DVI INC, PRE 14A, 1995-10-18

DVI INC
PRE 14A, 1995-10-18
FINANCE LESSORS

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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

Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/X/ Preliminary proxy statement

/ / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))

/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

DVI, INC.
(Name of Registrant as Specified in Its Charter)

Payment of filing fee (Check the appropriate box):

/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transactions applies:

(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

/ / Fee paid previously with preliminary materials.

/ / 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:

PRELIMINARY COPY

(4) Date Filed:

<PAGE>

DVI, INC.
500 HYDE PARK
DOYLESTOWN, PENNSYLVANIA 18901

---------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 15, 1995

---------------

To the Stockholders of DVI, Inc.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders
of DVI, Inc. (the "Company") will be held at the Cock 'N Bull Restaurant,
Lahaska, Pennsylvania, on Friday, December 15, 1995, at 10:30 a.m., local
time, for the following purposes:

1. To elect six directors to constitute the Board of Directors, each
to serve until the next meeting of Stockholders;

2. To consider and act upon a proposal to amend Article Fourth of
the Company's Certificate of Incorporation to increase the
number of shares of common stock, $.005 par value per share
("Common Stock"), which the Company is authorized to issue
from 13,000,000 shares to 75,000,000 shares;

3. To consider and act upon a proposal to (i) ratify and approve
Amendment No. 1 to Stock Purchase Agreement dated as of
June 14, 1995 ("Amendment No. 1"), between the Company and
MEFC Partners, L.P., and (ii) authorize and approve the
issuance of an aggregate of 400,000 shares of Common Stock
pursuant to the terms of Amendment No. 1;

4. To consider and act upon a proposal to authorize and approve
the DVI, Inc. 1995 Stock Bonus Plan which will provide for the
issuance, under certain circumstances, of up to 200,000
shares of Common Stock in the aggregate to certain key
employees;

5. To ratify the appointment of Deloitte & Touche as independent
public accountants for the Company for the fiscal year ending
June 30, 1996; and

6. To transact such other business as may properly come before
the Annual Meeting or any adjournment thereof.

The close of business on October 16, 1995 has been fixed as the
record date for the determination of all stockholders entitled to receive
notice of the Annual Meeting and to vote at such meeting or any adjournment
thereof.

<PAGE>

Holders of a majority of the outstanding shares of the Company's
Common Stock must be present either in person or by proxy in order for the
meeting to be held and it is important that your stock be represented regard-
less of the number of shares you hold. If you do not expect to attend the
meeting, or if you do plan to attend but wish to vote by proxy, please date,
sign and mail promptly the enclosed proxy for which a return envelope is
provided.

By Order of the Board of Directors

Melvin C. Breaux
Secretary

Dated: October ___, 1995

PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED
ADDRESSED ENVELOPE, EVEN IF YOU PLAN TO ATTEND THE MEETING. IF YOU
ATTEND THE MEETING AND VOTE IN PERSON, THE PROXY WILL NOT BE USED.

<PAGE>
<PAGE>
PRELIMINARY COPY

DVI, INC.
500 HYDE PARK
DOYLESTOWN, PENNSYLVANIA 92714

---------------

PROXY STATEMENT

---------------

ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 15, 1995

---------------

The Board of Directors of DVI, Inc., a Delaware corporation (the
"Company"), is soliciting the enclosed proxy for use at the Company's Annual
Meeting of Stockholders, to be held on Friday, December 15, 1995, at 10:30
a.m., local time, at the Cock 'N Bull Restaurant, Lahaska Pennsylvania (the
"Annual Meeting") and at any adjournment thereof. Whether or not you plan
to attend the Annual Meeting, you are requested to date, sign and return the
proxy to the Company as promptly as possible in the enclosed envelope. The
shares of the Company's common stock, par value $.005 per share (the
"Common Stock"), represented by proxies will be voted in accordance with the
Board of Directors' recommendations unless the proxy indicates otherwise.
Any stockholder giving a proxy may revoke it at any time prior to its use by
filing with the Secretary of the Company a written revocation or a proxy
bearing a later date, or by voting in person at the Annual Meeting.

The close of business on October 16, 1995 has been fixed as the
record date (the "Record Date") for the determination of the stockholders
entitled to receive notice of and to vote at the Annual Meeting. At
such date, the Company had outstanding 9,620,898 shares of Common Stock.
Each holder of Common Stock on the record date will be entitled to one vote
for each share registered in such stockholder's name on each of the matters
to come before the meeting. A majority of the outstanding shares of Common
Stock will constitute a quorum. A list of stockholders entitled to vote will
be available for examination by interested stockholders at the corporate head-
quarters of the Company, office of the Secretary, 500 Hyde Park, Doylestown,
Pennsylvania 18901 during ordinary business hours from December 5, 1995 to
the date of the meeting.

If a stockholder abstains from voting on a proposal described in this
Proxy Statement as to some or all of that stockholder's shares, that absten-
tion will have the same effect as voting those shares against such proposal.
If proxies are not furnished as to shares registered in the names of brokers
or other "street name" nominees because the beneficial owner has not provided
voting instructions (commonly referred to as "broker non-votes"), that will
have the same effect as voting those shares against the proposal relating
to increasing the authorized capital of the Company described in this
Proxy Statement, but will have no effect on the outcome of the vote on the
other proposals described in this Proxy Statement. Abstentions and broker
non-votes are counted for purposes of determining the presence
of a quorum for the transaction of business at the Annual Meeting.

The approximate date on which this Proxy Statement and form of proxy
is first being sent or given to the Company's stockholders is October 31,
1995.

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<PAGE>

The Company's Annual Report to Stockholders for the fiscal year ended
June 30, 1995 is being mailed concurrently with the mailing of this Proxy
Statement. This Annual Report shall not be deemed to be soliciting material
or incorporated in this Proxy Statement by reference. Brokerage houses,
custodians, nominees and others may obtain additional copies of the Annual
Report or this Proxy Statement by request to the Company.

-4-
<PAGE>
<PAGE>
PROPOSAL 1.

ELECTION OF DIRECTORS

Six Directors are to be elected at the Annual Meeting of Stockholders
to serve one-year terms until the 1996 Annual Meeting of Stockholders and
until their respective successors are elected and shall qualify. The persons
named in the accompanying proxy intend to vote for the election of the
nominees identified below unless authority to vote for one or more of such
nominees is specifically withheld in the proxy. All except two of the
nominees are currently directors of the Company and were elected Directors at
the 1994 Annual Meeting of Stockholders. The Board of Directors is informed
that all the nominees are willing to serve as Directors, but if any of them
should decline to serve or become unavailable for election as a Director at
the meeting, an event which the Board of Directors does not anticipate, the
persons named in the proxy will vote for such nominee or nominees as may be
designated by the Board of Directors, unless the Board of Directors reduces
the number of Directors accordingly.

Nominations for the election of Directors, other than by the Board of
Directors, must be made by a stockholder entitled to vote for the election of
Directors by giving timely written notice to the Secretary of the Company at
the Company's principal offices. Such notice must be received not less than
60 calendar days nor more than 90 calendar days prior to the meeting;
provided that, if in the event that notice or prior public disclosure of the
date of the meeting is given or made to the stockholders for a meeting date
that is not within 30 days before or after the anniversary of the immediately
preceding annual meeting of stockholders, notice by the stockholder will be
timely if received not later than the close of business on the tenth calendar
day following the day on which such notice was mailed or such public
disclosure was made. Such stockholder's notice must be in writing and must
set forth as to each proposed nominee all information relating to such person
that is required to be disclosed in solicitations of proxies pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended
("Exchange Act"), including, but not limited to such person's written consent
to being named in the proxy statement as a nominee and to serving as a
Director if elected. Such stockholder notice must also set forth the name
and address, as they appear on the Company's books, of the nominating
stockholder and the class and number of shares of Common Stock
beneficially owned by such stockholder.

THE BOARD OF DIRECTORS

The following table sets forth information concerning the Company's
nominees for Director and information concerning a Director Emeritus:

Name and Age Present Position With The Company
------------ ---------------------------------

David L. Higgins (49) Chief Executive Officer and Director
since 1986.
Gerald L. Cohn (67) Director since 1986.
John E. McHugh (67) Director since 1990.
Michael A. O'Hanlon (48) President since 1994 and Director
since 1993.
Nathan Shapiro (59) Nominee for Director
William S. Goldberg (39) Nominee for Director
Sidney Luckman (78)* Director since 1987.

- -------------------

* Mr. Luckman does not seek re-election to the Board of Directors but is
expected to be elected by the Board of Directors to the postion of
Director Emeritus by the Board of Directors following the Annual
Meeting. As a Director Emeritus, Mr. Luckman will be permitted to
attend (but not vote at) meetings of the Board of Directors.

-5-
<PAGE>

Mr. Higgins is the Company's Chairman and Chief Executive Officer.
Mr. Higgins founded the Company and served as the Company's President until
September 1994. Mr. Higgins was the President and Chief Executive Officer
of Delta Health, Inc., the predecessor company to DVI, Inc. that was acquired
by the Company in 1986. Prior to founding the Company, Mr. Higgins
managed the North America sales and service operations of Elscint, Inc.
("Elscint"), a full-line manufacturer of diagnostic imaging equipment for two
years. Previously, he held the same position for one year with Xonics Medical
Systems ("Xonics"), also a full-line manufacturer of medical imaging
equipment. The business and operations of Xonics were acquired by Elscint
in 1983. For five years prior, Mr. Higgins served as President and Chief
Executive Officer of Radiographic Development Corporation ("RDC"), which
was acquired by Xonics in 1982. RDC was a manufacturer of products to
upgrade diagnostic imaging equipment. Mr. Higgins also serves on the Board
of Directors of Healthcare Imaging Services, Inc. ("HIS").

