EXHIBIT N
[CALIFORNIA INVESTMENT FUND, LLC LETTERHEAD]
Dynex Capital, Inc.
Attn: Thomas H. Potts
10900 Nuckols Road, 3rd Floor
Glen Allen, Virginia 23060
804-217-5861
Dynex Capital, Inc.
C/O Investment Banking Division VIA FACSIMILE
Paine Webber Incorporated
Attn: Mr. Jonathan P. Dever
1285 Avenue of the Americas
New York, NY 10019
212-712-4205
August 8, 2000
Dear Mr. Potts and Mr. Dever:
Please be advised that you recent rejection of our latest offer dated July
24, 2000, which was in the amount of $90 million, constitutes the
termination of discussions regarding the possible acquisition of some or
all of the equity securities or assets of Dynex Capital Inc. Based on this
termination we are formally requesting the written consent of the Board of
Directors of Dynex Capital Inc., to allow California Investment Fund, LLC,
(CIF) to purchase any of the securities of Dynex Capital Inc. This request
is pursuant to paragraph 4 of the Confidentiality Agreement dated April 6,
2000.
We consider this request to be reasonable in light of the most recent press
release dated, August 3, 2000. CIF has not received any material non-public
information with regard to Dynex Capital, Inc. in the past few weeks, and
all other information is so dated as to not be relevant to our decision to
buy or sell the securities of the company. Given that the window for deemed
insiders is currently open, we request that you grant your written consent
to allow us trade in the securities by signing and returning this letter.
California Investment Fund, LLC, would like to continue the underwriting of
the assumption of the liability for the Sun America Tax Exempt Bond
Portfolio Credit Enhancement, and the acquisition of the taxable tails
associated with the tax-exempt bonds. CIF will also consider assisting in
any other capital needs of the company as those needs might arise.
California Investment Fund, L.L.C.
By: /s/ Michael R. Kelly
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Name: Michael R. Kelly
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Title: Managing Member
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Read and Approved:
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Thomas H. Potts Date
Chairman
Dynex Capital, Inc.
