<PAGE>
SCHEDULE 14A
Rule 14a-101
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a party other than Registrant[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
[ ] Confidential. For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
DVL, Inc.
...................................................................
(Name of Registrant as Specified In Its Charter)
...................................................................
(Name of Person(s) Filing Proxy Statement, if Other than the
Registrant)
Payment of Filing Fee(Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction
applies:
.............................................................
2) Aggregate number of securities to which transaction
applies:
.............................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and
state how it was determined):
.............................................................
4) Proposed maximum aggregate value of transaction:
.............................................................
5) Total fee paid:
.............................................................
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the
date of its filing.
1) Amount Previously Paid:
................................................
2) Form, Schedule or Registration Statement No.:
................................................
3) Filing party:
................................................
4) Date filed:
................................................
[ ] Fee paid previously with prelimary materials
<PAGE>
DVL, INC.
---------------------------
Notice of Annual Meeting of Stockholders
----------------------------------------
To Be Held June 20, 1997
---------------------------
TO OUR STOCKHOLDERS:
You are invited to be present either in person or by proxy at the
Annual Meeting of Stockholders of DVL, Inc., a Delaware corporation (the
"Company"), to be held at 24 River Road, Bogota, New Jersey on June 20,
1997, at 10:00 a.m., local time (the "Meeting"), to consider and act
upon the following:
1. To elect three directors to serve until the next Annual
Meeting of Stockholders and until their successors are
duly elected and qualified;
2. To transact such other business as may properly come
before the Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on April 28,
1997, as the record date for determining the stockholders entitled to
notice of, and to vote at, the Meeting or any adjournments thereof. A
Proxy and a Proxy Statement for the Meeting are enclosed. Also enclosed
is the Company's 1996 Annual Report to Stockholders, consisting of the
Company's Report on Form 10-K for the fiscal year ended December 31,
1996 as filed with the Securities and Exchange Commission.
The Board hopes that you will find it convenient to attend the
Meeting in person, but whether or not you plan to attend, PLEASE SIGN,
DATE AND RETURN THE ENCLOSED PROXY to assure that your shares are
represented at the Meeting. Returning your proxy does not deprive you
of your right to attend the Meeting and to vote your shares in person.
Please relay any questions to the Company at 201-487-1300.
By Order of the Board of Directors
Daniel Baldwin
Secretary
April 29, 1997
DVL, INC.
---------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
June 20, 1997
This Proxy Statement is furnished to the stockholders of DVL, Inc.,
a Delaware corporation (the "Company"), in connection with the
solicitation by the Board of Directors of the Company (the "Board") of
proxies to be used at the Annual Meeting of Stockholders to be held on
June 20, 1997, at 10:00 a.m., local time (the "Meeting"), for the
purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders (the "Notice").
The approximate mailing date of the Notice, Proxy Statement and the
form of proxy to stockholders is May 7, 1997.
VOTING OF PROXIES
If the enclosed form of proxy is executed and returned, it may
nevertheless be revoked at any time thereafter by writing to the
Secretary of the Company prior to the Meeting, by execution and delivery
of a subsequent proxy, or by attendance and voting in person at the
Meeting, except as to any matter or matters upon which, prior to such
revocation, a vote shall have been cast pursuant to the authority
conferred by such proxy. Shares represented by a valid proxy, if
received pursuant to this solicitation and not revoked before it is
exercised, will be voted as provided on the proxy at the Meeting or at
any adjournment or adjournments thereof.
The purposes of the Meeting are as follows:
i. To elect three directors to serve until the next Annual
Meeting of Stockholders and until their successors are
duly elected and qualified; and
ii. To transact such other business as may properly come
before the Meeting or any adjournments thereof.
As of the date of this Proxy Statement, the Board does not intend
to present to the Meeting any other business, and it has not been
informed of any business intended to be presented by others. Should any
other matters, however, properly come before the Meeting, the persons
named in the enclosed Proxy will take action, and vote Proxies, in
accordance with their judgment on such matters.
In addition to the three incumbent directors to be nominated for
re-election at the Meeting (the "general purpose directors"), who have
all of the powers normally granted to corporate directors, the Company
has one special purpose director, who was elected in September, 1996 by
the holder of the Class A Preferred Stock (the "Preferred A Holder").
The Preferred A Holder has no voting rights, other than the right to
elect the special purpose director, and thus has no right to vote with
respect to the election of the general purpose directors at the Meeting.
The special purpose director has no right to vote at meetings of the
Board, except as to Bankruptcy Matters (as such term is defined in the
Certificate of Incorporation), and did not participate in the selection
of the nominees for general purpose directors presented in this Proxy
Statement. References herein to solicitation of proxies by the "Board"
do not include the special purpose director.
While neither the Certificate of Incorporation nor By-laws of the
Company refers to the general purpose directors by that designation,
they are so designated in this Proxy Statement, where necessary in order
to differentiate them from the special purpose director.
The executive offices of the Company are located at 24 River Road,
Bogota, New Jersey 07603; TEL: (201) 487-1300
MANNER OF VOTING AND VOTE REQUIRED
Only holders of common stock, par value $.01 per share (the
"Common Stock"), of record at the close of business on April 28, 1997
(the "Record Date"), will be entitled to vote at the Meeting. As of the
Record Date, 15,679,450 shares of Common Stock, the only class of
securities of the Company entitled to vote on the election of the
general purpose directors, were issued and outstanding. Each holder of
Common Stock is entitled to one vote for each share held by such holder.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum
at the Meeting.