Mr. Cohn is a Director of the Company and has served in that capacity
since 1986. Mr. Cohn is a private investor. Mr. Cohn presently serves as
a director of HIS, Diagnostic Imaging Services, Inc. ("DIS"), SMT Health
Services Inc., I.V.I. Publishing, Inc. and International Metals Acquisition
Corp. In addition to his responsibilities as a Director, Mr. Cohn also acts
as a consultant to the Company and serves on the Company's senior credit
committee. Mr. Cohn is the father of Cynthia J. Cohn, a Company Vice
President.

Mr. McHugh is a Director of the Company and has served in that
capacity since 1990. Mr. McHugh was formerly the President of, and now
serves in a marketing and public relations capacity with, McHugh Construction
and Developers, a firm he has been associated with since 1954.

Mr. O'Hanlon is the Company's President and Chief Operating Officer
and has served as such since September 1994. Mr. O'Hanlon became a
Director in November 1993. From the time Mr. O'Hanlon joined the Company
in March 1993 until September 1994 he served as Executive Vice President of
the Company. Before joining the Company, for nine years, he served as
President and Chief Executive Officer of Concord Leasing, Inc. ("Concord
Leasing"), a major source of medical, aircraft, ship and industrial equipment
financing. Previously, Mr. O'Hanlon was a senior executive with Pitney Bowes
Credit Corporation. Mr. O'Hanlon is a director of DIS.

Mr. Shapiro is a founder and President of SF Investments, Inc., a
registered broker/dealer in business since 1972. Since 1979 he has been a
director of Baldwin & Lyons, Inc., a publicly traded property and casualty
insurance company. Mr. Shapiro is also the Chairman of the investment
committee of Baldwin & Lyons, Inc. He is a trustee for CT&T Funds, a family
of mutual funds sponsored by Chicago Title and Trust Company. Mr. Shapiro
is also a director of Amli Realty Co.

Mr. Goldberg is currently Managing Director of GKH Partners, L.P., a
privately equity investment and venture capital partnership with which he has
been involved since 1988. Mr. Goldberg is current or former director and/or
executive officer of several public and privately-owned companies controlled
by GKH Partners, L.P. One of the general partners of GKH Partners, L.P. is
HGM Associates, L.P., an investment partnership that is controlled by certain
descendants of Nicholas J. Pritzker, deceased, trusts for their benefit and/or
entities controlled thereby.

Mr. Luckman is presently a Director of the Company and has served in
that capacity since 1987. Mr. Luckman does not seek re-election to the Board
of Directors but is expected to be elected by the Board of Directors to the
position of Director Emeritus following the Annual Meeting. As Director
Emeritus, Mr. Luckman will be permitted to attend (but not vote at) all
meetings of the Board of Directors. Mr. Luckman is currently a national sales
manager of Cellucraft Products Inc., a company engaged in the manufacturing
and marketing of flexible packaging, and with which he has been associated for
over 40 years. Mr. Luckman is a member of the National Football League Hall
of Fame.

-6-
<PAGE>

COMMITTEES OF THE BOARD OF DIRECTORS

During the fiscal year ended June 30, 1995, the Company paid $500
to non-employee directors for each meeting attended in person and $100 for
each meeting attended by telephone. During the fiscal year ended June 30,
1994, the Board of Directors met a total of 12 times, including actions taken
by unanimous written consent.

Each of the incumbent directors attended at least 75% of the aggregate
of all meetings of the Board and committees of which he was a member held
during the period he served on the Board or committee.

The Board of Directors has a standing Executive Committee, Audit
Committee and a Compensation Committee. The Executive Committee
consists of Messrs. Higgins, Cohn and O'Hanlon and reviews certain policies
and operations of the Company. The Executive Committee met frequently
during the fiscal year ended June 30, 1995. The Board has no nominating
committee.

The Audit Committee consists of Messrs. Cohn, Luckman and McHugh
and makes recommendations concerning the engagement of the Company's
independent auditors, consults with the independent auditors concerning the
audit plan and thereafter concerning the auditor's report and management
letter. Following the Annual Meeting, Mr. Luckman will be removed from the
Audit Committee and will be replaced by an independent Director. During the
fiscal year ended June 30, 1995, the Audit Committee met one time.

The Compensation Committee (the "Compensation Committee") consists
of the entire Board of Directors and did not meet at any times other
than in the normal course of the Board of Directors' meetings.
Following the Annual Meeting, Mr. Luckman, as Director Emeritus,
will not serve on the Compensation Committee. The Board of Directors,
sitting as the Compensation Committee, reviews the annual compensation
rates of the officers and key employees of the Company, administers
the Company's compensation plans and makes recommendations in
connection with such plans.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

As permitted by the Delaware General Corporation Law, the Company's
Certificate of Incorporation limits the personal liability of a Director of
the Company for monetary damages for breach of fiduciary duty of care as a
Director. Liability is not eliminated for (i) any breach of the Director's
duty of loyalty to the Company or its stockholders, (ii) acts or omissions
not in good Faith or which involve intentional misconduct or a knowing
violation of law, (iii) unlawful payment of dividends or stock purchases
or redemptions pursuant to Section 174 of the Delaware General Corporation
Law, or (iv) any transaction from which the Director derived an improper
personal benefit.

COMPLIANCE WITH REPORTING REQUIREMENTS OF
SECTION 16 OF THE EXCHANGE ACT

Under Section 16(a) of the Exchange Act, the Company's Directors,
executive officers and any persons holding 10% or more of the Company's
Common Stock are required to report their ownership of Common Stock and
any changes in that ownership to the Securities and Exchange Commission (the
"SEC") and to furnish the Company with copies of such report. Specific due
dates for these reports have been established and the Company is required to
report in this Proxy Statement any failure to file on a timely basis by such
persons. Based solely upon a review of copies filed with the SEC during the

-7-
<PAGE>

fiscal year ended June 30, 1995, all persons subject to the reporting
requirements of Section 16(a) filed all required reports on a timely basis.

COMPENSATION COMMITTEE INTERLOCK AND
INSIDER PARTICIPATION

The Compensation Committee consists of the entire Board of Directors.
No Directors other than those currently serving on the Board of Directors
served as members of the Compensation Committee during the last completed
fiscal year. No member of that Committee, other than Messrs. Higgins, Cohn,
Luckman and O'Hanlon was an officer or employee of the Company or any of
its subsidiaries during the year. None of the executive officers of the
Company has served on the board of directors or on the compensation committee
of any other entity, any of whose officers served either on the Board of
Directors or on the Compensation Committee of the Company.

EXECUTIVE COMPENSATION

The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company for the
fiscal year ended June 30, 1995 (the "1995 fiscal year"), of those persons
who were, at June 30, 1995, executive officers of the Company or who served
as the Company's Chief Executive Officer during the 1995 fiscal year.

<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE

Annual Compensation Long-Term Compensation
------------------- Awards
----------------------
Name and Principal Position Year Salary(1) Bonus Stock Options (Shares)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
David L. Higgins 1995 $200,000 -0- -0-
Chairman of the Board and 1994 $176,923 -0- -0-
Chief Executive Officer 1993 $216,779 -0- 50,000

Michael A. O'Hanlon 1995 $228,654 -0- 132,000(2)
President and Director 1994 $175,000 -0- 75,000
1993 $ 77,404(3) -0- 15,000

Richard E. Miller 1995 $256,248(4) -0- -0-
Vice President 1994 $ 26,442(5) -0- 70,000
1993 $-0- -0- -0-

Dominic A. Guglielmi 1995 $169,932 -0- 88,000(6)
Vice President 1994 $184,545(7) -0- 10,000
1993 $ 52,885(8) -0- 10,000

James G. Costello (9) 1995 $159,327 -0- -0-
Vice President and 1994 $101,769(10) -0- 25,000
Chief Financial Officer 1993 $-0- -0- -0-

- ----------------

(1) Indicates salary paid through June 30, 1995, the last regular payment date prior to the
end of the 1995 fiscal year.

(2) Under the terms of Amendment No. 1 to the Stock Purchase Agreement dated
as of June 14, 1995 ("Amendment No. 1"), between the Company and MEFC
Partners, L.P., Mr. O'Hanlon is entitled to receive 132,000 shares of
Common Stock if stockholder approval of Proposal 3 described herein
is obtained. See "Certain Transactions-Medical Equipment Finance Corp."
and Proposal 3. Based on the closing price of $11.00 for the
the Common Stock on the New York Stock Exchange, Inc. ("NYSE") on
June 14, 1995 (the date such shares were granted), the aggregate
dollar value of such shares was $1.425 million. In addition, these
shares will be entitled to receve only those dividends, if any, that are
declared and paid after the date on which stockholder approval of
Proposal 3 is obtained.

(3) Includes compensation from February 16, 1993, the date which Mr. O'Hanlon began
employment with the Company.

</TABLE>

-8-
<PAGE>

(4) Includes a base salary of $125,000 and commissions earned for financing
transactions of $131,248 for the fiscal yearended June 30, 1995.

(5) Mr. Miller's salary for the 1994 fiscal year, if stated on an
annualized basis, would have been $125,000. Mr. Miller also was granted
70,000 stock options upon joining the Company in 1994.

