, 2000, UNLESS THE OFFER IS EXTENDED.
May 12, 2000
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
We have been appointed by Fortress Cap LLC, a Delaware limited liability
company (the "Purchaser") to act as Dealer Manager in connection with the
Purchaser's offer to purchase up to 5,000,000 shares of common stock, par value
$0.01 per share, of Capstead Mortgage Corporation, a Maryland corporation
("Capstead") at a purchase price of $8.00 per share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated May 12, 2000 (the "Offer to Purchase") and the
related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer") enclosed herewith. The
number of shares to be purchased and the Offer Price reflect the 1-for-2 reverse
split of Capstead's common stock, which took effect at the close of business on
May 8, 2000.
Holders of shares whose certificates for such shares (the "Share
Certificates") are not immediately available, who cannot complete the procedures
for book-entry transfer on a timely basis, or who cannot deliver all other
required documents to Norwest Bank Minnesota, N.A. (the "Depositary") prior to
the Expiration Date (as defined in the Offer to Purchase) must tender their
shares according to the guaranteed delivery procedures set forth in Section 4 of
the Offer to Purchase.
The Offer is not conditional upon any minimum number of shares being
tendered. The Offer is, however, subject to certain other conditions. SEE
SECTION 15 OF THE OFFER TO PURCHASE.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold shares registered in your name or in the name of
your nominee.
1. Offer to Purchase dated May 12, 2000;
2. Letter of Transmittal for your use in accepting the Offer and tendering
shares and for the information of your clients (manually signed facsimile copies
of the Letter of Transmittal may be used to tender shares);
3. Notice of Guaranteed Delivery to be used to accept the Offer if Share
Certificates are not immediately available or if such certificates and all other
required documents cannot be delivered to the Depositary, or if the procedures
for book-entry transfer cannot be completed on a timely basis;
<PAGE> 2
4. Additional Instructions to the Letter of Transmittal relating to the
1-for-2 reverse split of Capstead's common stock;
5. A printed form of letter that may be sent to your clients for whose
accounts you hold shares registered in your name or in the name of your nominee,
with space provided for obtaining such clients' instructions with regard to the
Offer;
6. Guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9.
The Offer is being made in part to satisfy an obligation under the
Supplemental Agreement dated December 9, 1999, between an affiliate of the
Purchaser and Capstead to acquire at least 2,500,000 shares of common stock of
Capstead through, at the Purchaser's option, open market purchases, conversion
of a portion of its shares of Series C or Series D preferred stock, or any
combination thereof and because the Purchaser believes the shares are attractive
investment at the purchase price. On May 9, 2000, the disinterested members of
the board of directors of Capstead approved the making of the Offer as a
mechanism by which the Purchaser could satisfy in full its obligation under the
Supplemental Agreement, as well as approving the purchase by the Purchaser of up
to an additional 2,500,000 shares of common stock.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal and any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry delivery of shares, and other required documents should be sent to
the Depositary and (ii) Share Certificates representing the tendered shares
should be delivered to the Depositary, or such shares should be tendered by
book-entry transfer into the Depositary's account maintained at the Book-Entry
Transfer Facility (as described in the Offer to Purchase), all in accordance
with the instructions set forth in the Letter of Transmittal and the Offer to
Purchase.
The Purchaser will not pay any fees or commissions to any broker or dealer
or other person (other than the Depositary, the Information Agent and the Dealer
Manager as described in the Offer to Purchase) for soliciting tenders of shares
pursuant to the Offer. The Purchaser will, however, upon request, reimburse you
for customary mailing and handling costs incurred by you in forwarding the
enclosed materials to your customers.
The Purchaser will pay or cause to be paid all stock transfer taxes
applicable to its purchase of shares pursuant to the Offer, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, JUNE 9, 2000, UNLESS THE OFFER IS EXTENDED.
Any inquiries you may have with respect to the Offer should be addressed to
the Information Agent or the undersigned at the addresses and telephone numbers
set forth on the back cover of the Offer to Purchase. Additional copies of the
enclosed materials may be obtained from the Information Agent.
