<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 24, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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DVI, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<TABLE>
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DELAWARE 22-2722773
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
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500 HYDE PARK
DOYLESTOWN, PENNSYLVANIA 18901
(215) 345-6600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
MICHAEL A. O'HANLON
500 HYDE PARK
DOYLESTOWN, PENNSYLVANIA 18901
(215) 345-6600
(NAME, ADDRESS INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
WITH A COPY TO:
JOHN A. HEALY, ESQ.
ROGERS & WELLS LLP
200 PARK AVENUE
NEW YORK, NEW YORK 10166
(212) 878-8000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
REGISTERED(1) REGISTERED(2) PER UNIT(3) PRICE(2)(3)(4) REGISTRATION FEE(5)
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
Common Stock..............
Preferred Stock...........
Depositary Shares......... $500,000,000 $500,000,000 $147,500
Debt Securities...........
Warrants..................
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(1) This Registration Statement also covers securities which may be issued by
the Registrant under contracts pursuant to which the counterparty may be
required to purchase Common Stock, Preferred Stock, Depositary Shares, Debt
Securities or Warrants.
(2) In no event will the aggregate maximum offering price of the Common Stock,
Preferred Stock, Depositary Shares, Debt Securities and Warrants registered
under this Registration Statement exceed $500,000,000. Any securities
registered hereunder may be sold separately or as units with other
securities registered hereunder.
(3) The proposed maximum offering price per unit (a) has been omitted pursuant
to instruction II.D. of Form S-3 and (b) will be determined, from time to
time, by the Registrant in connection with the issuance by the Registrant of
the securities registered hereunder.
(4) In U.S. dollars, or the equivalent thereof, denominated in one or more
foreign currencies or units of two or more foreign currencies or composite
currencies (such as European Currency Units).
(5) Calculated pursuant to Rule 457(o) of the rules and regulations promulgated
under the Securities Act of 1933, as amended.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL , 1998
PROSPECTUS
DVI, INC.
$500,000,000
COMMON STOCK, PREFERRED STOCK, DEPOSITARY SHARES,
DEBT SECURITIES AND WARRANTS
DVI, Inc. (the "Company") may from time to time offer, together or
separately, in one or more series: (i) shares of common stock, par value $.005
per share ("Common Stock"); (ii) shares of preferred stock, par value $10.00 per
share ("Preferred Stock"); (iii) debt securities consisting of debentures, notes
or other evidence of indebtedness and having such prices and terms as are
determined at the time of sale ("Debt Securities"); (iv) shares of Preferred
Stock represented by depositary shares ("Depositary Shares"); and (v) warrants
or other rights to purchase Common Stock, Preferred Stock, Depositary Shares,
Debt Securities, or any combination thereof, as may be designated by the Company
at the time of the offering ("Warrants"), with an aggregate public offering
price of up to $500,000,000, in amounts, at prices and on terms to be determined
at the time of offering. The Common Stock, Preferred Stock, Depositary Shares,
Debt Securities and Warrants (collectively, the "Securities") may be offered,
separately or together, in separate series and in amounts, at prices and on
terms to be set forth in one or more supplements to this Prospectus (each a
"Prospectus Supplement").
The specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in the applicable Prospectus Supplement and
will include, where applicable, in the case of Common Stock, the number of
shares and the terms of the offering and sale; (ii) in the case of Preferred
Stock, the number of shares, the specific title, the aggregate amount, any
dividend (including the method of calculating payment of dividends), seniority,
liquidation, redemption, voting and other rights, any terms for any conversion
or exchange into other Securities, the initial public offering price and any
other terms; (iii) in the case of Depositary Shares, the fractional share of
Preferred Stock represented by each such Depositary Share; (iv) in the case of
Debt Securities, the specific designation, aggregate principal amount, purchase
price, authorized denomination, maturity, rate or rates or interest (or method
of calculation thereof) and dates for payment thereof, dates from which interest
shall accrue, any exchangeability, conversion, redemption, prepayment or sinking
fund provisions and the currency or currencies or currency unit or currency
units in which principal, premium, if any, or interest, if any, is payable; and
(v) in the case of Warrants, the designation and number, the exercise price and
any other terms in connection with the offering, sale and exercise of the
Warrants. The Common Stock is listed on the New York Stock Exchange, Inc.
("NYSE") under the symbol "DVI."
The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a national securities exchange of, the
Securities covered by such Prospectus Supplement, not contained in this
Prospectus.
The Securities may be offered directly to one or more purchasers, through
agents designated from time to time by the Company or to or through underwriters
or dealers. If any agents or underwriters are involved in the sale of any of the
Securities, their names, and any applicable purchase price, fee, commission or
discount arrangement between or among them, will be set forth, or will be
calculable from the information set forth, in an accompanying Prospectus
Supplement. The net proceeds to the Company from such sale will also be set
forth in an accompanying Prospectus Supplement. No Securities may be sold by the
Company without delivery of a Prospectus Supplement describing the method and
terms of the offering of such series of Securities. See "Plan of Distribution."
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN
INVESTMENT IN THE SECURITIES, SEE "RISK FACTORS" COMMENCING ON PAGE 4.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is , 1998
<PAGE> 3
TABLE OF CONTENTS
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AVAILABLE INFORMATION....................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............. 2
RISK FACTORS................................................ 4
THE COMPANY................................................. 10
RATIO OF EARNINGS TO FIXED CHARGES.......................... 10
USE OF PROCEEDS............................................. 10
DESCRIPTION OF CAPITAL STOCK................................ 11
DESCRIPTION OF DEPOSITARY SHARES............................ 12
DESCRIPTION OF DEBT SECURITIES.............................. 15
DESCRIPTION OF WARRANTS..................................... 24
PLAN OF DISTRIBUTION........................................ 24
EXPERTS..................................................... 26
LEGAL MATTERS............................................... 26
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; and at its
regional offices at 7 World Trade Center, 13th Floor, New York, New York 10048
and at 500 West Madison Street, Suite 1400, Chicago, Illinois, 60661-2511.