(6) Under the terms of Amendment No. 1, Mr. Guglielmi is entitled to receive
88,000 shares of Common Stock if stockholder approval of Proposal 3
described herein is obtained. See "Certain Transactions - Medical
Equipment Finance Corp." and Proposal 3. Based on the closing
price of $11.00 for the Common Stock on the NYSE on June 14, 1995 (the
date such shares were granted), the aggregate dollar value of such
shares was $968,000. In addition, these shares will be entitled to
receive only those dividends, if any, that are declared and paid after
the date on which stockholder approval of Proposal 3 is obtained.

(7) Includes a base salary of $110,000 and commissions earned for financing
transactions of $74,545 for the fiscal year ended June 30, 1994.

(8) Includes compensation from January 4, 1993, the date which Mr. Guglielmi
began employment with the Company. Mr. Guglielmi's salary for the 1994
fiscal year, if stated on an annualized basis, would have been $110,000.
Mr. Guglielmi also received 10,000 stock options upon joining the
Company.

(9) Mr. Costello passed away on August 29, 1995.

(10) Includes compensation from October 5, 1993, the date which Mr. Costello
began employment with the Company. Mr. Costello's salary for the 1994
fiscal year, if stated on an annualized basis, would have been $140,000.
Mr. Costello also received 25,000 stock options upon joining the
Company.

OPTION GRANTS IN 1995 FISCAL YEAR

During the 1995 fiscal year, no stock options were granted to
the executive officers listed in the Summary Compensation Table.

AGGREGATE OPTION EXERCISES IN THE LAST
FISCAL YEAR END AND FISCAL YEAR END OPTION VALUES

The following table sets forth further information
for the executive officers listed in the Summary Compensation Table with
respect to previously granted options.

<TABLE>
<CAPTION>
Shares Number of Securities Underlying Value of Unexercised
Acquired on Value Unexercised Options at In-The-Money Options at
Name Exercise (#)(1) Realized($)(1) Fiscal Year-End(#) Fiscal Year-End($)(2)
- ---------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David L. Higgins -0- N/A 87,500 57,500 $344,375 -0-
Michael A. O'Hanlon -0- N/A 24,750 65,250 $ 93,032 -0-
Richard E. Miller -0- N/A 14,000 56,000 $ 33,250 -0-
Dominic A. Guglielmi -0- N/A 6,500 13,500 $ 33,688 -0-
James G. Costello -0- N/A 5,000 20,000 $ 15,625 -0-

</TABLE>
- --------------
(1) During the 1995 fiscal year, no stock options were exercised by the
named officers.

(1) Represents the difference between the closing price of the Company's
Common Stock on June 30, 1995 and the exercise price of the options.

EMPLOYMENT AGREEMENTS AND INCENTIVE COMPENSATION

The Company has not entered into any employment agreements with
any of its executive officers or employees and, other than the Company's
Incentive Stock Option Plan (the "Plan"), has no long-term incentive
compensation plan. The Company, however, does provide short-term incentive
compensation to certain executive officers through the award of quarterly
and/or annual bonuses based upon certain agreed upon performance criteria.

-9-
<PAGE>

The Board of Directors and stockholders of the Company adopted the
Plan in 1986. The Plan has been amended to increase the number of shares
of Common Stock for which options could be issued. Currently, the total
number of shares of Common Stock for which options could be issued is
1,250,000. Under the Plan, the number of shares which may be issued on
exercise of the options is subject to adjustment by reason of stock splits or
other similar capital events.

The Plan provides for the granting of nonstatutory stock options, as
well as incentive stock options to certain key employees and provides that the
option price per share for options granted under the Plan must be at least
100% of the fair market value of Common Stock on the date such options
were granted. Options are not transferrable under the Plan other than by will
or by laws of descent and distribution, and during the participant's lifetime
are exercisable only by participant.

REPORT OF THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION

The report of the Compensation Committee shall not be deemed
incorporated by reference to any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933 or under
the Exchange Act, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.

A publicly held corporation may not, subject to limited exceptions,
deduct for federal income tax purposes certain compensation paid to certain
executives in excess of $1 million in any taxable year (the "Deduction
Limitation"). It is not expected that compensation to executives of the Company
will exceed the Deduction Limitation in the foreseeable future, and,
therefore, the Company generally has not attempted to qualify any of its
compensation plans, programs and arrangements for any of the exceptions to the
Deduction Limitation. However, even though it is not expected that
compensation to executives of the Company will exceed the Deduction Limitation
in the foreseeable future, the Company has endeavored to qualify the Stock
Bonus Plan (as defined below) for such an exception.

OVERVIEW AND PHILOSOPHY

The entire Board of Directors sitting as the Compensation Committee
is responsible for developing the Company's executive compensation
policies. The Compensation Committee determines the compensation to be
paid to the Chief Executive Officer and each of the other executives of
the Company. The Compensation Committee is responsible for setting and
administering the policies which govern annual compensation, the Plan,
and determination of bonuses for executives.

There are three elements in the Company's executive compensation
program:

Base salary compensation.

Short-term incentive compensation (bonuses).

Long-term incentive compensation (stock options and
stock grants).

In designing its compensation programs, the Company believes that executive
compensation should reflect the value created for stockholders and support the
Company's strategic goals. Specifically, the objectives of the program are as
follows:

Attract and retain key executives important to the long-
term success of the Company.

Provide incentives for performance with respect to the
goals established for each executive by management.

Provide incentives for performance with respect to the
Company's goals.

Align the executive's interests with those of the
Company's stockholders through participation in stock
based plans.

10
<PAGE>

Reward individuals for outstanding contributions to the
Company's success.

The executive compensation program provides an overall level of
compensation opportunity that is competitive within the medical equipment
finance industry. Actual compensation levels may be greater or less than
average competitive levels in other companies based upon annual and long-
term Company performance as well as individual performance.

EXECUTIVE OFFICER COMPENSATION PROGRAM

BASE SALARY AND SHORT-TERM INCENTIVE COMPENSATION

The Company's general approach to base salary and short-term
incentive compensation is to pay salaries which when combined with bonuses
are competitive with the salaries and bonuses paid to executives of other
companies in the medical equipment finance industry based upon the
individual's experience and past and potential contribution to the Company.
As described in the Company's Proxy Statement, the base salary for the
Company's executive officers for fiscal year 1995 reflects levels deemed by
the Company to have been appropriate in view of the prior and expected
contribution of the executives to the Company's development. The Company
believes that a significant part of the overall compensation paid to
executives should consist of bonuses paid annually or quarterly based
on the ability of the executive to achieve specified Company, departmental
and individual goals.

STOCK OPTION PLAN AND STOCK BONUS PLAN

The Board of Directors and the Compensation Committee believe that
stock ownership is a significant incentive in building stockholder wealth
and aligning the interest of employees and stockholders. Stock options
will only have value if the Company's stock price increases. Stock options
utilize vesting periods to encourage key employees to continue in the employ
of the Company. The Plan authorizes the Compensation Committee to award
key employees stock options at exercise prices, vesting schedules and
with terms established by the Compensation Committee.

The Board of Directors believes that the DVI, Inc. 1995 Stock Bonus
Plan (the "Stock Bonus Plan") is instrumental in securing and retaining the
services of key employees of the Company by allowing them to participate
in the ownership and growth of the Company through the issuance of Stock Bonus
Plan shares. The Stock Bonus Plan provides key employees an additional
inducement to remain in the services of the Company and provides them with an
increased incentive to work towards the Company's success. The Stock Bonus
Plan authorizes the Stock Bonus Plan Committee, which is comprised of members
of the Board of Directors who are not employees of the Company and have not
received Stock Bonus Plan shares or any other equity securities of the Company
under any plans maintained by the Company at any time within one year prior
to, or during, such member's term of service on the Stock Bonus Plan
Committee, to, among other things, determine which key employees will
receive awards of the right to receive Stock Bonus Plan shares.

October__, 1995 Compensation Committee
Gerald L. Cohn
David L. Higgins
William R. Ingles
Sidney Luckman
John E. McHugh
Michael A. O'Hanlon

PRICE PERFORMANCE GRAPH

Set forth below is a line graph comparing the Company's total
stockholder return on Common Stock with the S&P 500 Index ("S&P"), and the
Bridge Leasing Company Index for listed stocks ("Lease Co. Index"), as of the
market close on June 30, 1990 through the end of the fiscal year ended
June 30, 1995.

-11-

<PAGE>

<PAGE>
PERFORMANCE CHART

- DVI, INC.

* S&P 500
COMPOSITE INDEX

X - LEASE CO. INDEX

660
520
380 [GRAPH TO BE INCLUDED IN DEFINITIVE PROXY STATEMENT]
240
100
-40
------------------------------
1990 1991 1992 1993 1994 1995

DATE

DATA PERIOD: JUNE 30, 1990 THROUGH JUNE 30, 1995

CERTAIN TRANSACTIONS

DIAGNOSTIC IMAGING SERVICES, INC. Subsequent to the Company's initial
investment in IPS Health Care, Inc. ("IPS") in November 1992, the Company
made additional investments in common and preferred stock of IPS, financed
various leasing transactions for magnetic resonance imaging and other
equipment, and entered into several restructuring agreements with IPS. In
those restructuring agreements, IPS issued several series of convertible
preferred stock to the Company in exchange for cash, equipment and an
exchange of debt obligations of IPS previously held by the Company. Through
these restructurings, the Company also obtained the right to appoint
representatives to IPS's Board of Directors.

