UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
____________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: December 28, 2000
DYNEX CAPITAL, INC.
(Exact Name of Registrant as Specified in Charter)
Virginia 1-9819 52-1549373
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
4551 Cox Road, Suite 300, Glen Allen, Virginia 23060
(Address of Principal Executive Offices) (Zip Code)
(804) 217-5800
(Registrant's telephone number, including area code)
1
Item 5. OTHER EVENTS.
On December 22, 2000, the Company delivered a letter to California
Investment Fund, LLC ("CIF") which declared that CIF was in breach of the terms
of the merger agreement entered into by the parties on November 7, 2000. The
breach is related to CIF's obligation to provide certain evidence of financing
of the transaction in accordance with the terms of the merger agreement. In the
letter, the Company also reserved its rights to terminate the merger agreement
if CIF did not agree to and satisfy certain conditions relating to the obtaining
of financing and other matters.
Subsequently, CIF has executed the letter sent by the Company dated
December 22nd. Under the terms of the countersigned December 22nd letter, CIF
has agreed to deliver to the Company on or before January 25, 2001 (i) "written
binding commitment(s)" or "definitive agreements" from one or more third parties
sufficient to provide CIF with the financing necessary to consummate the
transaction, and (ii) the written consent to the merger transaction, including
the financing, by a sufficient number of the holders of the Company's senior
unsecured notes due July 2002. Pursuant to the December 22nd letter, if CIF does
not satisfy either of these additional obligations, the Company has reserved its
right to terminate the merger agreement for the declared breach and/or for any
breach of the additional obligations. Although CIF sent a letter to the Company
dated December 26, 2000 indicating that it does not agree with the Company's
declaration of a breach under the merger agreement, CIF nevertheless executed
the December 22nd letter.
The foregoing is qualified in its entirety by reference to the complete
text of the letter dated December 22, 2000, which is filed as Exhibit 99.2
hereto.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
99.1 Dynex Capital, Inc. Press Release, dated December 28, 2000.
99.2 Letter, dated December 22, 2000, executed by California Investment
Fund, LLC, DCI Acquisition Corporation and Dynex Capital, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: December 28, 2000 DYNEX CAPITAL, INC.
By: /s/ Thomas H. Potts
Thomas H. Potts
President
EXHIBIT INDEX
Number Description Method of Filing
99.1 Dynex Capital, Inc. Press Release, Filed herewith
dated December 28, 2000.
99.2 Letter, dated December 22, 2000, executed Filed herewith
by California Investment Fund, LLC, DCI
Acquisition Corporation and Dynex Capital, Inc.
Exhibit 99.1
[ Company Logo ]
PRESS RELEASE
FOR IMMEDIATE RELEASE CONTACT: Kathy Fern
December 28, 2000 804-217-5800
DYNEX CAPITAL, INC.
ANNOUNCES CALIFORNIA INVESTMENT FUND
EXECUTES LETTER
Dynex Capital, Inc. (NYSE: DX) announced today that California Investment
Fund, LLC ("CIF") has executed the letter sent by the Company dated December 22,
2000. As previously reported, the Company declared that CIF was in breach of its
obligation to provide certain evidence of financing in accordance with the terms
of the merger agreement entered into between the parties on November 7, 2000 and
sent a letter to CIF to that effect on December 22nd. Under the terms of the
countersigned December 22nd letter, CIF has now agreed to deliver to the Company
on or before January 25, 2001 "written binding commitment(s)" or "definitive
agreements" from one or more third parties sufficient to provide CIF with the
financing necessary to consummate the transaction, as well as the written
consent to the merger transaction, including the financing, by a sufficient
number of the holders of the Company's senior unsecured notes due July 2002.
Pursuant to the December 22nd letter agreement, if CIF does not satisfy either
of these additional obligations, the Company has reserved its right to terminate
the merger agreement for the declared breach and/or for any breach of the
additional obligations. Although CIF sent a letter to the Company dated December
26, 2000 indicating that it does not agree with the Company's declaration of a
breach under the merger agreement, CIF nevertheless executed the December 22nd
letter.
The Company also announced that, at CIF's request, the parties agreed that
the revised date for the filing of the preliminary proxy materials with the
Securities and Exchange Commission would be January 29, 2001. Shareholders are
urged to read the proxy statement when it becomes available, and any other
relevant documents filed with the SEC, because such documents will contain
important information regarding the merger transaction.