Copies of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission also maintains a Web site that contains reports, proxy
statements and other information regarding registrants that file electronically
with the Commission at http://www.sec.gov. Reports, proxy statements and other
information concerning the Company can also be inspected at the office of the
New York Stock Exchange, 20 Broad Street, New York, New York 10005, on which
exchange the Common Stock is traded.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits, the "Registration Statement") filed
by the Company with the Commission under the Securities Act of 1933, as amended
(the "Securities Act"). This Prospectus omits certain of the information
contained in the Registration Statement and the exhibits and schedules thereto,
in accordance with the rules and regulations of the Commission. For further
information concerning the Company and the Securities offered hereby, reference
is hereby made to the Registration Statement and the exhibits and schedules
filed therewith, which may be inspected without charge at the office of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of
which may be obtained from the Commission at prescribed rates. Any statements
contained herein concerning the provisions of any document are not necessarily
complete, and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are incorporated herein
by reference:
(a) The Company's Annual Report on Form 10-K for its fiscal year ended
June 30, 1997, as amended by Form 10-K/A-1 dated October 28, 1997 (the
"1997 10-K").
(b) The Company's Quarterly Reports on Form 10-Q for the quarterly
periods ended September 30, 1997 and December 31, 1997.
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(c) The Company's Current Report on Form 8-K dated October 29, 1997.
(d) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the 1997 10-K.
All documents filed by the Company after the date of the Prospectus
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this Prospectus and
to be a part hereof from the date of the filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
into this Prospectus will be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained in this Prospectus or
any other subsequently filed document which also is or is deemed to be
incorporated by reference into this Prospectus modifies or supersedes that
statement.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE, WITHOUT CHARGE, TO EACH PERSON TO
WHOM THIS PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON,
A COPY OF ANY AND ALL DOCUMENTS INCORPORATED BY REFERENCE INTO THE REGISTRATION
STATEMENT OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). REQUESTS FOR SUCH
COPIES SHOULD BE DIRECTED TO: DVI, INC., 500 HYDE PARK, DOYLESTOWN, PENNSYLVANIA
18901 (TELEPHONE: 215-345-6600), ATTENTION: LEGAL DEPARTMENT.
Additional updating information with respect to the matters discussed in
this Prospectus may be provided in the future by means of appendices to this
Prospectus or other documents.
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RISK FACTORS
An investment in the Securities offered hereby involves a high degree of
risk. Prospective purchasers of Securities should carefully consider the
following risk factors in addition to the other information set forth in this
Prospectus, any Prospectus Supplement and the documents incorporated by
reference herein.
DEPENDENCE ON WAREHOUSE FINANCING. The Company's ability to sustain the
growth of its financing business is dependent upon funding obtained through
warehouse facilities until its equipment and other loans are permanently funded.
The funds the Company obtains through warehouse facilities are full recourse
short-term borrowings secured primarily by the underlying equipment, the medical
receivables and other collateral. These borrowings are in turn typically repaid
with the proceeds received by the Company when its equipment and other loans are
securitized or sold. At December 31, 1997 the Company had available an aggregate
of approximately $435.5 million under various warehouse facilities,
approximately $323.5 million of which is available for funding equipment loans
and approximately $112.0 million of which is available for funding medical
receivables loans. There can be no assurance that this type of warehouse
financing will continue to be available to the Company on acceptable terms. If
the Company were unable to arrange continued access to acceptable warehouse
financing, the Company would have to curtail its equipment and other loan
originations, which in turn would have a material adverse effect on the
Company's financial condition and results of operations.
DEPENDENCE ON PERMANENT FUNDING PROGRAMS. The Company's use of
securitization as its principal form of permanent funding is an important part
of the Company's business strategy. If for any reason the Company were to become
unable to access the securitization markets to fund permanently its equipment
and other loans, the consequences for the Company would be materially adverse.
The Company's ability to complete securitizations and other structured finance
transactions depends upon a number of factors, including general conditions in
the credit markets, the size and liquidity of the market for the types of
receivable-backed securities issued or placed in securitizations sponsored by
the Company and the overall performance of the Company's loan portfolio. The
Company does not have binding commitments from financial institutions or
investment banks to provide permanent funding for its equipment or medical
receivables loans.
IMPACT OF CREDIT ENHANCEMENT REQUIREMENTS. In connection with its
securitizations and other structured financings, the Company is required to
provide credit enhancement for the debt obligations issued and sold to third
parties. Typically, the credit enhancement consists of cash deposits, the
funding of subordinated tranches and/or the pledge of additional equipment or
other loans that are funded with the Company's capital. The requirement to
provide this credit enhancement reduces the Company's liquidity and requires it
to obtain additional capital. If the Company is unable to obtain and maintain
sufficient capital, it may be required to halt or curtail its securitization or
other structured financing programs, which in turn would have a material adverse
effect on the Company's financial condition and operations.
CREDIT RISK. Many of the Company's customers are outpatient healthcare
providers, the loans to whom often require a high degree of credit analysis.
