EXHIBIT A
ACKNOWLEDGEMENT AND AGREEMENT
Reference is hereby made to that certain Agreement and Plan of Merger
(the "Merger Agreement"), dated November 7, 2000, by and among California
Investment Fund, LLC, a California limited liability company (the "Buyer"),
DCI Acquisition Corporation, a Virginia corporation (the "Transitory
Subsidiary"), and Dynex Capital, Inc., a Virginia corporation (the
"Target"). Each capitalized term used and not otherwise defined herein
shall have the meaning ascribed to it in the Merger Agreement.
Pursuant to Section 5(c)(i), the SEC Mail Date will be December 22,
2000, unless the parties mutually agree to an earlier date.
Pursuant to Sections 2(d)(vii), 5(f) and 6(a)(vii) of the Merger
Agreement, the Target is required to purchase, terminate or cancel all
outstanding Target SARs and Target Options for an aggregate amount not to
exceed $265,000 on or before the Effective Time. Each of the Buyer, the
Transitory Subsidiary and the Target hereby agrees to substitute $300,000
in lieu of $265,000 in each such Section.
Pursuant to Section 5(g)(vii) of the Merger Agreement, none of the
Target and its Subsidiaries will make any change in employment retention
agreements other than extension through the Effective Time. Each of the
Buyer, the Transitory Subsidiary and the Target hereby agrees that the
Target may extend through December 31, 2001 employment retention agreements
for full-time employees of the Target in its Glen Allen, VA office that
have been employees of the Target for at least one full year as of December
31, 2000. Such retention agreements will provide for a retention payment of
20% of base salary in addition to the one-week per year of service in the
Target's existing severance policy to the extent such employee's position
is eliminated or relocated outside the Richmond, VA metropolitan area
during calendar year 2001 and such employee does not relocate.
IN WITNESS WHEREOF, each of the undersigned acknowledges and agrees to
the foregoing and executes this Acknowledgement and Agreement as of this
8th day of December, 2000.
ACKNOWLEDGED AND AGREED:
CALIFORNIA INVESTMENT FUND, LLC
By: /s/ Michael R. Kelly
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Title: Managing Member
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DCI ACQUISITION CORPORATION
By: /s/ Michael R. Kelly
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Title:
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DYNEX CAPITAL, INC.
By: /s/ Thomas H. Potts
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Title: President
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