The merger is subject to financing, shareholder approval and other
customary conditions and there can be no assurance at this time that the
requirements or conditions set forth in the merger agreement will be satisfied
and the merger completed.
Dynex Capital, Inc. is a financial services company that elects to be
treated as a real estate investment trust (REIT) for federal income tax
purposes. Note: This document contains "forward-looking statements"(within the
meaning of the Private Securities Litigation Act of 1995) that inherently
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of unforeseen external factors. As discussed in the Company's filings
with the SEC, these factors may include, but are not limited to, changes in
general economic conditions, disruptions in the capital markets, fluctuations in
interest rates, increases in costs and other general competitive factors.
# # #
Exhibit 99.2
[Company Logo ]
Dynex Capital, Inc.
4551 Cox Road, Suite 300
Glen Allen, Virginia 23060
804-217-5800
Fax 804-217-5861
December 22, 2000
BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED & BY FACSIMILE: (619) 687-5010
Mr. Michael R. Kelly
Managing Member
California Investment Fund, LLC
DCI Acquisition Corporation
550 West C Street
10th Floor
San Diego, California 92101
Re: Agreement and Plan of Merger dated as of November 7, 2000 by and among
California Investment Fund, LLC, DCI Acquisition Corporation and Dynex Capital,
Inc.
Dear Mr. Kelly:
This is to notify you that California Investment Fund, LLC ("CIF") is in
breach of its obligations under Section 5(e) of the captioned Agreement and Plan
of Merger (the "Merger Agreement"), as the letter addressed to me from Fremont
Investment & Loan dated December 19, 2000 is neither a "commitment" to provide
financing nor is it from a financing source "capable of financing the
transactions contemplated by" the Merger Agreement. Pursuant to Sections
7(a)(vii) and 7(c)(i) of the Merger Agreement, Dynex has the right to terminate
the Merger Agreement and receive payment and delivery of the Escrow Amount.
Dynex reserves its rights described above, but elects at this time to forbear
from exercising such rights, provided that the enclosed duplicate original of
this letter is executed and returned to the undersigned no later than 5pm
Eastern time on Wednesday, December 27, 2000 and that CIF complies with its
obligations under numbered paragraphs 2 and 3 below. If a countersigned original
of this letter is not received by such time, or if CIF breaches any obligation
under numbered paragraphs 2 or 3 below, Dynex shall thereupon terminate the
Merger Agreement and make a claim under the Escrow Agreement for the Escrow
Amount.
Capitalized terms used but not otherwise defined in this letter shall have
the meanings ascribed to such terms in the Merger Agreement.
By your execution and return of this letter, you agree to the terms and
conditions set forth below.
1. At CIF's request, the SEC Mail Date shall be January 29, 2001. Dynex
shall provide to CIF a revised draft preliminary merger proxy in substantially
final form (excluding sections of the merger proxy meant to be drafted by CIF)
on or before January 19, 2001. CIF shall provide to Dynex all its comments and
insertions to the draft preliminary merger proxy electronically and via fax by
5:00PM Pacific time on January 26, 2001.
2. On or before 5pm Eastern time on January 25, 2001, CIF shall provide to
Dynex (a) written binding commitment(s) from a third party or parties committing
to provide CIF and DCI with sufficient financing (debt and/or equity) to
consummate the Merger according to the terms (and without any conditions other
than those conditions customarily contained in such written binding
commitment(s) by such third party or third parties) of such written
commitment(s), or (b)definitive agreements for sufficient financing (debt
and/or equity) to consummate the Merger.
3. 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.
4. To the extent any provision of this letter conflicts with or is
inconsistent with any term or condition of the Merger Agreement, the Merger
Agreement shall be deemed to have been amended in a manner consistent with the
provisions hereof. Any breach by CIF of any obligation hereunder shall be deemed
to be a breach by CIF of its obligations under numbered paragraph 2 and 3 above,
and shall also revoke Dynex's forbearance described in the introductory
paragraph hereof.
DYNEX CAPITAL, INC.
By: /s/ Thomas H. Potts
Thomas H. Potts,
President
AGREED AND ACCEPTED:
CALIFORNIA INVESTMENT FUND, LLC
By: /s/ Michael R. Kelly
Name:
Title:
DCI ACQUISITION CORPORATION
By: /s/ Michael R. Kelly
Name:
Title:
cc: Stephen Fraidin, Esq.