Under the rules of the Securities and Exchange Commission (the
"Commission"), boxes and a designated blank space are provided on the
proxy card for shareholders to mark if they wish to withhold authority
to vote for one or more nominees for director. Votes withheld in
connection with the election of one or more of the nominees for director
will be counted as votes cast against such individuals and will be
counted toward the presence of a quorum for the transaction of business.
If no direction is indicated, the proxy will be voted for the election
of the nominees for director. Broker non-votes are not counted for any
purposes. The form of proxy does not provide for abstentions with
respect to the election of directors; however, a shareholder present at
the Meeting may abstain with respect to such election.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
- -----------------------------------------------
Set forth below is information concerning persons known to the
Company to be beneficial owners of more than 5% of the Common Stock as
of April 28, 1997.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percentage
Beneficial Owner Beneficial Ownership of Class
---------------------- -------------------- ----------
<S> <C> <C> <C>
The Shapiro Group 1,000,000 (1) 6.4%
c/o Gary Shapiro
700 S. Federal Highway
Suite 200
Boca Raton, FL 33432
The Cohen Group 1,000,000 (2) 6.4%
c/o Lawrence J. Cohen
1325 Avenue of the Americas
Suite 1200
New York, NY 10019
</TABLE>
Notes to Table
- --------------
(1) As set forth in a joint schedule 13D filed with the Securities and
Exchange Commission (the "Commission"), (a) the persons listed below are
members of a group (the "Shapiro Group"), and said persons share
dispositive power with each other and with the members of the Cohen
Group (see footnote 2 to this table), as to 1,000,000 shares of the
Company's Common Stock, and (b) each of the members of the Shapiro Group
has sole voting power with respect to the number of shares (out of the
total of 1,000,000 shares) set forth below opposite his name. The
shares shown on the above table as beneficially owned by the members of
the Shapiro Group and the members of the Cohen Group comprise the same
shares; said two groups beneficially own in the aggregate 1,000,000
shares.
The members of the Shapiro Group, and the number of shares as to
which each of said persons has sole voting power, are as follows:
<TABLE>
<CAPTION>
Name of Person Number of Shares
-------------- ----------------
<S> <C>
The SIII Associates Limited Partnership, 201,854
Third Addison Park Corporation,
and Gary L. Shapiro*
Keith B. Stein 68,343
Robert W. Barron 37,120
Adam Frieman 11,642
Stephen L. Gurba 90,712
Peter Offermann 11,642
Joseph Huston 7,761
Jan Sirota 11,642
Neal Polan 11,642
Michael Zarriello 11,642
</TABLE>
(*) The SIII Associates Limited Partnership has the sole power to
vote 201,854 shares of Common Stock. Third Addison Park Corporation is
the general partner of said partnership, and Gary L. Shapiro is the
chief executive officer of said Corporation.
3
Notes to Table (continued)
- -------------------------
(2) As set forth in joint Schedule 13D filed with the Commission, (a)
the persons listed below are members of a group (the "Cohen Group"), and
said persons share dispositive power with each other and with the
members of the Shapiro Group (see footnote 1 to this table), as to
1,000,000 shares of the Company's Common Stock, and (b) each of the
members of the Cohen Group has sole voting power with respect to the
number of shares (out of the total of 1,000,000 shares) set forth below
opposite his name.
The members of the Cohen Group, and the number of shares as to
which each of said persons has sole voting power, are as follows;
<TABLE>
<CAPTION>
Name of Person Number of Shares
-------------- ----------------
<S> <C>
Lawrence J. Cohen 188,000
Milton Neustadter 38,500
Jay Chazanoff 121,300
Ron Jacobs 94,100
Stephen Simms 94,100
</TABLE>
Security Ownership of Management
- --------------------------------
The following table sets forth the beneficial ownership of Common
Stock by each director, each nominee for director, each of the executive
officers named in the Summary Compensation Table set forth below who
currently holds office, and all executive officers and directors as a
group (7 persons) as of April 28, 1997.
<TABLE>
<CAPTION>
Name of Amount and Nature of Percentage
Beneficial Owner(1) Beneficial Ownership of Class*
---------------------- -------------------- ----------
<S> <C> <C> <C>
Alan E. Casnoff 560,000(2) 3.5%
Myron Rosenberg 188,854 1.2%
Frederick E. Smithline 57,550(3) **
Keith B. Stein 1,000,000(4) 6.4%
Allen Yudell 15,000(5) **
All current directors
and executive officers
as a group (7 persons) 1,896,404(6) 11.9%
<FN>
*In each instance where a named individual is listed as the holder
of a currently exercisable option, the shares which may be acquired upon
exercise thereof have been deemed outstanding for the purpose of
computing the percentage owned by such person, but not for the purpose
of computing the percentage owned by any other person, except the group
referred to in note 7. An option is deemed to be currently exercisable
if it may be exercised within 60 days.
** Less than 1%
</FN>
</TABLE>
(1) Mr. Casnoff is an executive officer of the Company. Messrs.