Very truly yours,
Merrill Lynch & Co.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF FORTRESS REGISTERED INVESTMENT TRUST, THE
PURCHASER, CAPSTEAD, THE DEALER MANAGER, THE INFORMATION AGENT, THE DEPOSITARY
OR ANY AFFILIATE OF ANY OF THE FOREGOING OR AUTHORIZE YOU OR ANY OTHER PERSON TO
USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION
WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
2
<PAGE> 1
Exhibit 99 (a)(5)
OFFER TO PURCHASE FOR CASH
UP TO 5,000,000 SHARES OF COMMON STOCK
OF
CAPSTEAD MORTGAGE CORPORATION
AT
$8.00 NET PER SHARE
BY
FORTRESS CAP LLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JUNE 9, 2000, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is the Offer to Purchase dated May 12, 2000
(the "Offer to Purchase") and a related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the "Offer")
in connection with the offer by Fortress Cap LLC, a Delaware limited liability
company (the "Purchaser"), to purchase up to 5,000,000 shares of common stock,
par value $0.01 per share, of Capstead Mortgage Corporation, a Maryland
corporation, ("Capstead") at a purchase price of $8.00 per share (the "Purchase
Price"), net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase and in the Letter
of Transmittal enclosed herewith. The number of shares to be purchased and the
Purchase Price per share reflect the 1-for-2 reverse split of Capstead's common
stock, which took effect at the close of business on May 8, 2000.
WE ARE THE HOLDER OF RECORD OF SHARES FOR YOUR ACCOUNT. A TENDER OF SUCH
SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR
INSTRUCTIONS. THE ENCLOSED LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish us to tender any or all of
the shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer to Purchase. Your attention is directed to the
following:
1. The purchase price is $8.00 per share, net to you in cash, without
interest.
2. The Offer is being made for up to 5,000,000 outstanding shares.
3. The disinterested members of the board of directors of Capstead has
approved the offer; however, neither Capstead nor its board of directors
makes any recommendation to stockholders as to whether to tender or refrain
from tendering their shares. Each stockholder must make the decision
whether to tender their shares and, if so, how many shares to tender.
4. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Friday, June 9, 2000 (the "Expiration Date"), unless the
Offer is extended.
5. Any stock transfer taxes applicable to the sale of shares to the
Purchaser pursuant to the Offer will be paid by the Purchaser, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
SEE SECTION 15 OF THE OFFER TO PURCHASE FOR CERTAIN CONDITIONS OF THE
OFFER.
<PAGE> 2
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of shares. The Purchaser is not
aware of any state where the making of the Offer is prohibited by administrative
or judicial action pursuant to any valid state statute. If the Purchaser becomes
aware of any valid state statute prohibiting the making of the Offer or the
acceptance of shares pursuant thereto, the Purchaser shall make a good faith
effort to comply with such state statute or seek to have such statute declared
inapplicable to the Offer. If, after such good faith effort, the Purchaser
cannot comply with such state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) holders of shares in such state. In
those jurisdictions where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer will be deemed to be
made on behalf of the Purchaser by Merrill Lynch & Co. in its capacity as Dealer
Manager for the Offer or one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
If you wish to have us tender any or all of your shares, please so instruct
us by completing, executing and returning to us the instruction form set forth
on the reverse side of this letter. An envelope to return your instructions to
us is also enclosed. If you authorize the tender of your shares, all such shares
will be tendered unless otherwise specified on the reverse side of this letter.
YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT
A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION DATE.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
UP TO 5,000,000 SHARES OF COMMON STOCK
OF
CAPSTEAD MORTGAGE CORPORATION
AT
$8.00 NET PER SHARE
BY
FORTRESS CAP LLC
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated May 9, 2000 and the related Letter of Transmittal of
Fortress Cap LLC., a Delaware limited liability company, up to 5,000,000 shares
of common stock, par value $0.01 per share, of Capstead Mortgage Corporation at
a purchase price of $8.00 per share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase and the related Letter of Transmittal.