Although the Company seeks to mitigate its risk of default and credit losses
through its underwriting practices and loan servicing procedures and through the
use of various forms of non-recourse or limited recourse financing (in which the
financing sources that permanently fund the Company's equipment and other loans
assume some or all of the risk of default by the Company's customers), the
Company remains exposed to potential losses resulting from a default by an
obligor. Obligors' defaults could cause the Company to make payments to the
extent the Company is obligated to do so and in the case of its permanent
equipment and other funding arrangements to the extent of the Company's
remaining credit enhancement position; could result in the loss of the cash or
other collateral pledged as credit enhancement under its permanent equipment and
other funding arrangements; or could require the Company to forfeit any residual
interest it may have retained in the underlying equipment. During the period
after the Company initially funds an equipment or other loan and prior to the
time it funds the loan on a permanent basis, the Company is exposed to full
recourse liability in the event of default by the obligor. In addition, under
the terms of securitizations and other types of structured finance transactions,
the Company generally is required to replace or repurchase equipment and other
loans in the event they fail to conform to the representations and
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warranties made by the Company, even in transactions otherwise designated as
non-recourse or limited recourse.
Defaults by the Company's customers also could adversely affect the
Company's ability to obtain additional financing in the future, including its
ability to use securitization or other forms of structured finance. The sources
of such permanent funding take into account the credit performance of the
equipment and other loans previously financed by the Company in deciding whether
and on what terms to make new loans. In addition, the credit rating agencies and
insurers that are often involved in securitizations consider prior credit
performance in determining the rating to be given to the securities issued in
securitizations sponsored by the Company and whether and on what terms to insure
such securities. To date, all of the Company's medical receivable loans (as
opposed to its equipment loans) have been funded on a full recourse basis
whereby the Company is fully liable for any losses that are incurred.
Under the Company's wholesale loan origination program, the Company
purchases equipment loans from originators that generally do not have direct
access to the securitization market as a source of permanent funding for their
loans. The Company does not work directly with the borrowers at the origination
of these equipment loans and therefore is not directly involved in structuring
the credits, however the Company independently verifies credit information
supplied by the originator. Accordingly, the Company faces a somewhat higher
degree of risk when it acquires loans under the wholesale program on a wholesale
basis. During the twelve-month period ended June 30, 1997 and the six month
period ended December 31, 1997, loans purchased under the Wholesale Program
constituted 21% and 10%, respectively, of the total loans originated during such
periods. There can be no assurance that the Company will be able to grow this
business successfully or avoid the credit risks related to wholesale loan
origination.
INTEREST RATE RISK. When the Company borrows funds through warehouse
facilities, it is exposed to certain risks caused by interest rate fluctuations.
Although the Company's equipment loans are structured and permanently funded on
a fixed interest rate basis, it uses warehouse facilities until permanent
funding is obtained. The Company uses hedging techniques to protect its interest
rate margins during the period that warehouse facilities are used prior to an
anticipated securitization and sale because funds borrowed through warehouse
facilities are obtained on a floating interest rate basis. The Company uses
derivative financial instruments, such as forward rate agreements, forward
market sales or purchases of treasury securities, and interest rate swaps and
caps, to manage its interest rate risk. The derivatives are used to manage three
components of this risk; mismatches of the maturity of assets and liabilities on
the Company's balance sheet, hedging anticipated loan securitizations and sales,
and interest rate spread protection. There can be no assurance, however, that
the Company's hedging strategy or techniques will be effective, that the
profitability of the Company will not be adversely affected during any period of
changes in interest rates or that the costs of hedging will not exceed the
benefits. A substantial and sustained increase in interest rates could adversely
affect the Company's ability to originate loans. In certain circumstances, the
Company for a variety of reasons may retain for an indefinite period certain of
the equipment and other loans it originates. In such cases, the Company's
interest rate exposure may continue for a longer period of time.
SUBSTANTIAL LEVERAGE. The Company has substantial outstanding indebtedness
and is highly leveraged. As of December 31, 1997, the Company and its
consolidated subsidiaries had total debt of $557.2 million, of which $345.6
million was full recourse debt and $211.6 million was limited recourse debt. Of
the $557.2 million of total debt, $371.5 million was long-term debt and $185.7
million was short-term debt. The ability of the Company to repay its
indebtedness will depend upon future operating performance, which is subject to
the performance of the Company's loan portfolio, the success of the Company's
business strategy, prevailing economic conditions, levels of interest rates and
financial, business and other factors, many of which are beyond the Company's
control. The degree to which the Company is leveraged also may impair its
ability to obtain additional financing on acceptable terms.
ABILITY TO SERVICE DEBT; NEGATIVE CASH FLOWS AND CAPITAL NEEDS. Although
the Company believes that cash available from operations and financing
activities will be sufficient to enable it to make required interest payments on
the Debt Securities and its other debt obligations and other required payments,
there can be no assurance in this regard and the Company may encounter liquidity
problems which could affect its ability to
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meet such obligations while attempting to withstand competitive pressures or
adverse economic conditions. In such circumstances, the value of the Debt
Securities could be materially adversely affected.
In a securitization, the Company recognizes a gain on sale of the loans
securitized upon the closing of the securitization, but does not receive the
cash representing such gain until it receives the excess servicing, which in
general is payable over the actual life of the loans securitized. The Company
incurs significant expense in connection with a securitization and incurs both
current and deferred tax liabilities as a result of the gain on sale. Therefore,
the Company requires continued access to short- and long-term external sources
of cash to fund its operations.
The Company expects to continue to operate on a negative cash flow basis as
the volume of the Company's loan purchases and originations increases and its
securitization program grows. The Company's primary cash requirements include
the funding of: (i) loan originations and purchases pending their securitization
and sale; (ii) fees and expenses incurred in connection with the securitization
of loans; (iii) reserve account or overcollateralization requirements in
connection with the securitization and sale of the loans; (iv) ongoing
administrative and other operating expenses; and (v) interest and principal
payments under the Company's warehouse facilities and other indebtedness.