In 1994, the businesses of IPS and Diagnostic Imaging Services, Inc.
("DIS") were combined through a merger (the "IPS Merger"). In the IPS
Merger, each outstanding share of common stock of DIS was converted into
approximately 4.69 shares of common stock of IPS ("IPS Common Stock").
In addition, each stockholder of DIS received on a pro rata basis (based on
each such stockholder's percentage ownership of DIS Common Stock
immediately prior to the IPS Merger), options and warrants to purchase
additional shares of IPS Common Stock that are substantially identical in
number and terms to the options and warrants issued by IPS and outstanding
immediately prior to the IPS Merger. As a result of the IPS Merger, Norman
Hames, who formerly was the beneficial owner of approximately 95% of the
outstanding capital stock of DIS, and the other four stockholders of DIS
acquired 50% of the IPS Common Stock.

In September 1994, following the completion of the IPS Merger, the
Company exchanged all the preferred stock of IPS owned by the Company for
two new series of convertible redeemable preferred stock (Series F and
Series G) of IPS. The exchange agreement also provided for the exchange of
certain assets and liabilities of IPS valued at approximately $164,000, the
return to IPS of IPS debt obligations valued at approximately $4.0 million,
assumption by the Company of certain assets and liabilities of IPS, and
the return of certain equipment previously used by the Company to IPS.
The Company did not record a gain or loss on any of the restructuring
transactions.

-12-

<PAGE>

Subsequent to the IPS Merger and the exchange and the other
transactions described above, IPS changed its name to DIS.

The approximately 4.5 million shares of DIS convertible preferred stock
now held by the Company have an aggregate liquidation preference of
approximately $4.5 million, are redeemable at the option of DIS for
approximately $4.5 million plus accrued dividends, and are convertible into
common stock of DIS at $2.42 per share for the Series F convertible preferred
stock and $1.00 per share for the Series G convertible preferred stock. In
addition, the majority shareholder of DIS has the right to repurchase the DIS
convertible preferred stock for approximately $4.5 million through September
2001. The Company also owns approximately 9% of DIS's issued and
outstanding common stock. Following the completion of the IPS Merger, the
Company's representatives (Mr. Higgins and Mr. Turek) resigned from the
Board of Director of IPS. Upon completion of the IPS Merger, new
representatives of the Company (Mr. Cohn and Mr. O'Hanlon) became
members of the board of directors of DIS.

MEDICAL EQUIPMENT FINANCE CORP. In January 1993, the Company
acquired all of the outstanding shares of common stock of Medical Equipment
Finance Corp. ("MEF Corp.") from MEFC Partners L.P., a Delaware limited
partnership ("MEFC Partners"). Under the terms of the original purchase
agreement, the purchase price was payable before October 15, 1998 in cash
or Common Stock of the Company, as elected by the Company. As initially
structured, the purchase price was to be determined as a percentage of the
after-tax earnings of the MEF Corp. division of the Company during the
sixty-six month period following the date of acquisition. During the year
ended June 30, 1995, management entered into negotiations with the former
shareholders of MEF Corp. to revise certain terms of the purchase agreement.
The Company and the former shareholders of MEF Corp. agreed in June 1995
to set the purchase price of MEF Corp. at 400,000 shares of Common Stock
(the "MEFC Shares"). Issuance of the MEFC Shares is subject to stockholder
approval. See Proposal 3. Michael A. O'Hanlon (President, Chief Operating
Officer and a Director of the Company), Dominic A. Guglielmi (Vice President
of the Company) and Mark H. Idzerda (an employee of DVI Financial Services)
are general partners of MEFC Partners and pursuant to the terms of
Amendment No. 1 are entitled to receive 132,000, 88,000 and 80,000 of the
MEFC Shares, respectively, if stockholder approval is obtained. In addition,
the MEFC Partners have been granted certain registration rights with respect
to the MEFC Shares.

PRINCIPAL HOLDERS OF VOTING SECURITIES

The following table sets forth information regarding beneficial
ownership of shares of Common Stock as of September 30, 1995 by each
stockholder known to the Company to be the beneficial owner of more than
5% of the outstanding shares of Common Stock, each director, each nominee
for election as director and all current officers and directors as a group.
Persons named in the following table have sole voting and investment powers
with respect to all shares shown as beneficially owned by them, subject to
community property laws where applicable and other information contained in
the footnotes to the table. Information with respect to beneficial ownership
is based upon the Company's Common Stock records and data supplied to the
Company by its stockholders.

-13-
<PAGE>

AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
<S> <C> <C>
David L. Higgins** 356,630(1)(2) 3.7%
Gerald L. Cohn*** 336,666(3)(4) 3.5%
William R. Ingles** 21,666(4) *
Sidney Luckman*** 28,966(4)(5) *
John E. McHugh*** 47,066(4) *
Nathaniel Shapiro*** 4,100(6) *
William S. Goldberg*** - -
Michael A. O'Hanlon*** 47,066(7)(8)(9) *
Canadian Imperial Bank of
Commerce Trust Company (Bahamas)
Limited**** 1,483,739(10) 15.0%
All directors & officers as a
group (12 persons) 1,024,217(9)(11)(12) 10.3%(9)(11)(12)

* Less than 1%
** 4041 MacArthur Boulevard, Suite 401, Newport Beach,
California 92660
*** 500 Hyde Park, Doylestown, Pennsylvania 18901
**** P.O. Box N-3933, Nassau, Bahamas
(1) Includes 100,000 shares of Common Stock which may be purchased on
the exercise of stock options granted under the Plan.
(2) Includes 2,380 shares of Common Stock held through the Company's
Employee Savings Plan.
(3) Does not include (a) 46,500 shares of Common Stock held of record
by Cynthia J. Cohn, who is a Vice President of the Company and one
of Mr. Cohn's daughters, in her capacity as trustee of the Cynthia
J. Cohn Revocable Trust, (b) 15,000 shares of Common Stock held of
record by a trust established for the benefit of Shelley Cohn
Schmidt, another of Mr. Cohn's daughters, and (c) 9,750 shares of
Common Stock held of record by a trust established for the benefit
of Clayton Schmidt, Mr. Cohn's grandchild, as to all of which
Mr. Cohn disclaims any beneficial interest.
(4) Includes 16,666 shares of Common Stock which may be purchased on
the exercise of stock options granted under the Plan.
(5) Does not include 80,000 shares of Common Stock held of record by
various trusts established for the benefit of certain members of
Mr. Luckman's family, of which either Robert Luckman (Mr.
Luckman's son) or another individual is the trustee, as to which
Mr. Luckman disclaims any beneficial ownership.
(6) Includes (i) 3,000 shares of Common Stock held of record by Mr.
Shapiro and (ii) 1,100 shares of Common Stock held of record by
SF Investments, Inc., a privately held registered broker-dealer,
90% of the common stock of which is owned by Mr. Shapiro. Does
not include 25,000 shares of Common Stock that are held of record
by Baldwin & Lyons, Inc., a publicly traded insurance company, in
which Mr. Shapiro is a director, as to all of which Mr. Shapiro
disclaims any beneficial interest.
(7) Includes 24,750 shares of Common Stock which may be purchased on
the exercise of stock options granted under the Plan.
(8) Includes 1,573 shares of Common Stock held through the Employee
Savings Plan.
(9) Does not include 132,000 shares of Common Stock which Mr. O'Hanlon,
a former shareholder of MEF Corp., may become entitled to receive
in connection with the Company's acquisition of MEF Corp. See
Proposal No. 3.
(10) Held by Canadian Imperial Bank of Commerce Trust Company (Bahamas)
Limited ("CIBC"), as trustee of trusts for the benefit of the
grandchildren of A.N. Pritzker, deceased. Does not include
56,339 shares of Common Stock owned by a partnership comprised
of trusts for the benefit of members of the Pritzker Family.
CIBC is not the trustee of such trusts. As used herein, the term
"Pritzker Family" refers to the lineal descendants of Nicholas J.
Pritzker, deceased.
(11) Includes 127,000 shares which may be purchased on the exercise of
stock options granted under the Plan, in addition to those shares
that may be purchased on the exercise of options set forth in
footnotes (1), (4) and (7).
(12) Does not include 88,000 shares of Common Stock which Dominic A.
Guglielmi, a vice president of the Company and a former share-
holder of MEF Corp., may be entitled to receive in
connection with the Company's acquisition of MEF Corp. See
Proposal No. 3.

VOTE REQUIRED; BOARD RECOMMENDATION

The affirmative vote of a majority of the shares of Common Stock
present and voting in person or by proxy at the Annual Meeting is required
for the election of each nominee specified in this proposal. The Board
of Directors unanimously recommends that you vote FOR the election of each
nominee specified in this proposal. Proxies solicited by the Board of
Directors will be voted for the nominees specified in this proposal unless
authority to vote for one or more of such nominees is specifically withheld
in the proxy.

-14-
<PAGE>

<PAGE>
PROPOSAL 2

PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION

DESCRIPTION OF PROPOSED AMENDMENT

At the Annual Meeting, there will be presented to the stockholders a
proposal to amend the Company's Certificate of Incorporation to increase the
number of shares of Common Stock that the Company is authorized to issue
from 13,000,000 to 75,000,000. The Board of Directors has determined that
an increase in the Company's authorized Common Stock is in the best interests
of the Company and its stockholders. The Company's ability to grow in the
future will depend on its access to new sources of financing. These sources
may include the issuance and sale of additional shares of Common Stock in one
or more public and/or private transactions. At October 16, 1995,
9,620,898 shares were issued and outstanding and an additional 3,347,685
shares were reserved for issuance on exercise of various outstanding options
and warrants. As a result, only 31,417 shares remained authorized and
available for issuance at the date of this Proxy Statement. If a sufficient
number of authorized shares of Common Stock were not available and the
authorization of the increase in the authorized number of such shares were to
be postponed until a specific need arose, the delay and expense incident to
obtaining the approval of the Company's stockholders at that time might
significantly impair the Company's ability to meet its objectives. Further-
more, additional shares of Common Stock are necessary for issuance in
connection with (i) the acquisition of MEF Corp. (See Proposal 3) and
(ii) the establishment of the DVI, Inc. 1995 Stock Bonus Plan (See
Proposal 4). The Board of Directors frequently reviews acquisition
opportunities, some of which might involve the issuance of Common
Stock. At the date of this Proxy Statement, the Company has not
entered into any definitive arrangement for any such acquisitions.