Rosenberg, Smithline and Yudell are the incumbent general purpose
directors, and are nominees for re-election at the Annual Meeting. Mr.
Stein is the incumbent special purpose director, and was elected by the
Preferred A Holder.
4
(2) Excludes 480 shares held by Mr. Casnoff's adult son, as to which
shares Mr. Casnoff disclaims beneficial ownership. Includes 26,000
shares owned by a corporation, partially owned and controlled by Mr.
Casnoff, and 350,000 shares which may be acquired upon the exercise of
currently exercisable options.
(3) Includes 550 shares held by Mr. Smithline and his brother as
tenants-in-common and 6,000 shares held by Mr. Smithline's wife, of
which 6,000 shares Mr. Smithline disclaims beneficial ownership.
(4) Mr. Stein is a member of the Shapiro Group and shares dispositive
power as to 1,000,000 shares with the members of said group, and with
the members of the Cohen Group. Mr. Stein has sole voting power as to
68,343 of said shares.
(5) Represents 15,000 shares which may be acquired upon the exercise
of currently exercisable options.
(6) Number of shares and percentage owned includes 440,000 shares which
may be acquired through exercise of currently exercisable options held
by certain of such persons (including those named). Number of
outstanding shares for purpose of computation of percentage of ownership
by the group includes such shares.
ELECTION OF DIRECTORS
Nominees
- --------
Three general purpose directors are to be elected at the meeting,
to serve until the next Annual Meeting of Stockholders of the Company
and until their successors shall be duly elected and shall qualify.
As noted above, unless otherwise indicated thereon, all proxies
received will be voted in favor of the election, individually, of the
three nominees named below as general purpose directors of the Company.
Should any of the nominees not remain a candidate for election at the
date of the Meeting (which contingency is not now contemplated or
foreseen by the board), proxies solicited hereunder will be voted in
favor of those nominees who do remain candidates and may be voted for
substitute nominees selected by the Board. Directors shall be elected
by a plurality of the votes cast at the Meeting. Each of the nominees
is currently serving as a director of the Company. The names of the
nominees and certain information with regard to each nominee follows:
<TABLE>
<CAPTION>
Director
Name Age Since Office(s)
- --------------- --- -------- ----------------
<S> <C> <C> <C>
Myron Rosenberg 69 1973 Director
Frederick E. 65 1982 Chairman of the
Smithline Board & Director
Allen Yudell 58 1996 Director
</TABLE>
5
Information Regarding Directors and Executive Officers
- ------------------------------------------------------
MYRON ROSENBERG has served as a director of the Company since 1973.
Mr. Rosenberg is currently a financial consultant. Through December
1996, Mr. Rosenberg served as Executive Vice President of Rosenthal &
Rosenthal, Inc., New York, New York, a commercial finance concern, where
he had been employed since 1961.
FREDERICK E. SMITHLINE has served as Chairman of the Board of the
Company since 1990 and as a director since 1982. From September 1989
to May 1996, Mr. Smithline was of counsel to the law firm of Epstein,
Becker & Green, P.C., New York, New York. He is currently in private
practice as an attorney.
ALLEN YUDELL has served as a director of the Company since September
1996. From 1967 to 1991, Mr. Yudell was President of Delco Development
Corporation. From 1992 to 1996, Mr. Yudell was a Vice President of
Unidell Realty Corp., and he is currently a consultant to Unidell.
Delco and Unidell are shopping center development companies based in
Boca Raton, Florida. Mr. Yudell is also a member of the International
Council of Shopping Centers. During 1990 and 1991, two limited
partnerships in which Mr. Yudell was one of the general partners, filed
for bankruptcy protection under Chapter 11 of Title 11 of the United
States Code.
In addition, Alan E. Casnoff serves as President of the Company,
Gary Flicker serves as Vice President and Chief Financial Officer,
Daniel Baldwin serves as Vice President, Secretary and General Counsel,
and Keith B. Stein serves as a special purpose director. The term of
office of all directors (other than the special purpose director)
expires at the June 1997 Annual Meeting of Stockholders. The term of
office of the executive officers expires at the June 1997 Annual Meeting
of Directors.
ALAN E. CASNOFF (age 53) has served as President of the Company
since November 1994, and was a director from October 1991 to September
1996. Mr. Casnoff served as Executive Vice President of the Company
from October 1991 to November 1994. Since June 1992, Mr. Casnoff has
also been of counsel to the Philadelphia, Pennsylvania law firm of Fox,
Rothschild, O'Brien & Frankel. From November 1990 to October 1991, Mr.
Casnoff served as a consultant to the Company and from 1971 to October
1991, as Secretary of the Company. Since May 1991, Mr. Casnoff has also
served as a director of Kenbee Management, Inc. ("Kenbee"), an
affiliate of the Company, and as President of Kenbee since November
1994. Since 1977, Mr. Casnoff has also been a partner of P&A
Associates, a private real estate development firm headquartered in
Philadelphia, Pennsylvania. From 1969 to October 1990, Mr. Casnoff was
associated with the Philadelphia, Pennsylvania law firm of Saul, Ewing,
Remick & Saul, previous legal counsel to the Company and Kenbee.