This will instruct you to tender to the Purchaser the number of shares
indicated below (or, if no number is indicated below, all shares) that are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer to Purchase and the related Letter of
Transmittal.
<TABLE>
<S> <C>
Number of Shares to be Tendered:* SIGN HERE
- ------------------- Shares -----------------------------------------------------------
-----------------------------------------------------------
SIGNATURE(S)
Account Number: ------------------------------- -----------------------------------------------------------
-----------------------------------------------------------
PRINT NAME(S) AND ADDRESS(ES)
-----------------------------------------------------------
Dated: , 2000 AREA CODE AND TELEPHONE NUMBER(S)
-----------------------------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER(S)
</TABLE>
- ---------------
* Unless otherwise indicated, it will be assumed that all shares held by us for
your account are to be tendered.
<PAGE> 1
Exhibit 99 (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
(SECTION REFERENCES ARE TO THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED.)
GUIDELINES FOR DETERMINING THE PROPER TAXPAYER IDENTIFICATION NUMBER ("TIN") TO
GIVE THE PAYER.--Social Security numbers ("SSNs") have nine digits separated by
two hyphens: i.e. 000-00-0000. Employer identification numbers ("EINs") have
nine digits separated by only one hyphen: i.e. 00-0000000. The table below will
help determine the number to give the payer.
You must enter your TIN in the appropriate box. If you are a resident alien
and you do not have and are not eligible to get an SSN, your TIN is your IRS
individual taxpayer identification number ("ITIN"). Enter it in the social
security number box. If you do not have an ITIN, see HOW TO GET A TIN below.
If you are a sole proprietor and you have an EIN, you may enter either your
SSN or EIN. However, using your EIN may result in unnecessary notices to the
person requesting your TIN.
<TABLE>
<CAPTION>
- ------------------------------------------------------------
GIVE THE NAME AND
TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF:
- ------------------------------------------------------------
<C> <S> <C>
1. Individual The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, the
first individual on
the account(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings The grantor-
trust (grantor is also trustee) trustee(1)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under state law
5. Sole proprietorship The owner(3)
6. A valid trust, estate, or pension The legal entity(4)
trust
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
GIVE THE NAME AND
TAXPAYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF:
- ------------------------------------------------------------
<C> <S> <C>
7. Corporate The corporation
8. Association, club, religious, The organization
charitable, educational, or other
tax-exempt organization
9. Partnership The partnership
10. A broker or registered nominee The broker or
nominee
11. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a state or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List above the signature line and circle the name of the person whose number
you furnish.
(2) List the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use your social security number or
employer identification number.
(4) List the name of the legal trust, estate, or pension trust. (Do not furnish
the TIN of the personal representative or trustee unless the legal entity
itself is not designated in the account title.)
NOTE: If no name above the signature line is listed when more than one name
appears in the registration, the number will be considered to be that of
the first name appearing in the registration.
<PAGE> 2
PURPOSE OF FORM. A person who is required to file an information return with
the IRS must get your correct TIN to report, for example, income paid to you,
real estate transactions, mortgage interest you paid, the acquisition or
abandonment of secured property, cancellation of debt, or contributions you made
to an IRA. Use Form W-9 to give your correct TIN to the person requesting your
TIN and, when applicable, (1) to certify the TIN you are giving is correct (or
you are waiting for a number to be issued), (2) to certify you are not subject
to backup withholding, or (3) to claim exemption from backup withholding if you
are an exempt payee.
WHAT IS BACKUP WITHHOLDING?--Persons making certain payments to you must
withhold and pay to the IRS 31% of such payments under certain conditions. This
is called "backup withholding." Payments that could be subject to backup
withholding include interest, dividends, broker and barter exchange
transactions, rents, royalties, nonemployee pay, and certain payments from
fishing boat operators. Real estate transactions are not subject to backup
withholding.