The Company's primary sources of liquidity in the future are expected to be
existing cash fundings under its warehouse facilities, sales of loans through
securitizations and other permanent fundings, the net proceeds from sales of
Debt Securities and further issuances of debt or equity.
The Company's primary sources of liquidity as described in the paragraph
above are expected to be sufficient to fund the Company's liquidity requirements
for at least the next 12 months if the Company's future operations are
consistent with management's current growth expectations. However, because the
Company expects to continue to operate on a negative cash flow basis for the
foreseeable future, it anticipates that it will need to effect debt or equity
financings regularly. The type, timing and terms of financing selected by the
Company will be dependent upon the Company's cash needs, the availability of
other financing sources and the prevailing conditions in the financial markets.
There can be no assurance that any such sources will be available to the Company
at any given time or as to the favorableness of the terms on which such sources
may be available.
HOLDING COMPANY STRUCTURE; LIMITATIONS ON ACCESS TO CASH FLOW OF OPERATING
COMPANIES; EFFECTIVE SUBORDINATION. The Debt Securities will be obligations
solely of the Company, which is a holding company with no business operations of
its own. The Company's assets consist primarily of its ownership interests in
its operating subsidiaries and all of the operations of the Company are
conducted through its subsidiaries, which are separate and distinct legal
entities and, unless otherwise provided in any Prospectus Supplement, have no
obligations, contingent or otherwise, to pay any amounts due pursuant to the
Debt Securities or to make any funds available to the Company to enable it to
make payments on the Debt Securities or meet working capital needs or other
liabilities of the Company, or for any other reason. In addition, to the extent
that any of the operating subsidiaries generates positive cash flow, the Company
may be unable to access such cash flow because certain of such entities are
currently or may become parties to credit or other borrowing agreements that
restrict or prohibit the payment of dividends or interest and principal on the
Debt Securities, and such entities are likely to continue to be subject to such
restrictions and prohibitions for the foreseeable future. The Debt Securities
also will be effectively subordinated to all existing and future indebtedness
and other liabilities of the Company's subsidiaries because the Company's right
to receive the assets of any such entities upon their liquidation, dissolution
or reorganization will be effectively subordinated to the claims of such
entities' creditors arising from the first priority perfected liens on those
assets granted under warehouse facilities and other loans. To the extent that
the Company is itself recognized as a creditor of any such subsidiary, the
claims of the Company would still be subordinated to the claims of such
entities' trade creditors as well as any indebtedness of such entity that is
senior in right of payment to the Company's claim or that is secured by the
assets of any such entity. As of December 31, 1997, the Company's subsidiaries
had total debt of $467.6 million, $236.0 million of which was full recourse and
$231.6 million of which was limited recourse.
POSSIBLE ADVERSE CONSEQUENCES FROM RECENT GROWTH. In the past three years,
the Company originated a significantly greater number of equipment and other
loans than it did in previous years. As a result of this
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rapid growth, the Company's loan portfolio grew from $405.8 million at June 30,
1995 to $662.3 million at December 31, 1997. In light of this growth, the
historical performance of the Company's loan portfolio, including rates of
credit loss, may be of limited relevance in predicting future loan portfolio
performance. Any credit or other problems associated with the large number of
equipment and other loans originated in the recent past will not become apparent
until sometime in the future. Further, while the Company's loan originations
have grown substantially in the past three years, its net interest margins have
declined during that same period due to a general decline in interest rates, the
Company's pricing strategy, the sale of higher-yielding loans to finance the
cost of its developing domestic and international business units and the
increase in the amount of lower-yielding credit enhancements due to the
increased number of securitizations. Periodic permanent financing which shifts
portions of the Company's borrowings from short-term facilities to more costly
long-term facilities increases the cost of funds. As a result, the Company's
historical results of operations may be of limited relevance to an investor
seeking to predict the Company's future performance.
ABILITY TO SUSTAIN GROWTH. To sustain the rates of growth it has achieved
in the last three years, the Company will be required to penetrate further the
markets for lower cost diagnostic imaging equipment and for other types of
medical equipment or devices such as lasers used in patient treatment. The
Company faces significant barriers to entry in the patient treatment device
market, which is more diverse than the diagnostic imaging market because of the
larger number of manufacturers and types of products and the greater price range
of those products. The Company has limited experience in the patient treatment
device market. In an effort to obtain access to new markets, the Company has
initiated operations internationally and has made investments in certain
emerging markets. The success and ultimate recovery of these investments is
dependent upon many factors including foreign regulation and business practices,
currency exchange regulations and currency fluctuations and the achievement of
management's planned objectives for these markets. There can be no assurance
that the Company will be able to penetrate and compete effectively in the
markets described above.
RISKS RELATED TO THE MEDICAL RECEIVABLE FINANCING BUSINESS. In July 1993,
the Company entered the medical receivable financing business and expects to
focus on this business as a part of the Company's growth strategy. The Company's
medical receivable financing business generally consists of providing loans to
healthcare providers that are secured by their receivables from payors such as
insurance companies, large self-insured companies and governmental programs and
by other collateral. While the Company expects to focus on this business as a
significant part of its growth strategy, there can be no assurance that the
Company will be able to expand this business successfully or avoid related
liabilities or losses. The Company has funded its medical receivable financial
business to date through the use of the Company's capital; $100 million in
securitizations; a rated warehouse facility of $30 million; and is in the
process of obtaining a committed $100 million revolving credit facility. The
growth of the Company's medical receivable financing business is dependent upon
the Company's ability to obtain additional funding facilities to finance medical
receivables loans.