GARY FLICKER (age 38) became Vice President and Chief Financial
Officer of the Company in April, 1997. Mr. Flicker is a Certified
Public Accountant. From January 1996 to April 1997, he was a financial
consultant, performing acquisition analysis, and financial, operational
and accounting consulting services. From November 1985 to November
1994, he was Vice President - Director of Real Estate Accounting and
Financial Analysis with Integrated Resources, Inc. ("Integrated"), a
publicly-held real estate investment company. In February 1990,
Integrated filed for bankruptcy protection under Chapter 11 of Title 11
6
of the United States Code, and the proceeding was concluded in November
1994. Thereafter, until December 1995, Mr. Flicker served as Senior Real
Estate Controller for Concurrency Management, Inc. which was engaged by
Integrated's successor to perform management services. Mr. Flicker's
principal responsibilities for Integrated involved the performance of
accounting services for limited partnerships in which a subsidiary of
Integrated was the general partner. From November 1983 to November
1985, Mr. Flicker was a Supervising Senior Accountant at Kenneth
Leventhal & Company, C.P.A.s, and from September 1980 to November 1983
he was a Senior Accountant at Garnick, Mansfield, et al., C.P.A.s
(formerly Lester Witte & Company).
DANIEL BALDWIN (age 44) became Vice President, Secretary and
General Counsel of the Company in April, 1997. Prior thereto, Mr.
Baldwin was a partner with Bressler, Amery & Ross, P.C., a law firm with
offices in New York, New York and Morristown, New Jersey. Mr. Baldwin
was an associate with the firm beginning in 1977, and became a partner
in 1984. His practice was in the areas of commercial real estate,
mergers and acquisitions, and securities, and involved the
representation of public and privately held companies.
KEITH B. STEIN (age 39) has been a special purpose director of the
Company since September 1996. Mr. Stein is a Managing Director of
National Financial Companies LLC ("NFC"), and has served as a principal
of NFC since January 1995. Mr. Stein is also the Vice Chairman,
Secretary, Treasurer and a director of National Auto Finance Company,
Inc. (NASDAQ/NMS: NAFI), a specialty automobile finance company. From
March 1993 to September 1994, he served as Senior Vice President,
Secretary and General Counsel of WestPoint Stevens, Inc., a textile
company, after having served the same company from October 1992 to
February 1993 in the capacity of Acting General Counsel and Secretary.
From May 1989 to February 1993, Mr. Stein was associated with the law
firm of Weil, Gotshal & Manges LLP.
NFC is an affiliate of NPM Capital LLC ("NPM") and NPO Management
LLC ("NPO"). NPM, NPO and certain parties affiliated with said entities
consummated a multi-faceted transaction with the Company in September
1996; for information regarding this transaction, see "Certain
Relationships and Related Transactions", below.
Compliance with Section 16 (b) of the Exchange Act
- --------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who are
beneficial owners of more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes
in ownership with the Commission. Officers, directors, and greater than
10% beneficial owners are required by Commission regulations to furnish
the Company with copies of all Section 16(a) forms they file. To the
Company's knowledge, based solely on review of such reports furnished
to the Company, and written representations that no other reports were
required during the fiscal year ended December 31, 1996, all Section
16(a) filing requirements applicable to such persons were satisfied
except as follows:
7
The Initial Statement of Beneficial Ownership on Form 3 for Allen
Yudell, which was due after he became a director on September 17, 1996,
was filed late, and reported the grant to him, on said date, of an
option to purchase Common Stock. Keith B. Stein did not file a Form 3
which was due after he became a special purpose director on September
27, 1996, to report the fact that, on said date, Common Stock and
warrants were acquired by him from the Company in connection with the
transactions with NPM Capital LLC and NPO Management LLC and their
affiliates which were consummated on said date (see "Certain
Relationships and Related Transactions", below); the required
information was reported on Annual Statement of Beneficial Ownership on
Form 5, which was filed late. As to Alan E. Casnoff, his Form 4
reporting the acquisition of Common Stock on April 1, 1996, by a
corporation partially owned and controlled by him, was filed late, and
his Form 5, reporting the issuance to him, on September 17, 1996, of an
option to purchase Common Stock, was filed late.
Committees and Members of the Board of Directors
- ------------------------------------------------
During 1996, the Board of Directors of the company held nine
meetings. Each director of the company attended at least 75% of those
meetings.
The Board of Directors has established two committees of the Board,
the Audit Committee and the Compensation Committee. The members of the
Audit and Compensation Committees from January 1, 1996 until the Annual
Meeting of Stockholders held on September 17, 1996 were Herbert Golden,
Frederick E. Smithline and Myron Rosenberg. The members of said
Committees for the remainder of 1996 were Messrs. Smithline and
Rosenberg, and Allen Yudell. The Audit Committee reviews the services
provided by the Company's independent auditors, consults with the
independent auditors on audits and proposed audits of the Company, and
reviews certain filings with the Commission and the need for internal
auditing procedures and the adequacy of internal controls. The Audit
Committee held two meetings during 1996, at which all members were
present. The Compensation Committee determines executive compensation
and reviews transactions between the Company and its affiliates. The
Compensation Committee held one meeting during 1996, at which all
members were present.