If the proposal is approved, the additional shares of Common Stock will
be available for issuance from time to time for such purposes and for such
consideration as the Board of Directors may approve without the need to obtain
the approval of the Company's stockholders, other than as required by the
rules of the New York Stock Exchange. At the date of this Proxy Statement,
the Company has no definitive plans to issue additional shares of Common
Stock.

If this proposal is approved, the first paragraph of Article FOURTH of
the Company's Certificate of Incorporation will be amended and restated in its
entirety as follows:

"FOURTH: The Corporation is authorized to issue 75,100,000
shares of capital stock, of which 75,000,000 shares shall be Common
Stock, par value $.005 per share, and 100,000 shares shall be
Preferred Stock, par value $10.00 per share."

VOTE REQUIRED; BOARD RECOMMENDATION

The affirmative vote of a majority of the outstanding shares of
Common Stock on the Record Date is required for the proposed amendment to the
Certificate of Incorporation. The Board of Directors unanimously recommends
that you vote FOR this proposal. Proxies solicited by the Board of Directors
will be voted FOR this proposal unless a vote against the proposal or
abstention is specifically indicated.

-15-

<PAGE>
<PAGE>
PROPOSAL 3

PROPOSAL TO RATIFY AND APPROVE AMENDMENT NO. 1
TO STOCK PURCHASE AGREEMENT

DESCRIPTION OF AMENDMENT NO. 1

At the Annual Meeting, there will be presented to the stockholders a
proposal to (i) ratify and approve Amendment No. 1 to Stock Purchase
Agreement dated as of June 14, 1995 ("Amendment No. 1"), between the
Company and MEFC Partners; and (ii) authorize and approve the issuance of an
aggregate of 400,000 shares of Common Stock pursuant to the terms of
Amendment No. 1.

In January 1993, the Company acquired all the outstanding shares of
common stock of MEF Corp. from MEFC Partners pursuant to a Stock
Purchase Agreement dated as of January 6, 1993 (the "Agreement"),
between the Company and the MEFC Partners. Under the terms of the
Agreement, the purchase price was payable before October 15, 1998 in cash
or Common Stock of the Company, as elected by the Company. As initially
structured, the purchase price was to be determined as a percentage of the
after-tax earnings of the MEF Corp. division of the Company during the
sixty-six month period following the date of the acquisition. During the year
ended June 30, 1995, the Company entered into negotiations with the former
shareholders of MEF Corp. to revise certain terms of the Agreement.
The reason for the amendment was that due to the integration
of the former MEF Corp. personnel and business relationships into
the Company's business, the concept of segregating the earnings of
the "MEF Corp. division" as contemplated by the Agreement was becoming
increasingly impractical and was likely to result in substantial
uncertainties. Due to this fact and because of changes in the Company's
business, it was not possible for the Company to compute the number of
shares to which MEFC Partners would have been entitled under the original
provisions of the Agreement. Based on negotiations between the Company and
MEFC Partners, the Company and the former shareholders of MEF Corp. agreed in
June 1995 to set the purchase price of MEF Corp. at 400,000 shares of Common
Stock (the "MEFC Shares") pursuant to the terms of Amendment No. 1.

Under the rules of the NYSE (on which the Common Stock is
listed), issuance of the MEFC Shares requires the approval of the Company's
stockholders because certain of the Company's officers have an interest in
the transaction. Michael A. O'Hanlon (President, Chief Operating Officer
and a Director of the Company), Dominic A. Guglielmi (Vice President
of the Company) and Mark H. Idzerda (an employee of DVI Financial
Services) are general partners of MEFC Partners and pursuant to the
terms of Amendment No. 1 will be entitled to receive 132,000, 88,000
and 80,000 of the MEFC Shares, respectively, if stockholder approval is
obtained. In addition, the MEFC Partners have been granted certain
registration rights with respect to the MEFC Shares. See "Certain
Transactions - Medical Equipment Finance Corp."

On June 8, 1995 the Board of Directors approved and recommended
for submission to the Company's stockholders for their approval the terms
of Amendment No. 1 and the issuance of the MEFC Shares thereunder. Amendment
No. 1 is conditioned on, among other things, the approval of stockholders of
the issuance of the MEFC Shares. The Board of Directors has determined,
based on the considerations described above, that the issuance of the
MEFC Shares to the MEFC Partners pursuant to the terms of Amendment
No. 1 is in the best interests of the stockholders and the Company
and believes that the acquisition of MEF Corp. was an important part of the
Company's strategy of continued future growth.

A copy of the Amendment is attached as Annex 1 to this Proxy
Statement.

VOTE REQUIRED; BOARD RECOMMENDATION

Under the rules of the NYSE, the affirmative vote of a majority
of the outstanding shares of Common Stock present and voting in
person or by proxy at the Annual Meeting is required for ratification
and approval of Amendment No. 1 and authorization and approval of
the issuance of the MEFC Shares in accordance with the terms
of Amendment No. 1, provided that the total vote cast represents over
50% in interest of all shares of Common Stock entitled to vote on
this proposal. The Board of Directors unanimously recommends that
you vote FOR this proposal. Proxies solicited by the Board of Directors will
be voted FOR this proposal unless a vote against the proposal or abstention is
specifically indicated.

-16-
<PAGE>

PROPOSAL 4

PROPOSAL TO RATIFY APPROVE THE DVI, INC. 1995 STOCK BONUS PLAN

DESCRIPTION OF 1995 STOCK BONUS PLAN

On June 8, 1995 the Board of Directors adopted and recommended for
submission to stockholders for their approval the DVI, Inc. 1995 Stock Bonus
Plan (the "Stock Bonus Plan"). The Stock Bonus Plan will permit the Company
to issue up to 200,000 shares of Common Stock in the aggregate (the "Stock
Bonus Plan Shares") to certain key employees. These employees will include
Michael A. O'Hanlon, the Company's President and Chief Operating Officer,
and Dominic A. Guglielmi, a Vice President of the Company. See
"Certain Transactions-Medical Equipment Finance Corp." Except with respect
to certain changes in the Company's capital structure, the aggregate number
of shares of Common Stock that may be awarded under the Stock Bonus Plan to
any participant may not exceed 100,000 shares.

The Stock Bonus Plan Shares may be issued by the Company on the
earlier to occur of (i) such time on or prior to December 31, 1998 as the last
sales price (as reported in the consolidated reporting system of the New York
Stock Exchange, Inc. (the "NYSE")) of the Common Stock is $16.00 per share
or higher for 30 consecutive calendar days, provided that any such employee
entitled to Stock Bonus Plan Shares under the Stock Bonus Plan must be
employed by the Company during the above described 30-day period in order
to receive Stock Bonus Plan Shares or (ii) a Sale of the Company (as defined
below) in which the consideration to be received for each share of Common
Stock is $13.00 or higher. The determination of the Stock Bonus Plan
Committee (as defined below) as to the occurrence of either condition shall be
final and conclusive. "Sale of the Company" is defined in the Stock Bonus
Plan as the earliest to occur of the following events, whether in one
transaction or a series of related transactions: (a) any sale, lease,
exchange or transfer of all or substantially all of the assets
of the Company and/or its subsidiaries to any party other than an
affiliate of the Company; or (b) any "person" (as such term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act) shall become the
"beneficial owner" (as defined in Rule 13d-3 and 13d-5 under the Exchange
Act except where a person is deemed to have acquired beneficial ownership
by virtue of Rule 13-3(d)(1)(i) under the Exchange Act), directly or
indirectly, of 75% or more of the total voting power of all classes
of capital stock then outstanding of the Company normally entitled
to vote in the election of Directors.

The Plan will be administered by a committee (the "Stock Bonus Plan
Committee") comprised of members of the Board of Directors who are not
employees of the Company and have not received Stock Bonus Plan Shares or
any other equity securities of the Company under any plans maintained by the
Company at any time within one year prior to, or at any time during, such
member's term of service on the Stock Bonus Plan Committee. The Stock
Bonus Plan Committee shall have the exclusive authority to, among other
things, (i) construe and interpret the Stock Bonus Plan, (ii) subject to the
provisions of the Stock Bonus Plan, to determine the participants who will
receive awards of the right to receive Stock Bonus Plan Shares, (iii) award
the right to receive Stock Bonus Plan Shares under the Stock Bonus Plan, (iv)
contest any ruling or decision relating to the Stock Bonus Plan, and (v)
determine whether income tax withholding will be required under the Stock
Bonus Plan. The determinations by the Stock Bonus Plan Committee will be
final and conclusive. Each award of the right to receive Stock Bonus Plan
Shares shall be subject to payment by the participant of the par value for the
Stock Bonus Plan Shares awarded, the conditions specified above and such
other conditions, not inconsistent with the Stock Bonus Plan, as the Stock
Bonus Plan Committee shall deem appropriate. In the event the conditions
described above fail to occur, the Stock Bonus Plan will terminate on December
31, 1998.

