EXHIBIT A
CALIFORNIA INVESTMENT FUND, L.L.C.
January 2, 2001
BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED
AND BY FACSIMILE: (804) 217-5860
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Mr. Thomas Potts
Dynex Capital, Inc.
4551 Cox Road, Suite 300
Glen Allen, Virginia 23060
Re: DYNEX CAPITAL, INC. PRESS RELEASE
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Dear Mr. Potts:
We are concerned by the press release issued by Dynex Capital, Inc.
("Dynex") on December 28, 2000 (the "Press Release") for several reasons.
We address your attention to section 8(b) of the Merger Agreement, which
prohibits Dynex from issuing such a press release without the prior written
approval of California Investment Fund, LLC ("CIF"). The Press Release was not
approved by CIF.
Additionally, the Press Release is inaccurate in a number of respects. For
example, the letter agreement purportedly described in the Press Release
provides, at paragraph 3, as follows: "CIF shall have obtained and shall provide
to Dynex, on or prior to 5pm Eastern time on January 25, 2001, the written
consent by a sufficient number of the holders of the Target Senior Notes to
permit all of the transactions contemplated by the Merger Agreement, including
without limitation the financing thereof, to be consummated without breach of
the Target Senior Note Indenture." (emphasis added). The Press Release failed to
note that the consent of a sufficient number of the bondholders is required only
if consummation of the transactions contemplated by the Merger Agreement would
breach the Indenture.
CALIFORNIA INVESTMENT FUND, LLC
By: /s/ Michael R. Kelly
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Name: Michael R. Kelly
Title: Managing Member
CC: Elizabeth R. Hughes, Esq.
550 West C Street, 10th Floor
San Diego, California 92101
(619) 687-5000 (619) 687-5010 fax