8
<TABLE>
<CAPTION>
COMPENSATION OF DIRECTORS AND
EXECUTIVE OFFICERS
Summary Compensation Table
- --------------------------
The following table sets forth all compensation awarded to, earned by or paid to the following
persons for services rendered to the Company in 1994, 1995 and 1996: (1) the person serving as the
Company's chief executive officer during 1996; (2) those persons who were either serving as
executive officers as of the end of 1996, or who served in such capacity at any time during 1996,
and whose total annual salary exceeded $100,000:
SUMMARY COMPENSATION TABLE
--------------------------
Annual Compensation Long-Term Compensation Awards
------------------------------- ------------------------------
Securities
Other Annual Underlying LTIP
Name Year Salary Compensation(4) Options/SAR(5) Payouts
---- ---- ----------- --------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alan E. Casnoff 1996 $300,000 None 300,000(6) None
President (Chief 1995 314,002 $ 15,000 None $ 7,500(11)
Executive Officer) 1994 339,810(3) None None None
Joel Zbar 1996 187,500 None 150,000(7) None
Treasurer, Chief 1995 250,000 7,500 100,000(8) 23,469(11)
Financial Officer 1994 250,000 None None None
and Chief Operating
Officer(1)
Robert W. LoSchiavo 1996 160,000 None 15,000(9) None
Vice President, 1995 160,260 7,500 18,750(10) 7,219(11)
Secretary and 1994 144,530 None None None
General Counsel(2)
- ----------------------
<FN>
(1) Mr. Zbar resigned from employment with the Company on October 1, 1996. The amount shown as his salary for
1996 represents the amount paid to him for services rendered through such date. He also received a severance
payment in the amount of $147,000.
(2) Mr. LoSchiavo resigned from employment with the Company on February 27, 1997. The amount shown for 1996 represents
the amount paid to him for services rendered for all of 1996, and includes a salary of $150,000 and a cash bonus
of $10,000 paid in January 1997.
(3) Does not include payments made to a corporation partially owned and controlled by Mr. Casnoff which provided
management assistance for two properties in Philadelphia, Pennsylvania owned by affiliated partnerships for
which such corporation received $9,187 in 1994.
9
Notes to Table (continued)
- -------------------------
(4) Other Annual Compensation represents the value of 100,000 shares, 50,000 shares and 50,000 shares of Common Stock
issued in 1995 to Messrs. Casnoff, Zbar and LoSchiavo, respectively.
(5) On September 17, 1996, the Company terminated its Performance Plan and caused all outstanding performance units
(considered to be stock appreciation rights) previously granted thereunder to be exchanged for options which were
granted under the 1996 Stock Option Plan concurrently with the ratification and approval of the Stock Option Plan
on said date.
(6) Consists of options to purchase 300,000 shares of Common Stock, granted on September 17, 1996 under the 1996 Stock
Option Plan in exchange for an equivalent number of performance units.
(7) Consists of option to purchase 150,000 shares of Common Stock, granted on September 17, 1996 under the 1996 Stock
Option Plan in exchange for an equivalent number of performance units.
(8) Consists of performance units granted in 1995 under the Performance Plan.
(9) Consists of options to purchase 15,000 shares of Common Stock, granted on September 17, 1996 under the 1996 Stock
Option Plan.
(10) Consists of Performance units granted in 1995 under the Performance Plan.
(11) Mr. Zbar exercised 50,000 performance units and Mr. LoSchiavo exercised 18,750 performance units in 1995 realizing
$23,469 and $7,219, respectively. Mr. Casnoff surrendered 50,000 performance units in consideration of the
issuance to him of 50,000 shares of Common Stock which shares the Company valued at $7,500.
</FN>
</TABLE>
10
<PAGE>
Option Grants in Last Fiscal Year
- ---------------------------------
The following table sets forth information as to options granted
in 1996 under the DVL, Inc. 1996 Stock Option Plan to the executive
officers named in the Summary Compensation Table. The Plan provides for
the grant of options to purchase up to 1,500,000 shares of Common Stock,
to Employees and Non-Employee Directors, (in each case as defined in the
Plan).
The plan provides that any Employee wishing to exercise an option
must give prior notice to the Board. If the Board determines, in its
reasonable discretion, that such exercise will cause an "ownership
change" (as defined in Section 382 of the Internal Revenue Code of 1986,
as amended) in the Company which would have an adverse effect on the
Company's use of its "net operating loss carryforwards" (as defined in
Section 382) (an "Adverse Ownership Change"), the Board shall deny
approval of the exercise. If the Board determines that such exercise
would not cause an Adverse Ownership change, it shall approve the
exercise. The conditions described in this paragraph are referred to
below as the "Section 382 Restrictions".
Currently, options to purchase 828,131 shares are outstanding
under the Plan and 671,869 shares are available for issuance upon
exercise of options which may be granted in the future.
No performance units were granted under the Performance Plan in
1996. As noted above, the Performance Plan was terminated on September
17, 1996.