While the medical receivable financing business shares certain
characteristics, including an overlapping customer base, with the Company's core
equipment financing business, there are many differences, including unique
risks. Healthcare providers could overstate the quality and characteristics of
their medical receivables, which the Company analyzes in determining the amount
of the line of credit to be secured by such receivables. After the Company has
established or funded a line of credit, the healthcare providers could change
their billing and collection systems, accounting systems or patient records in a
way that could adversely affect the Company's ability to monitor the quality
and/or performance of the related medical receivables. There are technical legal
issues associated with creating and maintaining perfected security interests in
medical receivables, specifically those generated by Medicaid and Medicare
claims. Payors may make payments directly to healthcare providers that have the
effect (intentionally or otherwise) of circumventing the Company's rights in and
access to such payments. Payors may attempt to offset their payments to the
Company against debts owed to the payors by the healthcare providers. In
addition, as a lender whose position is secured by receivables, the Company is
likely to have less leverage in collecting outstanding receivables in the event
of a borrower's insolvency than a lender whose position is secured by medical
equipment that the borrower needs to run its business. A borrower that receives
medical receivables loans from the Company and
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defaults on obligations secured by such receivables may require additional
loans, or modifications to the terms of existing loans, in order to continue
operations and repay outstanding loans. The Company may have a conflict of
interest when it acts as servicer for an equipment-based securitization and
originates medical receivables loans to borrowers whose equipment loans have
been securitized. The Company's efforts to develop suitable sources of funding
for its medical receivable financing business through securitization or other
structured finance transactions may be constrained or hindered due to the fact
that the use of structured finance transactions to fund medical receivables is a
relatively new process. While the Company believes it has structured its credit
policies and lending practices to take into account these and other factors,
there can be no assurance the Company will not sustain credit losses in
connection with its medical receivable financing business or that the medical
receivable financing business will meet the Company's growth expectations.
MEDICAL EQUIPMENT MARKET. The demand for the Company's equipment financing
services is affected by numerous factors beyond the control of the Company.
These factors include general economic conditions, including the effects of
recession or inflation, and fluctuations in supply and demand for various types
of sophisticated medical equipment resulting from, among other things,
technological and economic obsolescence and government regulation. In addition,
the demand for sophisticated medical equipment also may be negatively affected
by reductions in the amount of reimbursement to healthcare providers for their
services from third-party payors such as insurance companies, large self-insured
companies and government programs, and the increased use of managed healthcare
plans that often restrict the use of certain types of high technology medical
equipment. At December 31, 1997, financing for purchases of magnetic resonance
imaging ("MRI") machines accounted for approximately 38% (by dollar volume) of
the total loans originated by the Company. Any substantial decrease in the
Company's loan originations for the purchase of MRI machines could have a
material adverse effect on the Company.
HEALTHCARE REFORM. During the past half decade, large U.S. corporations
and U.S. consumers of healthcare services have substantially increased their use
of managed healthcare plans such as HMOs and PPOs. This development has
increased the purchasing power of those plans, which in turn have used that
power to lower the amounts they pay for healthcare services. Since 1993,
numerous proposals have been presented to Congress to restructure the U.S.
healthcare system. The principal features of these proposals are to provide
universal access to healthcare services and to achieve overall cost containment.
To date, none of the proposals initiated at the federal government level have
been enacted. In the private sector, however, cost containment initiatives have
continued. Certain aspects of these actual and proposed cost containment
initiatives, particularly plans to eliminate payment for duplicative procedures,
may reduce the overall demand for the types of medical equipment financed by the
Company. Declining reimbursement for medical services also could cause
hospitals, physician groups and other healthcare providers, which form a
significant portion of the Company's customer base, to experience cash flow
problems. This in turn could negatively impact their ability to meet their
financial obligations to the Company and/or reduce their future equipment
acquisitions which could adversely affect the Company. The Company believes that
the general movement toward a managed healthcare system in the U.S. will
materially reduce the demand for medical equipment and for related financing.
DEPENDENCE ON REFERRALS AND SUPPORT FROM EQUIPMENT MANUFACTURERS. The
Company obtains a significant amount of its equipment financing business through
referrals from manufacturers of diagnostic imaging equipment and other
manufacturers of medical equipment it finances. In addition, these manufacturers
occasionally provide credit support for or assume first loss positions with
respect to equipment financing they refer to the Company. These manufacturers
are not contractually obligated to refer their customers to the Company for
equipment financing or to provide credit support or assume first loss positions
in connection with their referrals. There is no assurance that these
manufacturers will continue to refer equipment financing opportunities to the
Company or to provide credit support or assume first loss positions. If for any
reason the Company were no longer to benefit from these referrals or related
credit support and assumptions of first loss positions, its equipment financing
business would be materially adversely affected.
COMPETITION. The business of financing sophisticated medical equipment is
highly competitive. The Company competes with equipment manufacturers that sell
and finance sales of their own equipment and finance subsidiaries of national
and regional commercial banks and equipment leasing and financing
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<PAGE> 10
companies. Many of the Company's competitors have significantly greater
financial and marketing resources than the Company. In addition, the competition
in the new markets recently targeted by the Company, specifically the patient
treatment device financing market and medical receivable financing market, may
be greater than the levels of competition historically experienced by the
Company.
The Company believes that increased equipment loan originations during the
past three years resulted, in part, from a decrease in the number of competitors
in the higher cost medical equipment financing market and the Company's high
level of penetration in this market. There can be no assurance that new
competitive providers of financing will not enter the medical equipment
financing market in the future. To meet its long-term growth objectives, the
Company must penetrate further its targeted markets for lower cost medical
equipment and medical receivable financing businesses. Such penetration may
require the Company to reduce its margins to be competitive in the lower cost
medical equipment and medical receivable financing businesses. In addition,
there can be no assurance that the Company will sustain the same level of
equipment loan originations in future periods as during the past three years or
that it will be able to meet its long-term growth objectives.
