UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-10)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE
13D-1(A) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13D-2(A)*
(AMENDMENT NO. 2)
Dynex Capital, Inc.
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(Name of Issuer)
Common Stock, $0.01 par value per share
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(Title of Class of Securities)
26817Q506
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(CUSIP Number)
with a copy to:
Michael R. Kelly Stephen Fraidin
550 West C Street Fried, Frank, Harris, Shriver & Jacobson
San Diego, CA 92101 One New York Plaza
(619) 687-5000 New York, NY 10004-1980
(212) 859-8000
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
September 29, 2000
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box |_|.
Note: Schedules filed in paper format shall include a signed original
and five copies of the Schedule, including all exhibits. See Rule 13d-7(b)
for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934, as amended ("Act") or otherwise subject to the
liabilities of that section of the Act but shall be subject to all other
provisions of the Act (however, see the Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 26817Q506
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
CALIFORNIA INVESTMENT FUND, LLC 33-0688954
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (See Instructions)
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
NOT APPLICABLE
6 CITIZENSHIP OR PLACE OF ORGANIZATION
CALIFORNIA
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 572,178
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
10 SHARED DISPOSITIVE POWER
572,178
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
572,178
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES (See Instructions)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.00%
14 TYPE OF REPORTING PERSON (See Instructions)
CO
<PAGE>
SCHEDULE 13D
CUSIP No. 26817Q506
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MICHAEL R. KELLY
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (See Instructions)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
NOT APPLICABLE
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 572,178
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
10 SHARED DISPOSITIVE POWER
572,178
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
572,178
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES (See Instructions)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.00%
14 TYPE OF REPORTING PERSON (See Instructions)
IN
<PAGE>
SCHEDULE 13D
CUSIP No. 26817Q506
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RICHARD KELLY
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS (See Instructions)
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
NOT APPLICABLE
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 572,178
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
10 SHARED DISPOSITIVE POWER
572,178
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
572,178
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES (See Instructions)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.00%
14 TYPE OF REPORTING PERSON (See Instructions)
IN
<PAGE>
This amendment amends and supplements the Fund's Schedule 13D,
dated March 29, 2000, and filed on April 4, 2000, and Amendment No. 1 to
Schedule 13D, dated September 13, 2000, and filed on September 13, 2000,
with the Securities and Exchange Commission (together, the "Schedule 13D").
Except as amended by this amendment, there has been no change in the
information previously reported on the Schedule 13D.
ITEM 4. PURPOSE OF TRANSACTION.
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On September 25, 2000, California Investment Fund, LLC (the
"Fund") received a draft agreement and plan of merger (the "Merger
Agreement") from Dynex Capital, Inc. ("Dynex") outlining a potential
acquisition of Dynex by the Fund through a reverse triangular merger of a
wholly-owned subsidiary of the Fund with and into Dynex. Delivery of the
draft Merger Agreement by Dynex to the Fund followed the Fund's written
proposal dated September 12, 2000 to acquire all of the outstanding shares
of common stock and Series A, B and C Redeemable Preferred Stock of Dynex
for an aggregate of $90 million in cash, which proposal was delivered to
Dynex on September 12, 2000 (the "Proposal Letter"). A copy of the Proposal
Letter was attached as an Exhibit to the Fund's Amendment No. 1 to Schedule
13D filed September 13, 2000, and is specifically incorporated herein by
reference, and the description herein of such letter is qualified in its
entirety by reference to such letter. The Fund held discussions with Dynex
regarding a potential acquisition transaction.
On September 29, 2000, the Fund and Dynex entered into a letter
of intent regarding the Fund's proposed acquisition of Dynex for $90
million through a merger transaction (the "Letter of Intent"). Among other
things, the Letter of Intent provides that for the three-week period
commencing on September 29, 2000 (the "Exclusivity Period") (i) Dynex will
not, directly or indirectly, cooperate with, provide information for or
otherwise engage in or facilitate discussions or negotiations with any
third party concerning any alternative transaction with a third party
regarding a potential acquisition of Dynex and (ii) the Fund will use its
best efforts to obtain the necessary financing commitments on terms
reasonably satisfactory to the Fund to consummate the proposed merger,
complete its due diligence and obtain any consents that it believes are
necessary or advisable to complete a merger transaction. A copy of the
Letter of Intent is attached hereto as Exhibit A and is specifically
incorporated herein by reference, and the description herein of such letter
is qualified in its entirety by reference to such letter.
On October 3, 2000, the Fund issued a press release announcing
that it had entered into the Letter of Intent. A copy of the press release
is attached hereto as Exhibit B.
Discussions between the Fund and Dynex regarding the potential
merger transaction and negotiation of a definitive merger agreement are
expected to continue to take place from time to time during the Exclusivity
Period.
Depending on the outcome of the discussions between Dynex and the
Fund, the Fund reserves the right to formulate other plans and/or make
other proposals, and take such actions with respect to its investment in
Dynex, including any or all of the actions set forth in paragraphs (a)
through (j) of Item 4 of Schedule 13D and any other actions as it may
determine. The Fund also reserves the right to suspend or terminate its
discussions with Dynex.
Except as stated in this response to Item 4 and in furtherance of
a proposed business combination, the Fund has no current plans or proposals
with respect to Dynex or its securities of the types enumerated in
paragraphs (a) through (j) of Item 4 of Schedule 13D.
<PAGE>
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
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Exhibit A -- Letter of Intent between the Fund and Dynex dated September 29,
2000
Exhibit B -- Press Release of the Fund dated October 3, 2000
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SIGNATURES
After reasonable inquiry and to the best of our knowledge and
belief, we certify that the information set forth in this statement is
true, complete and correct.
Date: October 3, 2000 California Investment Fund, LLC,
a California limited liability company
By: /s/ Michael R. Kelly
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Michael R. Kelly
Its: Managing Member
Date: October 3, 2000 Michael R. Kelly
By: /s/ Michael R. Kelly
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Michael R. Kelly, as an Individual
Date: October 3, 2000 Richard Kelly
By: /s/ Richard Kelly
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Richard Kelly, as an Individual
<PAGE>
EXHIBIT INDEX
Exhibit A -- Letter of Intent between the Fund and Dynex dated September 29,
2000
Exhibit B -- Press Release of the Fund dated October 3, 2000