11<PAGE>
<TABLE>
<CAPTION>
Individual Grants Grant Date Value
------------------------------------------------------------- -------------------
Percentage of
Total Options
Number of Securities Granted to Exercise
Underlying Options Employees in Price Expiration Grant Date
Name(1) Granted(2) Fiscal Year(3) ($/Sh)(4) Date Present Value (5)
- ------------------- -------------------- -------------- --------- ---------- -------------------
<S> <C> <C> <C> <C> <C>
Alan E. Casnoff 300,000 44.6 0.21 9/16/06 $54,000
Joel Zbar 150,000 14.9 0.21 9/16/06 27,000
Robert W. LoSchiavo 15,000 2.2 0.21 9/16/06 2,700
<FN>
(1) Mssrs. Zbar and LoSchiavo resigned from employment with the Company on October 1, 1996 and February
27, 1997, respectively.
(2) Individual grants to employees become exercisable in whole or in installments, and at such times,
and subject to the fulfillment of any conditions on exercisability (in addition to the Section 382
Restrictions) as may be determined by the Compensation Committee of the Board of Directors (the
"Committee") at the time of grant. All options listed in the above table become exercisable upon
grant, subject only to the Section 382 Restrictions. The Committee also has the discretion to
establish provisions relating to the forfeiture of an option upon the employee's termination of
employment with the Company, or to grant any option without a forfeiture provision. None of the
options listed in the above table contains a forfeiture provision.
(3) Total options granted to employees in fiscal year was 673,131.
(4) The exercise price for each share of Common Stock underlying an option may not be less than the
fair market value of the shares on the date of grant; provided, however, that the exercise price
for each option granted in exchange for the cancellation of performance units was determined as
$.21 per share. All options listed in the above table were granted in exchange for performance
units. The fair market value on the date of grant (determined in accordance with the Plan as the
closing price of the Common Stock on the NASDAQ OTC Bulletin Board) was $.22 per share.
(5) In accordance with the Commission rules, the Black-Scholes option pricing model was chosen to
estimate the grant date present value of the options set forth in this table. The Company does not
believe that the Black-Scholes model, or any other model, can accurately determine the value of an
option. Accordingly, there is no assurance that the value, if any, realized by an option holder
will be at or near the value estimated by the Black-Scholes model. Future compensation resulting
from option grants is based solely on the performance of the Company's stock price. The Black-
Scholes ratio of .18 was determined using the following assumptions: a volatility of 80%, an
historic average dividend yield of 0%, a risk free interest rate of 6.73% and a 10 year projected
exercise period.
</FN>
</TABLE>
12
Fiscal Year-End Option Values
- -----------------------------
The following table sets forth information as to options held as
of the end of 1996 by the executive offices named in the Summary
Compensation Table. No options were exercised by said officers in 1996.
All options held by said officers at fiscal year-end were immediately
exercisable.
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options At Fiscal In-The Money Options
Name(1) Year End At Fiscal Year-End
- ----- ------------------------------- --------------------
<S> <C> <C>
Alan E. Casnoff 300,000 $3,000
Joel Zbar 150,000 1,500
Robert W. LoSchiavo 15,000 150
<FN>
(1) Mssrs. Zbar and LoSchiavo resigned from employment with the Company on
October 1, 1996 and February 27, 1997, respectively.
</FN>
</TABLE>
Compensation of Directors
- -------------------------
General purpose directors who are not officers or employees of the
Company ("Non-Employee Directors") presently receive a director's fee
of $1,500 per month, plus $500 for each Audit Committee meeting of the
Board of Directors attended. Directors who are officers or employees
of the Company receive no compensation for their services as directors
or attendance at any Board of Directors or committee meetings. The
special purpose director receives no compensation for his service as a
director or attendance at any Board of Directors or committee meetings.
The special purpose director receives no compensation for his services
as a director or attendance at any Board of Directors or committee
meetings.
On September 17, 1996, an option to purchase 15,000 shares of
Common Stock at a price of $.22 per share was granted to Allen Yudell,
who became a director on that date. The option was granted under the
1996 Stock Option Plan. It vested immediately and is exercisable for
a term of ten (10) years from the date of grant. The exercise price is
equal to the fair market value on the date of grant.
Employment Contracts;
Arrangements Regarding Termination of Employment
- ------------------------------------------------
Alan E. Casnoff has agreed to serve as President of the Company
through at least December 31, 1997, at a reduced compensation level.
Until March 31, 1997, he was compensated at the annual rate of $300,000.
Previously, the Board of Directors had authorized the Company to
make payments to Mr. Casnoff, upon termination of his employment under
certain circumstances, in an amount equal to six months salary payable
over a period of three months. Mr. Casnoff has agreed that all
compensation paid to him following the consummation of the transactions
with NPM Capital LLC and related parties in September 1996 will be
credited, on a dollar-for-dollar basis, against the aforesaid
termination payments, if any, owing to him. Based on the amounts so
credited to date, any termination obligation which may arise has been
satisfied.
Joel Zbar was paid $147,000 upon his resignation as an officer on
October 1, 1996.
13
Board Report on Executive Compensation
- --------------------------------------
The Compensation Committee of the Board of Directors of the Company
is comprised of Messrs. Rosenberg, Smithline and Yudell, all of whom are
independent directors. The purpose of the Compensation Committee is to
review compensation of the executive officers of the Company to
determine if such compensation is in line with similar organizations and
to recommend and provide appropriate incentives to key employees.