The Board of Directors believes that the Stock Bonus Plan is
instrumental in securing and retaining the services of key employees of
the Company by allowing them to participate in the ownership and growth of
the Company through the issuance of Stock Bonus Plan Shares.
The Stock Bonus Plan provides key employees an additional inducement to remain
in the service of the Company and provides them with an increased incentive
to work towards the Company's success.

-17-
<PAGE>

A copy of the Stock Bonus Plan is attached on Annex 2 to this Proxy
Statement.

VOTE REQUIRED; BOARD RECOMMENDATION

Section 16(b) of the Exchange Act, and the rules promulgated thereunder
("Rule 16b-3") and the Rules of the NYSE require the affirmative vote of the
holders of a majority of the shares of Common Stock present in person or by
proxy at the Annual Meeting for approval of the Stock Bonus Plan, provided
that the total vote cast represents over 50% in interest of all shares of
Common Stock entitled to vote on this proposal. The Board of Directors
unanimously recommends that you vote for this proposal. Proxies
solicited by the Board of Directors will be voted for this proposal unless a
vote against the proposal or abstention is specifically indicated.

-18-
<PAGE>

<PAGE>
PROPOSAL 5

PROPOSAL TO RATIFY APPOINTMENT OF ACCOUNTANTS

The Company proposes to select Deloitte & Touche as the Company's
independent accountants for the fiscal year ending June 30, 1996. Deloitte
& Touche has been the independent accountants for the Company since May
1987. Representatives of Deloitte & Touche are expected to be present at the
Annual Meeting and will be available to respond to appropriate questions and
to make such statements as they may desire.

VOTE REQUIRED; BOARD RECOMMENDATION

The affirmative vote of a majority of the outstanding shares of Common
Stock present and voting in person or by proxy at the Annual Meeting is
required to ratify the appointment of Deloitte & Touche LLP as the Company's
independent certified public accountants. The Board of Directors unanimously
recommends that you vote FOR the ratification of Deloitte & Touche LLP as the
Company's independent certified public accountants. Proxies solicited by the
Board of Directors will be voted FOR the proposal unless a vote against the
proposal or an abstention is specifically indicated.

ANNUAL REPORT TO STOCKHOLDERS

The Company's Annual Report to Stockholders for the fiscal year ended
June 30, 1995, which is being mailed concurrently with the mailing of this
Proxy Statement, contains the consolidated financial statements of the
Company. Such Annual Report is not incorporated in this Proxy Statement and
is not considered a part of the proxy soliciting material.

STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING

The Company has received no stockholder proposals to be voted on at
this meeting. Appropriate stockholder proposals which are intended to be
presented at the 1996 Annual Stockholder's Meeting must be received by the
Company no later than June 30, 1996, in order to be included in the 1996
proxy materials.

-19-

<PAGE>

<PAGE>
OTHER MATTERS

All expenses in connection with the solicitation of proxies will be paid
by the Company. The Company may pay brokers, nominees, fiduciaries or
other custodians for their reasonable expenses in sending proxy materials to,
and obtaining instructions from persons for whom they hold stock of the
Company. The Company expects to solicit proxies primarily by mail, but
directors, officers and other employees of the Company may also solicit
proxies in person or by telephone, telex or telegraph.

As of the date of this Proxy Statement, the management has no
knowledge of any matters to be presented at the meeting other than those
referred to above. If any other matters properly come before the meeting,
the persons named in the accompanying form of proxy intend to vote such
proxy in accordance with their best judgment.

By Order of the Board of Directors

Melvin C. Breaux
Secretary

October__, 1995

STOCKHOLDERS MAY OBTAIN WITHOUT CHARGE, A COPY OF THE COMPANY'S 1995
ANNUAL REPORT OR FORM 10-K BY SENDING A WRITTEN REQUEST TO CORPORATE
COMMUNICATIONS, DVI, INC., 4041 MacARTHUR BOULEVARD, SUITE 401, NEWPORT
BEACH, CALIFORNIA 92660.

-20-

PAGE
<PAGE>
DVI, INC.

THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 15, 1995

The undersigned hereby constitutes and appoints
David L. Higgins and Melvin C. Breaux, or either of them,
attorneys and proxies of the undersigned with full power of
substitution to vote all shares of Common Stock of DVI, Inc.
(the "Company") owned or held by the undersigned at the
Annual Meeting of Stockholders of the Company to be held
at the Cock 'N Bull Restaurant, Lahaska, Pennsylvania, on
Friday, December 15, 1995, at 10:30 a.m. and at any
adjournment thereof.

The Board of Directors recommends a vote "FOR
ALL NOMINEES" in Item 1 and "FOR" Items 2, 3, 4 and 5.

ITEM 1. Election of Directors.

/ / For all nominees listed below (except as marked to the
contrary below)

/ / WITHHOLD AUTHORITY to vote for all nominees

INSTRUCTION: To withhold authority to vote for
any individual nominee strike a line through the nominee's
name in the list below.

G. Cohn, D. Higgins, J. McHugh, M. O'Hanlon, N.
Shapiro, W. Goldberg

ITEM 2. To amend Article Fourth of the Company's
Certificate of Incorporation to increase the number of shares
of Common Stock the Company is authorized to issue from
13,000,000 shares to 75,000,000 shares.

/ / For / / Against
/ / Abstain

ITEM 3. To ratify and approve Amendment No. 1 to
the Stock Purchase Agreement dated as of June 14, 1995
("Amendment No. 1"), between the Company and MEFC
Partners, L.P., and to authorize and approve the issuance of
an aggregate of 400,000 shares of Common Stock pursuant
to Amendment No. 1.

/ / For / / Against
/ / Abstain

ITEM 4. To approve the DVI, Inc. 1995 Stock
Bonus Plan.

/ / For / / Against
/ / Abstain

ITEM 5. To ratify the appointment of Deloitte &
Touche LLP as independent public accountants for the
Company for the fiscal year ending June 30, 1996.

/ / For / / Against
/ / Abstain

ITEM 6. To transact such other business as may
properly come before the Annual Meeting or any adjournment
thereof.

THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE
AND RETURN PROMPTLY.

<PAGE>
<PAGE>
PAGE 2

THE PROXY HOLDERS ARE DIRECTED TO VOTE
AS SET FORTH ABOVE. THE SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. IF NO DIRECTION IS GIVEN WHEN THE
DULY EXECUTED AND DATED PROXY IS RETURNED, SUCH
SHARES WILL BE VOTED "FOR ALL NOMINEES" IN ITEM 1,
"FOR" ITEMS 2, 3, 4 AND 5 AND IN ACCORDANCE WITH
THE JUDGMENT OF SUCH PROXIES ON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL
MEETING. IF ANY OF THE NOMINEES FOR DIRECTOR IS
UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT
SERVE, THE PROXY HOLDERS WILL VOTE FOR SUCH
OTHER PERSON OR PERSONS AS THE BOARD OF
DIRECTORS MAY RECOMMEND.

The undersigned hereby acknowledges receipt of
the Company's Annual Report to Stockholders and of the
Notice of Annual Meeting of Stockholders and Proxy
Statement relating to the Annual Meeting

Dated:_________, 1995

Signature(s):

Please mark, date and sign as
your name appears above and
return in the enclosed envelope.
When signing as an agent,
attorney, or fiduciary, or for a
corporation or partnership,
indicate the capacity in which
you are signing. Shares
registered in joint names should
be signed by each joint tenant or
trustee.

<PAGE>

</TABLE>

ANNEX 1
EXECUTION COPY
--------------

AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT
-------------------------------------------

AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT
("Amendment") dated as of June 14, 1995 between DVI, INC. (formerly
known as DVI HEALTH SERVICES CORPORATION), a Delaware corporation
("Buyer"), and MEFC PARTNERS L.P., a Delaware limited partnership
("Seller").

WHEREAS, Buyer and Seller (i) have entered into a Stock Purchase
Agreement dated as of January 6, 1993 (the "Agreement") relating to the
purchase by Buyer and the sale by Seller of all of the common stock, par value
$.01 per share, of Medical Equipment Finance Corporation (all capitalized
terms not otherwise defined in this Amendment are used herein as defined in
the Agreement) and (ii) desire to amend the Agreement pursuant to Section 9.6
thereof upon the terms hereinafter set forth.

NOW THEREFORE, in consideration of the premises, the mutual
covenants, representations, warranties and agreements set forth in this
Agreement, and of other good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties hereto,
intending legally to be bound, hereby covenant and agree as follows:

1. AMENDMENTS TO AGREEMENT. Subject to the conditions of Section
2 hereof, Section 1.2 of the Agreement is hereby amended in its entirety as
follows:

"1.2 CONSIDERATION. In consideration of the sale of the Shares,
Buyer shall deliver to Seller, as the purchase price for the Shares, an
aggregate of 400,000 shares of the common stock, par value $.01 per
share, of the Buyer (the "DVI Common Stock") at such time as the
conditions set forth in Section 2 are satisfied. Each of Buyer and Seller
shall account for and report the issuance of the shares of DVI Common
Stock as purchase price for the Shares."