If you give the requester your correct TIN, make the proper certifications,
and report all your taxable interest and dividends on your tax return, payments
you receive will not be subject to backup withholding. Payments you receive will
be subject to backup withholding if:
1. You do not furnish your TIN to the requester, or
2. The IRS tells the requester that you furnished an incorrect TIN, or
3. The IRS tells you that you are subject to backup withholding because you
did not report all your interest and dividends on your tax return (for
reportable interest and dividends only), or
4. You do not certify to the requester that you are not subject to backup
withholding (for reportable interest and dividend accounts opened after
1983 only), or
5. You do not certify your TIN.
Certain payees and payments are exempt from backup withholding and information
reporting. See below.
HOW TO GET A TIN: If you do not have a TIN, apply for one immediately. To
apply for an SSN, get Form SS-5 from your local Social Security Administration
office. Get Form W-7 to apply for an ITIN or Form SS-4 to apply for an EIN. You
can get Forms W-7 and SS-4 from the IRS by calling 1-800-TAX-Form
(1-800-829-3676) or from the IRS's Internet Web Site at www.irs.gov.
If you do not have a TIN, check the box titled "Applied For" in the space for
the TIN, sign and date the form, and give it to the requester.
NOTE: Checking the box titled "Applied For" on the form means that you have
already applied for a TIN OR that you intend to apply for one soon.
As soon as you receive your TIN, complete another Form W-9, include your TIN,
sign and date the form, and give it to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Individuals (including sole proprietors) are NOT exempt from backup withholding.
Corporations are exempt from backup withholding for certain payments, such as
interest and dividends.
If you are exempt from backup withholding, you should still complete this form
to avoid possible erroneous backup withholding. Enter your correct TIN in Part
I, write "Exempt" in Part II, and sign and date the form. If you are a
nonresident alien or a foreign entity not subject to backup withholding, give
the requester a completed Form W-8, Certificate of Foreign Status.
The following is a list of payees exempt from backup withholding and for which
no information reporting is required. For interest and dividends, all listed
payees are exempt except the payee listed in item (9). For broker transactions,
payees listed in (1) through (13) and a person registered under the Investment
Advisers Act of 1940 who regularly acts as a broker are exempt. Payments subject
to reporting under sections 6041 and 6041A are generally exempt from backup
withholding only if made to payees described in items (1) through (7).
(1) An organization exempt from tax under section 501(a), or an IRA, or a
custodial account under section 403(b)(7) if the account satisfies the
requirements of section 401(f)(2).
(2) The United States or any of its agencies or instrumentalities.
(3) A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(4) A foreign government or any of its political subdivisions, agencies, or
instrumentalities.
(5) An international organization or any of its agencies or
instrumentalities.
(6) A corporation.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the United
States, the District of Columbia or a possession of the United States.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or custodian.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments that are not subject to information reporting also are not subject to
backup withholding. For details, see sections 6041, 6041A, 6042, 6044, 6045,
6049, 6050A, and 6050N, and their regulations.
PRIVACY ACT NOTICE.--Section 6109 requires you to give your correct TIN to
persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, cancellation of debt, or
contributions you made to an IRA. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. The IRS may also
provide this information to the Department of Justice for civil and criminal
litigation and to cities, states, and the District of Columbia to carry out
their tax laws.
You must provide your TIN whether or not you are required to file a tax return.
Payers must generally withhold 31% of taxable interest, dividend, and certain
other payments to a payee who does not give a TIN to a payer. Certain penalties
may also apply.
PENALTIES
(1) FAILURE TO FURNISH TIN.--If you fail to furnish your TIN to a requester, you
are subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
(4) MISUSE OF TINS.--If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
<PAGE> 1
Exhibit (a)(7)
F O R T R E S S
INVESTMENT GROUP LLC
Contact: FOR RELEASE
Lilly H. Donohue
Vice President, Fortress
212 798-6118
FORTRESS ANNOUNCES AN OFFER TO PURCHASE
UP TO 5,000,000 SHARES OF COMMON STOCK OF CAPSTEAD
AT A CASH TENDER PRICE OF $8.00 PER SHARE
NEW YORK, May 12, 2000 -- Fortress Investment Fund LLC (together with its
affiliates, "Fortress") announced today the commencement of an offer by its
affiliate, Fortress Cap LLC, to purchase up to 5,000,000 shares of common stock
(the "Offer") of Capstead Mortgage Corporation ("Capstead") (NYSE ticker symbol:
CMO) for a cash price of $8.00 per share, net to the seller, representing
approximately 22 percent of the common shares outstanding. The cash price
represents a premium of approximately 24 percent over the May 11, 2000 closing
price of $6.44. The Offer will only be made pursuant to offering materials being
distributed to Capstead common stockholders on May 12, 2000 and will expire at
12:00 Midnight, New York City Time, on June 9, 2000 (unless extended).