DEPENDENCE UPON KEY PERSONNEL. The ability of the Company to successfully
continue its existing financing business, to expand into its targeted markets
and to develop its newer businesses depends upon the ability of the Company to
retain the services of its key management personnel, including Michael A.
O'Hanlon, the Company's President and Chief Executive Officer and Steven R.
Garfinkel, the Company's Executive Vice President and Chief Financial Officer.
The loss of any of these individuals or an inability to attract and maintain
additional qualified personnel could adversely affect the Company. There can be
no assurance that the Company will be able to retain its existing management
personnel or to attract additional qualified personnel.
RISKS ASSOCIATED WITH DILUTION. To the extent the Company issues Common
Stock, the ownership interest of existing stockholders would be diluted. Such
dilution may be substantial.
YEAR 2000 CONCERNS. The Company believes, based on discussions with its
current systems vendors, that its software applications and operational programs
will properly recognize calendar dates beginning in the Year 2000. In addition,
the Company is discussing with its customers and suppliers the possibility of
any interface difficulties relating to the Year 2000 which may affect the
Company. To date, no significant concerns have been identified, however, there
can be no assurance that there will not be any Year 2000-related operating
problems or expenses that will arise with the Company's computer systems and
software or in connection with the Company's interface with the computer systems
and software of its vendors and customers and suppliers.
FORWARD-LOOKING INFORMATION. This Prospectus contains and any amendment or
supplement hereto may contain various forward-looking statements based on
assumptions made by and information currently available to management. When used
in this Prospectus and any amendment or supplement, the words "expect,"
"believe," "estimate," "project" and similar expressions are intended to
identify forward looking statements. The Company wishes to ensure that such
statements are accompanied by meaningful cautionary statements pursuant to the
safe harbor established in the Private Securities Litigation Reform Act of 1995.
Such statements are subject to certain risks, uncertainties and assumptions
including those identified in this section. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those expected, believed, estimated or
projected. Additionally, new risk factors may emerge from time to time and
management cannot predict such risk factors, nor can it assess the impact, if
any, of such risk factors on the Company's business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those projected in any forward-looking statements.
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<PAGE> 11
THE COMPANY
DVI is an independent specialty finance company that conducts a medical
equipment finance business and a related medical receivables finance business.
As of December 31, 1997, the Company's total assets and shareholder's equity
were $726.3 million and $106.3 million, respectively.
The Company finances the acquisition of diagnostic imaging and other types
of sophisticated medical equipment used by outpatient healthcare providers,
medical imaging centers, groups of physicians, integrated healthcare delivery
networks and hospitals. The Company's equipment finance business operates by (i)
providing financing directly to end users of equipment; (ii) providing finance
programs for vendors of diagnostic and patient treatment devices; and (iii)
purchasing medical equipment loans and leases originated by regional finance
companies ("Originators") through the Company's wholesale loan purchase program
(the "Wholesale Program"). The Company also provides lines of credit to a wide
variety of healthcare providers, many of which are also equipment finance
customers. Substantially all of the lines of credit are collateralized by third
party medical receivables due from Medicare, Medicaid, HMO, PPOs and commercial
insurance companies. By effectively and efficiently servicing the equipment
financing needs of healthcare providers and at the same time building productive
relationships with medical equipment manufacturers and vendors seeking to
arrange financing for their customers, the Company has established a niche
leadership position among independent finance companies serving the medical
industry.
The Company is a Delaware corporation and conducts its business through
operating subsidiaries. The principal operating subsidiaries are DVI Financial
Services Inc. ("DVI Financial Services") and DVI Business Credit Corporation
("DVI Business Credit"). The Company conducts securitizations through indirect
wholly-owned subsidiaries. The Company also conducts other structured financings
through its operating subsidiaries. The borrowers under the Company's various
warehouse credit facilities are DVI Financial Services or DVI Business Credit.
Except as the context otherwise requires, the term "Company" refers to DVI, Inc.
and its wholly owned subsidiaries.
The executive offices of the Company are located at 500 Hyde Park,
Doylestown, Pennsylvania 18901 (Telephone: 215-345-6600).
RATIO OF EARNINGS TO FIXED CHARGES
The following are the ratios of consolidated earnings to fixed charges for
the Company for each of the fiscal years ended June 30, 1993, 1994, 1995, 1996
and 1997 and for the six months ended December 31, 1996 and 1997.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FISCAL YEAR ENDED JUNE 30, DECEMBER 31,
------------------------------------ ------------
1993 1994 1995 1996 1997 1996 1997
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio:................................... 1.89 1.49 1.31 1.47 1.41 1.42 1.42
</TABLE>
For purposes of computing this ratio, earnings consist of earnings from
continuing operations before provision for income taxes, equity in net loss of
investees and discontinued operations. Fixed charges are interest expense.
USE OF PROCEEDS
Except as may otherwise be set forth in the applicable Prospectus
Supplement, the Company intends to use the net proceeds from the sale of the
Securities offered hereby for general corporate purposes, which may include the
continued expansion and diversification of its financing activities, both by
internal growth and by acquisition; repayment of any outstanding indebtedness of
the Company or its subsidiaries; or for such other uses as may be set forth in a
Prospectus Supplement. Pending any of the foregoing applications, the net
proceeds may be invested temporarily in short-term, interest bearing securities.
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DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 25,000,000 shares
of Common Stock and 100,000 shares of Preferred Stock. As of January 30, 1998,
there were 10,953,384 shares of Common Stock issued and outstanding. No shares
of Preferred Stock are outstanding.
The description of the capital stock set forth below does not purport to be
complete and is qualified in its entirety by reference to the Company's
certificate of incorporation, as amended (the "Certificate of Incorporation"),
and bylaws, as amended (the "Bylaws"). All material terms of the Common Stock
and the Preferred Stock, except those disclosed in the applicable Prospectus
Supplement, are described in this Prospectus.