During 1995, the Compensation Committee adopted a compensation
policy with respect to the Company's executive officers which was
consistent with the Company's general policy of reducing overhead and
expenses. In line with this policy, and as a consequence of the fact
that the Company continued to experience operating losses during 1996,
the Compensation Committee determined that increases in cash
compensation to the Company's President, Chief Financial Officer and
General Counsel were not appropriate. As a result in 1996 the
President's salary remained at $300,000, the Chief Financial Officer's
salary remained at $250,000, and the General Counsel's cash compensation
(comprising salary for 1995, and salary and bonus for 1996) remained at
$160,000.
The 1996 Stock Option Plan was adopted by the Board in April 1996
and ratified by the stockholders in September 1996. The purpose of the
Plan, and the associated exchange of stock appreciation rights ("SARs")
which occurred upon ratification of the Plan, is to promote the success
and enhance the value of the Company by eliminating potentially large
outlays of cash upon the future exercise of SARS and by linking the
personal interests of those participating under the Stock Option Plan
to those of the Company's stockholders. The only options granted in
1996 were those granted on September 17, 1996 in exchange for SARs, and
to Allen Yudell upon his election as a director.
This report was furnished by Messrs. Rosenberg and Smithline, as
members of the Compensation Committee. Mr. Yudell became a member of
the Committee upon his election to the Board of Directors on September
17, 1996; he did not participate in the Committee's decisions regarding
executive officer salaries paid in 1996, or in the Board's adoption of
the Stock Option Plan.
Mr. Yudell was a member of the Committee as of the date it granted
the options referred to above; however, said grants were non-
discretionary, since they were mandated by the terms of the Plan.
Performance Graph
- -----------------
The following graph compares the yearly percentage change in the
cumulative total stockholder return on the Company's Common Stock for
each of the last five years with the cumulative return (assuming
reinvestment of dividends) of the Dow Jones Equity Market Index and the
Dow Jones Real Estate Investment Index.
Since August 1995, the Common Stock is traded on the over-the-
counter market, and is quoted on the NASD OTC Bulletin Board under the
symbol "DVLN". Until August 3, 1995, the Common Stock was traded on the
New York Stock Exchange.
14
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE
TOTAL RETURN
Among DVL, Inc. Index, Dow Jones Equity Market
Index and Dow Jones Real Estate Investment Index
Fiscal Year Ending December 31
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
DVL, Inc. 100 218 363 82 18 70
Dow Jones Equity Market Index 100 109 119 120 166 206
Dow Jones Real Estate Investment Index 100 90 106 100 124 166
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As described in the Proxy Statement dated and filed with the
Securities and Exchange Commission on July 31, 1996, the Company
consummated a multi-faceted transaction on September 27, 1996, pursuant
to which: (i) certain existing indebtedness of the Company was acquired
by NPM Capital LLC ("NPM"), under a loan agreement dated March 27, 1996
(the "Loan Agreement"); (ii) 1,000,000 shares of Common Stock
(representing 6.4% of the Common Stock now outstanding) were issued to,
and purchased by, the members of the Shapiro Group and the Cohen Group
( see "Security Ownership of Certain Beneficial Owners," above), who are
affiliates of NPM; (iii) the Certificate of Incorporation of the Company
was amended to permit the issuance of warrants, to limit change of
ownership of capital stock of the Company and to designate Preferred
Stock together with rights, powers and preferences (including the
appointment of a special purpose director); (iv) warrants to purchase
additional shares of Common Stock (which, when added to the 1,000,000
shares acquired, represent rights to acquire up to 49% of the
outstanding Common Stock, on a fully diluted basis) were issued to, or
for the benefit of, the members of the Shapiro Group and the Cohen
Group;* (v) 100 shares of Preferred Stock were issued to an affiliate
of NPM; (vi) most, but not all, convertible securities and warrants
existing and outstanding prior to the transaction were converted into
Common Stock; and (vii) the Company continued the engagement of NPO
Management LLC ("NPO"), an affiliate of NPM, to perform administrative
and advisory services relating to the assets of the Company and its
affiliated partnerships, pursuant to an Asset Serving Agreement dated
March 27, 1996. As of December 31, 1996, the amount of the Company's
indebtedness to NPM under the Loan Agreement was $7,502,000, and the
Company had accrued service fees to NPO in the amount of $464,000.
The members of the Shapiro Group and of the Cohen Group are
affiliates of NPM and NPO, and therefore have a material interest in the
transactions between the Company and NPM, and between the Company and
NPO, described in the preceding paragraph. Keith B. Stein, the special
purpose director of the Company and a member of the Shapiro Group, is
an affiliate of NPM and NPO, and therefore has a material interest in
said transactions.
_____________________
* Except under certain circumstances, no portion of the warrants
may be exercised prior to January 1, 1999 without the prior
consent of the Board of Directors of the Company.
15
Alan E. Casnoff (President of the Company, and a director until
September 1996) became President and the sole director of Kenbee
Management, Inc. by virtue of certain voting trust agreements which were
entered into because Kenbee was the Company's largest debtor, and the
Company needed to obtain control of Kenbee. Mr. Casnoff acquired sole
voting power over the shares of capital stock of R&M Holding, a Delaware
corporation and the sole stockholder of Kenbee, pursuant to the terms
of a Voting Trust Agreement dated May 15, 1991, between R&M Holding and
Mr. Casnoff, as trustee. The shares subject to the Agreement are owned
by Roger D. Stern and Martin Wright, each a 50% owner of the shares of
capital stock of R&M Holding, and each a former officer and director of
the Company. The term of the Voting Trust Agreement expires on January
1, 2000 as to 50% of the shares of capital stock owned by Mr. Stern and
on February 28, 2001 as to 50% of the shares of capital stock owned by
Mr. Wright.