Merrill Lynch & Co. is acting as exclusive Dealer-Manager for the Offer.
Neither Fortress nor Capstead is making any recommendation to the stockholders
as to whether or not they should tender any shares pursuant to the Offer.
The Offer is being made in part to satisfy an obligation of Fortress to
acquire at least 2,500,000 shares of Capstead common stock contained in an
agreement made in connection with Fortress's previous $51 million convertible
preferred equity investment in Capstead.
Fortress is a real estate opportunity fund located in New York with over
$870 million of private equity capital. Fortress focuses on real estate-related
investments worldwide.
###
<PAGE> 1
Exhibit (a)(8)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell shares. The Offer is made solely by the Offer to Purchase dated May 12,
2000 and the related Letter of Transmittal and is being made to all holders of
shares. The Purchaser is not aware of any state where the making of the Offer
is prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of shares pursuant thereto, the
Purchaser shall make a good faith effort to comply with such state statute
or seek to have such statute declared inapplicable to the Offer. If, after
such good faith effort, the Purchaser cannot comply with such state statute,
the Offer will not be made to (nor will tenders be accepted from or on
behalf of) holders of shares in such state. In those jurisdictions
where the securities, blue sky or other laws require the Offer to be
made by a licensed broker or dealer, the Offer will be deemed to be
made on behalf of the Purchaser by Merrill Lynch, Pierce, Fenner &
Smith Incorporated in its capacity as Dealer Manager for the Offer
or one or more registered brokers or dealers licensed under the
laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
UP TO 5,000,000 SHARES OF COMMON STOCK
OF
CAPSTEAD MORTGAGE CORPORATION
AT
$8.00 NET PER SHARE
BY
FORTRESS CAP LLC
Fortress Cap LLC, a Delaware limited liability company (the
"Purchaser"), offers to purchase up to 5,000,000 shares of common stock, $0.01
par value per share, of Capstead Mortgage Corporation, a Maryland corporation
("Capstead"), at a purchase price of $8.00 per share, net to the seller in cash,
without interest. The number of shares and the price per share have been
adjusted for the 1-for-2 reverse split of Capstead's common stock, effective at
the close of business on May 8, 2000. Shares must be tendered on the terms and
subject to the conditions set forth in the Offer to Purchase dated May 12, 2000
(the "Offer to Purchase") and the related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the
"Offer"). All shares properly tendered and not properly withdrawn will be
purchased at the purchase price, upon the terms and subject to the conditions of
the Offer, including the proration provisions described in Section 2 of the
Offer to Purchase.
<PAGE> 2
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JUNE 9, 2000, UNLESS THE OFFER IS EXTENDED.
The Purchaser reserves the right, in its sole discretion, to purchase
more than 5,000,000 shares pursuant to the Offer. Shares not purchased because
of the proration provisions will be returned promptly following the expiration
or termination of the Offer. See Section 4 of the Offer to Purchase. In the
event of an over-subscription of the Offer, shares validly tendered and not
properly withdrawn prior to the Expiration Date (as defined below) will be
purchased on a pro-rata basis, disregarding fractions that arise as a result of
such prorating, according to the number of shares tendered by each stockholder
prior to the Expiration Date of the Offer. See Section 2 of the Offer to
Purchase.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 15 OF THE OFFER TO PURCHASE.