COMMON STOCK
Holders of shares of Common Stock are entitled to one vote per share on
matters to be voted upon by the stockholders of the Company. Holders of shares
of Common Stock do not have cumulative voting rights; therefore, the holders of
more than 50% of the Common Stock will have the ability to elect all of the
Company's directors. Holders of shares of Common Stock will be entitled to
receive dividends when, as and if declared by the Board of Directors and to
share ratably in the assets of the Company legally available for distribution to
its stockholders in the event of the liquidation, dissolution or winding up of
the Company, in each case subject to the rights of the holders of any Preferred
Stock issued by the Company. Holders of Common Stock have no preemptive,
subscription, redemption or conversion rights.
PREFERRED STOCK
The following description of the Preferred Stock sets forth certain general
terms and provisions of the Preferred Stock to which any Prospectus Supplement
may relate. The statements below describing the Preferred Stock are in all
respects subject to and qualified in their entirety by reference to the
applicable provisions of the Certificate of Incorporation and Bylaws and any
applicable Certificate of Designations designating the terms of a series of
Preferred Stock (a "Certificate of Designations").
Prior to issuance of shares of each series, the Board of Directors is
required by the Delaware General Corporation Law ("DGCL") and the Certificate of
Incorporation to fix for each series the terms, preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends or other
distributions, qualifications and terms or conditions of redemption of such
shares as may be permitted by Delaware law. Such rights, powers, restrictions
and limitations could include the right to receive specified dividend payments
and payments on liquidation prior to any such payments to holders of Common
Stock or other capital stock of the Company ranking junior to the Preferred
Stock. The shares of Preferred Stock will be, when issued, fully paid and
nonassessable.
The Board of Directors could authorize the issuance of shares of Preferred
Stock with terms and conditions that could have the effect of discouraging a
takeover or other transaction that holders of Common Stock might believe to be
in their best interests or in which holders of some, or a majority, of the
shares of Common Stock might receive a premium for their shares over the then
market price of such shares of Common Stock.
Reference is made to the Prospectus Supplement relating to the Preferred
Stock offered thereby for specific terms, including: (i) the title and stated
value of such Preferred Stock; (ii) the number of shares of such Preferred Stock
offered, the liquidation preference per share and the offering price of such
Preferred Stock; (iii) the dividend rate(s), period(s) and/or payment date(s) or
method(s) of calculation thereof applicable to such Preferred Stock; (iv) the
date from which dividends on such Preferred Stock shall accumulate, if
applicable; (v) the procedures for any auction and remarketing, if any, for such
Preferred Stock; (vi) the provision for a sinking fund, if any, for such
Preferred Stock; (vii) the provision for redemption, if applicable, of such
Preferred Stock; (viii) any listing of such Preferred Stock on any national
securities exchange; (ix) the terms and conditions, if applicable, upon which
such Preferred Stock will be convertible into Common Stock, including the
conversion price (or manner of calculation thereof); (x) any
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<PAGE> 13
other specific terms, preferences, rights, limitations or restrictions of such
Preferred Stock; (xi) a discussion of federal income tax considerations
applicable to such Preferred Stock; (xii) the relative ranking and preference of
such Preferred Stock as to dividend rights and rights upon liquidation,
dissolution or winding up of the affairs of the Company; and (xiii) any
limitations on issuance of any series of Preferred Stock ranking senior to or on
a parity with such series of Preferred Stock as to dividend rights and rights
upon liquidation, dissolution or winding up of the affairs of the Company.
As described under "Description of Depositary Shares," the Company may, at
its option, elect to offer Depositary Shares evidenced by depositary receipts
("Depositary Receipts"), each representing an interest (to be specified in the
Prospectus Supplement relating to the particular series of the Preferred Stock)
in a share of the particular series of Preferred Stock issued and deposited with
a Preferred Stock Depositary (as defined below).
DESCRIPTION OF DEPOSITARY SHARES
The description set forth below, and in any applicable Prospectus
Supplement, of certain provisions of the Deposit Agreement (as defined below)
and of the Depositary Shares and Depositary Receipts summarizes the material
terms of the Deposit Agreement and of the Depositary Shares and Depositary
Receipts and is qualified in its entirety by reference to the form of Deposit
Agreement and form of Depositary Receipts relating to each series of the
Preferred Stock.
GENERAL
The Company may, at its option, elect to have shares of Preferred Stock be
represented by Depositary Shares. The shares of any series of the Preferred
Stock underlying the Depositary Shares will be deposited under a separate
deposit agreement (the "Deposit Agreement") between the Company and a bank or
trust company (the "Preferred Stock Depositary") selected by the Company. The
Prospectus Supplement relating to a series of Depositary Shares will set forth
the name and address of the Preferred Stock Depositary. Subject to the terms of
the Deposit Agreement, each owner of a Depositary Share will be entitled,
proportionately, to all the rights, preferences and privileges of the Preferred
Stock represented thereby (including dividend, voting, redemption, conversion,
exchange and liquidation rights, if any).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement, each of which will represent the applicable
interest in a number of shares of a particular series of the Preferred Stock
described in the applicable Prospectus Supplement.