2. CONDITIONS TO EFFECTIVENESS. This Amendment is subject to the
satisfaction in full of the following conditions precedent:

(a) Each of Buyer and Seller shall have received fully executed
counterparts of this Amendment;

(b) Buyer shall have filed an amended Listing Application with
the New York Stock Exchange (the "NYSE") and received the approval
of the NYSE with respect thereto (subject to official notice of issuance);

(c) Buyer shall have made such filings and received such
approvals as may be required under federal and state securities laws for
the issuance of the shares of DVI Common Stock pursuant to Section 1
hereof;

<PAGE>

(d) The issuance of the DVI Common Stock shall have been
approved by the stockholders of Buyer; and

(e) Seller shall have received one or more certificates
evidencing the shares of DVI Common Stock to be acquired by it
hereunder.

3. REPRESENTATIONS AND WARRANTIES.

(a) Buyer represents and warrants to Seller that:

(i) This Amendment has been duly authorized,
executed and delivered by Buyer and constitutes a valid and legally
binding obligation of Buyer, enforceable in accordance with its terms;

(ii) No consent, approval, authorization, order,
registration or qualification of or with any governmental authority or
other entity or person is required for the consummation by Buyer of the
transactions contemplated by this Amendment;

(iii) The shares of DVI Common Stock to be
issued to Seller have been duly authorized and, when issued and delivered
against payment therefor as provided herein, will be duly and validly
issued and fully paid and nonassessable; good and valid title to each of
the shares of DVI Common Stock will be transferred by Buyer to Seller, free
and clear of any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, security interest, lien, charge,
encumbrance, preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (other than
restrictions on transfer imposed by the Securities Act (as hereinafter
defined) or the applicable securities laws of any State); and

(iv) The representations and warranties of Buyer
contained in the Agreement are true and correct on and as of the date
hereof as if such representations and warranties had been made on and as
of the date hereof (except to the extent such representation and warranties
relate to an earlier date).

(b) Seller represents and warrants to Buyer that:

(i) This Amendment has been duly authorized,
executed and delivered by Seller and constitutes a valid and legally
binding obligation of Seller, enforceable in accordance with its terms;

(ii) No consent, approval, authorization, order,
registration or qualification of or with any governmental authority or
other entity or person is required for the consummation by Seller of the
transactions contemplated by this Amendment;

(iii) (A) Seller is acquiring the shares of DVI
Common Stock hereunder for its own account and with no intention of
-2-
<PAGE.

distributing or selling such shares except for distribution thereof to its
partners. Seller understands that the shares of DVI Common Stock being
acquired by it hereunder have not been (and are not being) registered
under the Securities Act by reason of their contemplated issuance in
transaction(s) exempt from the registration and prospectus delivery
requirements of the Securities Act pursuant to Section 4(2) thereof, and
that the reliance of Buyer on such exemption from registration is
predicated in part on the representations and warranties of Seller
hereunder.

(B) Seller agrees that it will not sell or
otherwise dispose of any share(s) of DVI Common Stock acquired by it
hereunder unless such sale or other disposition has been registered or is
exempt from registration under the Securities Act and has been registered
or qualified or is exempt from registration or qualification under
applicable securities laws of any State.

(C) Seller understands that a restrictive
legend consistent with the foregoing has been or will be placed on the
certificates evidencing the shares of DVI Common Stock to be issued to
it hereunder, and related stop transfer instructions will be noted in the
transfer records of Buyer and/or its transfer agent for such shares of
capital stock; and

(iv) the representations and warranties of Seller contained
in the Agreement are true and correct on and as of the date hereof as if
such representations and warranties had been made on and as of the date
hereof (except to the extent such representation and warranties relate to
an earlier date).

4. MISCELLANEOUS.

(a) FULL FORCE AND EFFECT. Except as expressly set forth herein,
this Amendment does not constitute a waiver or modification of any provision of
the Agreement. Except expressly amended hereby, the Agreement shall continue
in full force and effect in accordance with the provisions thereof on the date
hereof. As used in the Agreement, the terms "the Agreement," "herein,"
"hereof," "hereinafter," "hereto" and words of similar import, shall, unless
the context otherwise requires, mean the Agreement as amended by the Amendment.
References to the terms "Agreement" appearing in the Exhibits or Schedules to
the Agreement, shall, unless the context otherwise requires, mean the Agreement
as amended by this Amendment.

(b) HEADINGS AND TERMS. The headings in this Amendment are
for purposes of reference only and shall not be considered in construing this
Agreement. Terms defined in the singular shall have a comparable meaning when
used in the plural, and vice versa.

(c) COUNTERPARTS. This Amendment may be executed in any
number of counterparts, each of which when so executed and delivered shall
constitute an original and all together shall constitute one agreement.

-3-
<PAGE>

(d) LAW GOVERNING. This Agreement shall be construed and
enforced in accordance with and shall be governed by the laws of the State of
New York, without giving effect to its conflict of laws provisions.

(e) PUBLIC ANNOUNCEMENTS. Buyer and Seller each hereby
agrees it will not issue any press release or otherwise make any public
statement or respond to any press inquiry with respect to this Amendment, the
transactions contemplated hereby or agreements or transactions referred to
herein without the prior approval of the other party except as may be required
by applicable law.

IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the date first above written.

BUYER:

DVI, INC. (FORMERLY KNOWN AS DVI
HEALTH SERVICES CORPORATION), a Delaware corporation

By: /s/ David L. Higgins
--------------------
Name: David L. Higgins
Title: Chief Executive Officer

SELLER:

MEFC PARTNERS L.P., a Delaware limited
partnership

By: /s/ Dominick Guglielmi
----------------------
Name: Dominick Guglielmi
Title: General Partner

By: /s/ Mark Irzerda
----------------
Name: Mark Irzerda
Title: General Partner

-4-

<PAGE>

ANNEX 2
DVI, INC.
1995 STOCK BONUS PLAN
---------------------

1. Preamble.
--------

DVI, Inc., a Delaware corporation (the "Company"), has
established this DVI, Inc. 1995 Stock Bonus Plan, (as set forth
herein and as amended from time to time the "Plan") as a means
whereby the Company may provide key employees who have
substantial responsibilities for the direction and management of
the Company and its Subsidiaries (as hereinafter defined) with
additional incentive to promote the success of the businesses
operated by the Company and its Subsidiaries.

2. Definitions.
-----------

2.01 "AFFILIATE" means, with respect to any person or
entity, any person or entity who or which, directly or
indirectly, through one or more intermediaries, controls or is
controlled by or is under common control with such person or
entity.

2.02 "AWARD DATE" means the date upon which rights to
receive shares of Bonus Stock are awarded to a Participant under
the Plan.

2.03 "BOARD" or "BOARD OF DIRECTORS" means the board of
directors of the Company.

2.04 "BONUS STOCK" means Common Stock awarded to a
Participant pursuant to this Plan and subject to the
restrictions contained in Section 6.

2.05 "BONUS STOCK AGREEMENT" means an agreement,
substantially in the form of Exhibit A hereto, or such other
agreement as the Committee shall from time to time approve to
memorialize an award pursuant to hereto.

2.06 "COMMITTEE" shall initially mean the Compensation
Committee of the Board of Directors (so long as it meets the
requirements of this Section), or, in the event the Compensation
Committee fails to meet such requirements, such other committee
selected by the Board which is comprised exclusively of
Directors, PROVIDED that each member of the Committee (a) shall
not, at any time within one year prior to, or at any time during
such member's term of service on the Committee, have received
any award of Bonus Stock under the Plan or any other equity
security under any other plan maintained by the Company or any
of its affiliates, except as permitted pursuant to the
provisions of Rule 16b-3(c)(2)(i) of the Exchange Act or any
successor rule thereto; and (b) shall be an outside Director as
determined under Proposed Regulation 26 CFR Sec.1.162-27(e)(3) or
any final or successor regulation thereto.

2.07 "COMMON STOCK" means the common stock of the Company,
$.005 par value.

<PAGE>

2.08 "DIRECTOR" means a member of the Board.

2.09 "EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as it exists now or from time to time may hereafter be
amended.

2.10 "FAIR MARKET VALUE" means for the relevant day:

(a) If shares of Common Stock are listed or admitted
to unlisted trading privileges on any national or regional
securities exchange, the last reported sale price, regular
way, on the composite tape of that exchange on the day Fair
Market Value is to be determined;

(b) If the Common Stock is not listed or admitted to
unlisted trading privileges as provided in paragraph (a),
and if sales prices for shares of Common Stock are reported
by the National Association of Securities Dealers, Inc.
Automated Quotations, Inc. National Market System ("NASDAQ
System"), then the last sale price for Common Stock
reported as of the close of business on the day Fair Market
Value is to be determined, or if no such sale takes place
on that day, the average of the high bid and low asked
prices so reported; if Common Stock is not traded on that
day, the next preceding day on which such stock was traded;
or

(c) If trading of the Common Stock is not reported by
the NASDAQ System or on a stock exchange, Fair Market Value
will be determined by the Committee based upon the best
available data, which determination shall be conclusive for
all purposes.

2.11 "PARTICIPANT" means an employee of the Company to whom
rights to receive Bonus Stock have been awarded under the Plan.

2.12 "SALE OF THE COMPANY" means the earliest to occur of
the following events, whether in one transaction or a series of
related transactions:

(a) any sale, lease, exchange or transfer of all or
substantially all of the assets of the Company and/or its
Subsidiaries to any party other than an Affiliate of the
Company; or

(b) any "person" (as such term is used in Sections
13(d) and 14(d)(2) of the Exchange Act) shall become the
"beneficial owner" (as defined in Rule 13d-3 and 13d-5
under the Exchange Act except where a person is deemed to
have acquired beneficial ownership by virtue of

-2-

<PAGE>

Rule 13-3(d)(1)(i) under the Exchange Act), directly or
indirectly, of 75% or more of the total voting power of all
classes of capital stock then outstanding of the Company
normally entitled to vote in the election of Directors.