The Offer is being made in part to satisfy an obligation under the
Supplemental Agreement dated December 9, 1999, between an affiliate of the
Purchaser and Capstead to acquire at least 2,500,000 shares of common stock of
Capstead through, at the Purchaser's option, open market purchases, conversion
of a portion of its shares of Series C or Series D preferred stock, or any
combination thereof and because the Purchaser believes the shares are attractive
investment at the purchase price. On May 9, 2000, the disinterested members of
the Board of Directors of Capstead approved the Offer as a means by which the
Purchaser could seek to satisfy this obligation in full and acquire up to an
additional 2,500,000 shares.
THE DISINTERESTED MEMBERS OF THE BOARD OF DIRECTORS OF CAPSTEAD HAVE
APPROVED THE MAKING OF THE OFFER. YOU MUST, HOWEVER, MAKE YOUR OWN DECISION
WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. NONE OF
CAPSTEAD, ITS BOARD OF DIRECTORS OR THE DEALER MANAGER MAKES ANY RECOMMENDATION
TO YOU WITH RESPECT TO THE OFFER, AND NO PERSON HAS BEEN AUTHORIZED BY CAPSTEAD,
ITS BOARD OF DIRECTORS OR THE DEALER MANAGER TO MAKE ANY SUCH RECOMMENDATIONS.
DIRECTORS AND EXECUTIVE OFFICERS OF CAPSTEAD HAVE AGREED NOT TO PARTICIPATE IN
THE OFFER.
The Purchaser expressly reserves the right, in its sole discretion, to
(i) extend the period of time during which the Offer is open by giving oral or
written notice of such extension to the Depositary (as defined below) or (ii)
amend the Offer in any respect by making a public announcement of such
amendment. Any extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date, in accordance with the public announcement requirements of Rule
14e-1(d) under the Securities Exchange Act of 1934.
Tenders pursuant to the Offer may be withdrawn at any time prior to
midnight on June 9, 2000, the expiration date of the Offer (as such date may be
extended, the "Expiration Date"), and if not yet accepted for payment, after
July 10, 2000. For a withdrawal to be effective, a written, telegraphic or
facsimile transmission notice of withdrawal must be timely received by Norwest
Bank Minnesota, N.A., the depositary for the Offer (the "Depositary"), at one of
its addresses set forth on the back cover page of the Offer to Purchase. Any
such notice of withdrawal must specify the name, address and taxpayer
identification number of the person who tendered the shares to be withdrawn, the
number of shares to be withdrawn and the name of the registered holder of such
shares, if different from that of the person who tendered such shares. If
certificates evidencing shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and the signature(s) on the notice of withdrawal must be
guaranteed by an Eligible Institution (as defined in the Offer to Purchase),
unless such shares have been tendered for the account of an Eligible
Institution. If shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 4 of the Offer to Purchase, any
notice of withdrawal must also specify the name and number of the account at The
Depository Trust Company to be credited with the withdrawn shares.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment, and thereby purchased, shares validly tendered and not
properly withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such shares pursuant
to the Offer. In all cases, payment for shares accepted for payment pursuant to
the Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such shares or confirmation of a book-entry transfer of
such shares into the Depositary's account at The Depository Trust Company
pursuant to the procedures set forth in Section 4 of the Offer to Purchase, (ii)
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees or, in the case of a book-entry
transfer, an Agent's Message (as defined in the Offer to Purchase) in lieu of
the Letter of Transmittal and (iii) any other documents required by the Letter
of Transmittal.
<PAGE> 3
UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE BE PAID,
REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT.
Any stockholder wishing to tender shares in the Offer must (1) complete
and sign the Letter of Transmittal (or a facsimile thereof) in accordance with
the instructions in the Letter of Transmittal and mail or deliver the Letter of
Transmittal and all other required documents to the Depositary, together with
certificates representing the shares tendered or follow the procedure for
book-entry transfer set forth in Section 4 of the Offer to Purchase or (2)
request such stockholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for the stockholder. A stockholder whose
shares are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact such person if such stockholder wishes to
tender such shares. Any stockholder who wishes to tender shares and cannot
deliver certificates representing such shares and all other required documents
to the Depositary on or prior to the Expiration Date or who cannot comply with
the procedures for book-entry transfer on a timely basis may tender such shares
pursuant to the guaranteed delivery procedure set forth in Section 4 of the
Offer to Purchase.