Rosenthal & Rosenthal, Inc. ("R&R"), a commercial finance concern
of which Myron Rosenberg, a director of the Company, served as Executive
Vice President until December 31, 1996, made a loan to the Company in
1990 in the aggregate principal amount of $1,331,700, secured by the
assignment of a certain promissory note and mortgage executed by the
Company. Regular payments of principal and interest on this loan were
made through September 1990. In 1992, the Company completed a
settlement in which this loan was exchanged for the assignment to R&R
of a wraparound mortgage, certain limited partnership units and options
to acquire 600,000 shares of the Company's Common Stock (subject to
adjustment as a result of anti-dilution provisions) for $1.00 per share.
R&R was also provided with a note with a face value of $107,000 bearing
interest at 10% per annum and 214,000 warrants to purchase Common Stock
for $1.00 per share, which warrants would have expired in April 1998.
R&R had an option to return either the wraparound mortgage or the notes
and warrants within five years of the settlement. Pursuant to a
February 1996 amendment of the settlement agreement with R&R, the
Company issued to R&R warrants to purchase 800,000 shares of the
Company's Common Stock at $.50 per share in consideration of R&R's
surrender of its options to purchase common stock of the Company for
$1.00 per share, the return of $107,000 of Company debentures
accompanied by 214,000 warrants to purchase the Company's Common Stock
at $1.00 per share and the release of the Company from certain
contingent obligations. R&R's interests in the promissory note and
mortgage and in certain partnership units were not affected by this
amendment.
Since June 1992, the Company and affiliates have periodically
retained Fox, Rothschild, O'Brien & Frankel to perform certain legal
services in connection with various matters. Alan E. Casnoff, serves
as of counsel to Fox, Rothschild, O'Brien & Frankel.
INDEPENDENT AUDITORS
The board has selected the firm of Richard A. Eisner & Company LLP,
independent auditors, as auditors of the Company for the next fiscal
year. The Company has been advised by such firm that neither it nor any
member or associate of such firm has any relationship with the Company
or with any of its affiliates other than as independent accountants and
auditors.
Representatives of Richard A. Eisner & Company, LLP will be present
at the Meeting, will have an opportunity to make any statements they may
desire to make, and will be available to answer appropriate questions
from stockholders.
16
MISCELLANEOUS
All of the costs and expenses in connection with the solicitation
of proxies with respect to the matters described herein will be borne
by the Company. In addition to solicitation of proxies by use of the
mails, directors, officers and employees (who will receive no
compensation therefor in addition to their regular remuneration) of the
Company may solicit the return of proxies by telephone, telegram or
personal interview.
The Company will request banks, brokerage houses and other
custodians, nominees and fiduciaries to forward copies of the proxy
materials to their principals and to request instructions for voting the
proxies. The Company may reimburse such banks, brokerage houses and
other custodians, nominees and fiduciaries for their expenses in
connection therewith.
Action may be taken on the business to be transacted at the Meeting
on the date specified in the Notice of Meeting or on any date or dates
to which such Meeting may be adjourned.
STOCKHOLDER PROPOSALS
In order for stockholder proposals intended to be presented at the
Annual Meeting of Stockholders to be held in 1998 to be eligible for
inclusion in the Company's Proxy Statement and form of proxy for such
meeting, they must be received by the Company at its principle office
in Bogota, New Jersey prior to January 1, 1998.
By Order of the Board of Directors
Daniel Baldwin
Secretary
April 29, 1997
17
<PAGE>
<PAGE>
FORM OF PROXY
-------------
(Front)
Proxy Proxy
DVL, INC.
Annual Meeting of Stockholders to be held on June 20, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, a stockholder of DVL, INC., a Delaware
corporation (the "Company"), hereby appoints FREDERICK E. SMITHLINE
and ALLEN YUDELL, and each of them, jointly and severally, proxies,
with full power of substitution, to vote, as designated below, all
shares of Common Stock which the undersigned is entitled to vote at
the Annual Meeting of Stockholders of the Company to be held at 24
River Road, Bogota, New Jersey on June 20, 1997 at 10:00 a.m.,
local time, and at any adjournment or adjournments thereof:
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as marked to vote for all
to the contrary below) nominees listed below
Myron Rosenberg, Frederick E. Smithline, and Allen Yudell
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
_________________________________________________________________
and in their discretion upon such other business as may be
propertly brought before the Meeting.<PAGE>
(Back)
IF NO CHOICE IS SPECIFIED, THE UNDERSIGNED'S SHARES REPRESENTED BY
THIS PROXY SHALL BE VOTED FOR THE MANAGEMENT SLATE OF DIRECTORS.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate
name by the President or other authorized officer. If a
partnership, please sign in the partnership name by an authorized
person.
Dated: __________________ ______________________________
Signed
______________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