2.13 "SECURITIES ACT" means the Securities Act of 1933, as
it exists now or from time to time may hereafter be amended.

2.14 "SUBSIDIARY" means any corporation or other entity of
which the majority voting power or equity interest is owned
directly or indirectly by the Company.

3. Stock Subject to the Plan.
--------------------------

Except as otherwise provided in Section 8, the aggregate
number of shares of Common Stock that may be awarded as Bonus
Stock under this Plan may not exceed 200,000 shares. Shares of
Common Stock reserved for issuance pursuant to this Plan may be
either authorized but unissued shares or treasury shares, in the
Board's discretion. If any award of rights to receive Bonus
Stock hereunder shall terminate or expire, as to any number of
shares, new rights to receive Bonus Stock may thereafter be
awarded with respect to such shares. Except as otherwise
provided in Section 8, the aggregate number of shares of Common
Stock that may be awarded as Bonus Stock to any Participant may
not exceed 100,000.

4. Administration.
--------------

The Plan shall be administered by the Committee. In
addition to any other powers set forth in this Plan, the
Committee has the exclusive authority:

(a) to construe and interpret the Plan, and to remedy
any ambiguities or inconsistencies therein;

(b) to establish, amend and rescind appropriate rules
and regulations relating to the Plan;

(c) subject to the express provisions of the Plan, to
determine the Participants who will receive awards of
rights to receive Bonus Stock, the times when Participants
will receive such awards, the number of shares to be
subject to each award and the payment terms, payment
method, and expiration date applicable to each award;

(d) to contest on behalf of the Company or
Participants, at the expense of the Company, any ruling or
decision on any matter relating to the Plan or to any
awards of Bonus Stock (or rights to receive the same);

(e) generally, to administer the Plan, and to take
all such steps and make all such determinations in
connection with the Plan and the awards of rights to
receive Bonus Stock granted thereunder as it may deem

-3-

<PAGE>

necessary or advisable; and

(f) to determine whether income tax withholding under
Section 9 of this Plan will be required.

5. Eligible Employees.
------------------

Subject to the provisions of the Plan, the Committee shall
determine from time to time those key employees of the Company
or a Subsidiary who shall be designated as Participants and the
number of shares of Bonus Stock to which each such Participant
shall be granted rights or receive upon the terms and subject to
the conditions of this Agreement.

6. Terms and Conditions of Awards.
------------------------------

The Committee, in its discretion, may award the right to
receive shares of Bonus Stock to any Participant under the Plan.
Each award of the right to receive shares of Bonus Stock shall
be evidenced by a Bonus Stock Agreement between the Company and
the Participant. Each award of the right to receive shares of
Bonus Stock under the Plan shall be subject to the following
express terms and conditions and to such other terms and
conditions, not inconsistent with the Plan, as the Committee
shall deem appropriate:

(a) ISSUANCE OF SHARES. No shares of Bonus Stock
will be issued until (i) payment therefor is made in
accordance with Section 7 hereof and (ii) the earlier to
occur of (x) such time on or prior to December 31, 1998 as
the Fair Market Value per share of Common Stock is greater
than or equal to $16 for a period of 30 consecutive
calendar days; and (y) immediately prior to the occurrence
of a Sale of the Company at any time on or prior to
December 31, 1998 so long as the value of the consideration
to be paid to all stockholders of the Company in connection
with such Sale of the Company is greater than or equal to
$13 per share of Common Stock. The determination of the
Committee as to the occurrence of either condition to
issuance shall be final and binding on the Company and all
Participants in the Plan. In the event neither condition
to issuance shall occur on or prior to December 31, 1998,
no shares of Bonus Stock will be issued pursuant hereto and
this Plan shall terminate.

Subject to the provisions of subparagraphs (b) and (c)
below and any other restrictions imposed by law,
certificates evidencing shares of Bonus Stock shall be
delivered to Participants as soon as practicable after they
are issued.

(b) FORFEITURES. A Participant shall forfeit all
rights to receive shares of Bonus Stock awarded to such
Participant hereunder on the date that such participant's
employment by the Company is terminated for any reason. A

-4-

<PAGE>

transfer of a Participant's employment from the Company to
a Subsidiary or affiliate, or VICE VERSA shall not be a
termination of employment for purposes of this Plan. This
Section 6(b) shall not apply to any shares of Bonus Stock
which shall have been issued prior to the date upon which
such Participant's employment by the Company is terminated.

(c) LEGENDS. Each certificate representing shares of
Bonus Stock issued to any Participant who may (in the
Company's discretion) be deemed to be an "affiliate" of the
Company for purposes of the Securities Act shall bear the
following (or a similar) legend:

"The shares of Common Stock represented
hereby have not been registered under the
Securities Act of 1933, as amended (the
Securities Act"), or any state securities
laws. These securities may not be
transferred or resold except as permitted
under the Securities Act and the applicable
state securities laws, pursuant to either
registration thereunder or exemption
therefrom."

7. Payment for Shares of Bonus Stock.
---------------------------------

In connection with the issuance of shares of Bonus Stock
pursuant hereto, the Participant shall pay or the Company shall
cause to be paid an amount equal to the product of (a) the par
value per share of the Common Stock, multiplied by (b) the
number of shares of Bonus Stock to be issued.

8. Adjustments to Reflect Changes in Capital Structure.
----------------------------------------------------

If there is any change in the corporate structure or shares
of the Company, the Board of Directors may make any adjustments
necessary to prevent accretion, or to protect against dilution,
in the number and kind of shares authorized by the Plan and,
with respect to outstanding rights to receive Bonus Stock in the
number and kind of shares covered thereby. For the purpose of
this Section 8, a change in the corporate structure or shares of
the Company includes, without limitation, any change resulting
from a recapitalization, stock split, stock dividend,
consolidation, rights offering, spin-off, reorganization, or
liquidation and any transaction in which shares of Common Stock
are changed into or exchanged for a different number or kind of
shares of stock or other securities of the Company or another
corporation.

9. Withholding Tax.
---------------

The Company shall have the right to withhold, from any
compensation payable to Participants, any income taxes required
by law to be withheld as a result of the issuance of Bonus Stock
or the grant to the Participant of rights to receive the same.

-5-

<PAGE>

10. No Right To Employment.
----------------------

Participation in the Plan will not give any Participant a
right to be retained as an employee of the Company or any
Subsidiary, or any right or claim to any benefit under the Plan,
unless the right or claim has specifically accrued under the
Plan.

11. Amendment of the Plan.
---------------------

The Committee may from time to time amend or revise the
terms of this Plan in whole or in part and may, without
limitation, adopt any amendment deemed necessary; provided,
however, that (a) no change in any award previously granted to
a Participant may be made that would impair the rights of the
Participant without the Participant's consent and (b) the
Committee may not, without approval by the holders of a majority
of the shares of the Company's Common Stock present at a duly
held stockholders' meeting or otherwise represented and entitled
to vote thereon, (i) change the aggregate number of shares of
Common Stock that may be awarded pursuant to the Plan (except in
accordance with the provisions of Section 8), (ii) change the
class of eligible individuals who may receive awards under the
Plan, or (iii) materially increase benefits accruing to
Participants under the Plan.

12. Conditions Upon Issuance of Shares.
----------------------------------

Rights to receive Bonus Stock shall not be awarded and
shares of Bonus Stock shall not be issued unless any such
transaction shall comply with all relevant provisions of law,
including, without limitation, the Securities Act, the Exchange
Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares of
Common Stock may then be listed, and shall be further subject to
the approval of counsel for the Company with respect to such
compliance.

13. Effective Date and Termination of Plan.
--------------------------------------

13.1 EFFECTIVE DATE. This Plan is effective as of the
later of the date of its adoption by the Committee, or the date
it is approved by the stockholders of the Company, in accordance
with Rule 16b-3(b) under the Exchange Act.

13.2 TERMINATION OF THE PLAN. The Plan will terminate on
January 1, 1999, or at such other time as the Committee, in its
sole discretion, may determine. The Committee may terminate the
Plan at any time with respect to any shares of Common Stock
authorized for awards under Section 3 for which rights to
receive the same have not been awarded under this Plan.

-6-

<PAGE>

Termination of the Plan will not affect the rights and
obligations of any Participant with respect to awards to receive
Bonus Stock which have been granted prior to termination and
shares of Bonus Stock which have been issued prior to
termination to Bonus Stock awarded before termination.

14. Rules of Construction.
---------------------

14.1 GOVERNING LAW. The construction and operation of this
Plan are governed by the laws of the State of Delaware.

14.2 UNDEFINED TERMS. Unless the context requires another
meaning, any term not specifically defined in this Plan has the
meaning given to it by the Code.

14.3 HEADINGS. All headings in this Plan are for reference
only and are not to be utilized in construing the Plan.

14.4 GENDER. Unless clearly appropriate, all nouns of
whatever gender refer indifferently to persons of any gender.

14.5 SINGULAR AND PLURAL. Unless clearly inappropriate,
singular terms refer also to the plural and VICE VERSA.

14.6 SEVERABILITY. If any provision of this Plan is
determined to be illegal or invalid for any reason, the
remaining provisions shall continue in full force and effect and
shall be construed and enforced as if the illegal or invalid
provision did not exist, unless the continuance of the Plan in
such circumstances is not consistent with its purposes.

-7-

PAGE
<PAGE>
EXHIBIT A

Form of Bonus Stock Agreement

<PAGE>