The information required to be disclosed by paragraph (d)(1) of Rule
14d-6 of the General Rules and Regulations under the Exchange Act is contained
in the Offer to Purchase and is incorporated herein by reference.
The Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of shares as of May 8, 2000 and will be furnished to
brokers, banks and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial stockholders.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth below. Additional copies of the Offer to Purchase,
the Letter of Transmittal, the Notice of Guaranteed Delivery and other related
materials may be obtained at the expense of the Purchaser, from the Information
Agent at its address and telephone numbers set forth below. Stockholders may
also contact their broker, dealer, commercial bank, trust company or other
nominee for copies of these documents.
The Information Agent for the Offer is:
CORPORATE INVESTOR COMMUNICATIONS, INC.
111 Commerce Road - Carlstadt, NJ 07072-2586
Banks and Brokers call (800) 346-7885
All Others Call Toll Free (888) 568-9323
The Dealer Manager for the Offer is:
MERRILL LYNCH & CO.
World Financial Center
South Tower
New York, NY 10281
(212) 236-3790 (call collect)
May 12, 2000
<PAGE> 1
Exhibit 99 (a)(9)
ADDITIONAL INSTRUCTIONS RELATING TO THE LETTER OF TRANSMITTAL
PURSUANT TO THE OFFER TO PURCHASE 5,000,000 SHARES OF CAPSTEAD
MORTGAGE CORPORATION COMMON STOCK
PURPOSE OF TRANSMITTAL:
Use the enclosed BLUE Letter of Transmittal to tender your shares pursuant
to the Offer. The BLUE Letter of Transmittal provides for the tendering of
shares that have not yet been adjusted for the reverse stock split.
Upon receipt of your properly completed BLUE Letter of Transmittal, the
Exchange Agent* will accept the old certificate(s) and dividend reinvestment
shares, if any, for exchange into the new shares of Capstead common stock. Once
the Exchange Agent completes the reverse split exchange, the new shares,
including fractions, which you have indicated on the BLUE Letter of Transmittal
you wish to tender, will be held in book entry at the Depositary until the Offer
expires. Shortly following expiration of the Offer, those shares held in book
entry at the Depositary will be tendered in accordance with the Offer. A
certificate will be mailed to you following the exchange of shares pursuant to
the reverse stock split for any shares you held out of the Offer, as indicated
by you on the BLUE Letter of Transmittal.
SHARE BALANCE ON THE TRANSMITTAL:
Printed at the bottom of the enclosed BLUE Letter of Transmittal is your
certificated share balance and dividend reinvestment share balance, if any, and
an aggregate share balance ON A PRE-REVERSE STOCK SPLIT BASIS. For your
convenience, the aggregate balance has been reverse split-adjusted to show you
the total share balance that is eligible for the offer to purchase. When
completing the "Description of Shares Tendered" box, indicate the shares you
wish to tender on a PRE-SPLIT BASIS, and the Depositary will adjust for the
reverse stock split accordingly. When submitting the BLUE Letter of Transmittal,
you need only provide a certificate(s) for those shares indicated on the BLUE
Letter of Transmittal as "Cert."
USE THE BLUE LETTER OF TRANSMITTAL ONLY IF YOU WISH TO TENDER YOUR SHARES.
DO NOT USE THE BLUE LETTER OF TRANSMITTAL IF YOU INTEND TO SOLEY EXCHANGE YOUR
SHARES FOR THE REVERSE STOCK SPLIT. INSTEAD, USE THE WHITE LETTER OF
TRANSMITTAL, WHICH IS BEING MAILED TO YOU UNDER SEPARATE COVER, FOR THE SOLE
PURPOSE OF EXCHANGING YOUR SHARES PURSUANT TO THE ONE-FOR-TWO REVERSE STOCK
SPLIT.
- ---------------
* Norwest Shareowner Services will act as both the Exchange Agent for the
1-for-2 reverse split of the Common Stock of Capstead Mortgage Corporation and
the Depositary for the Offer.