A holder of Depositary Shares will be entitled to receive the shares of
Preferred Stock (but only in whole shares of Preferred Stock) underlying such
Depositary Shares. If the Depositary Receipts delivered by the holder evidence a
number of Depositary Shares in excess of the whole number of shares of Preferred
Stock to be withdrawn, the Depositary will deliver to such holder at the same
time a new Depositary Receipt evidencing such excess number of Depositary
Shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions, if any, with respect to the Preferred Stock to the record
holders of Depositary Receipts in proportion, insofar as possible, to the number
of Depositary Shares owned by such holders. In the event of a distribution other
than in cash with respect to the Preferred Stock, the Preferred Stock Depositary
will distribute property received by it to the record holders of Depositary
Receipts in proportion, insofar as possible, to the number of Depositary Shares
owned by such holders, unless the Preferred Stock Depositary determines that it
is not feasible to make such distribution in which case the Preferred Stock
Depositary may, with the approval of the Company, adopt such method as it deems
equitable and practicable for the purpose of effecting such distribution,
including sale (public or private) of such property and distribution of the net
proceeds from such sale to such holders.
The amount so distributed in any of the foregoing cases will be reduced by
any amount required to be withheld by the Company or the Preferred Stock
Depositary on account of taxes.
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CONVERSION AND EXCHANGE
If any Preferred Stock underlying the Depositary Shares is subject to
provisions relating to its conversion or exchange as set forth in the Prospectus
Supplement relating thereto, each record holder of Depositary Shares will have
the right or obligation to convert or exchange such Depositary Shares pursuant
to the terms thereof.
REDEMPTION OF DEPOSITARY SHARES
If Preferred Stock underlying the Depositary Shares is subject to
redemption, the Depositary Shares will be redeemed from the proceeds received by
the Preferred Stock Depositary resulting from the redemption, in whole or in
part, of the Preferred Stock held by the Preferred Stock Depositary. The
redemption price per Depositary Share will be equal to the aggregate redemption
price payable with respect to the number of shares of Preferred Stock underlying
the Depositary Shares. Whenever the Company redeems Preferred Stock from the
Preferred Stock Depositary, the Preferred Stock Depositary will redeem as of the
same redemption date a proportionate number of Depositary Shares representing
the shares of Preferred Stock that were redeemed. If less than all of the
Depositary Shares are to be redeemed, the Depositary Shares to be redeemed will
be selected by lot or pro rata, as may be determined by the Company.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
redemption price upon such redemption. Any funds deposited by the Company with
the Preferred Stock Depositary for any Depositary Shares which the holders
thereof fail to redeem shall be returned to the Company after a period of two
years from the date such funds are so deposited.
VOTING
Upon receipt of notice of any meeting at which the holders of any shares of
Preferred Stock underlying the Depositary Shares are entitled to vote, the
Preferred Stock Depositary will mail the information contained in such notice to
the record holders of the Depositary Receipts. Each record holder of such
Depositary Receipts on the record date (which will be the same date as the
record date for the Preferred Stock) will be entitled to instruct the Preferred
Stock Depositary as to the exercise of the voting rights pertaining to the
number of shares of Preferred Stock underlying such holder's Depositary Shares.
The Preferred Stock Depositary will endeavor, insofar as practicable, to vote
the number of shares of Preferred Stock underlying such Depositary Shares in
accordance with such instructions, and the Company will agree to take all
reasonable action which may be deemed necessary by the Preferred Stock
Depositary in order to enable the Preferred Stock Depositary to do so. The
Preferred Stock Depositary will abstain from voting the Preferred Stock to the
extent it does not receive specific written instructions from holders of
Depositary Receipts representing the Preferred Stock.
RECORD DATE
Whenever (i) any cash dividend or other cash distribution shall become
payable, any distribution other than cash shall be made, or any rights,
preferences or privileges shall be offered with respect to the Preferred Stock
or (ii) the Preferred Stock Depositary shall receive notice of any meeting at
which holders of Preferred Stock are entitled to vote or of which holders of
Preferred Stock are entitled to notice, or of the mandatory conversion of or any
election on the part of the Company to call for the redemption of any Preferred
Stock, the Preferred Stock Depositary shall in each such instance fix a record
date (which shall be the same as the record date for the Preferred Stock) for
the determination of the holders of Depositary Receipts (x) who shall be
entitled to receive such dividend, distribution, rights, preferences or
privileges or the net proceeds of the sale thereof or (y) who shall be entitled
to give instructions for the exercise of voting rights at any such meeting or to
receive notice of such meeting or of such redemption or conversion, subject to
the provisions of the Deposit Agreement.
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AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt and any provision of the Deposit Agreement
may at any time be amended by agreement between the Company and the Preferred
Stock Depositary. However, any amendment which imposes or increases any fees,
taxes or other charges payable by the holders of Depositary Receipts (other than
taxes and other governmental charges, fees and other expenses payable by such
holders as stated under "Charges of Preferred Stock Depositary"), or which
otherwise prejudices any substantial existing right of holders of Depositary
Receipts, will not take effect as to outstanding Depositary Receipts until the
expiration of 90 days after notice of such amendment has been mailed to the
record holders of outstanding Depositary Receipts.
Whenever so directed by the Company, the Preferred Stock Depositary will
terminate the Deposit Agreement by mailing notice of such termination to the
record holders of all Depositary Receipts then outstanding at least 30 days
prior to the date fixed in such notice for such termination. The Preferred Stock
Depositary may likewise terminate the Deposit Agreement if at any time 45 days
shall have expired after the Preferred Stock Depositary shall have delivered to
the Company a written notice of its election to resign and a successor
depositary shall not have been appointed and accepted its appointment. If any
Depositary Receipts remain outstanding after the date of termination, the
Preferred Stock Depositary thereafter will discontinue the transfer of
Depositary Receipts, will suspend the distribution of dividends to the holders
thereof, and will not give any further notices (other than notice of such
termination) or perform any further acts under the Deposit Agreement except as
provided below and except that the Preferred Stock Depositary will continue (i)
to collect dividends on the Preferred Stock and any other distributions with
respect thereto and (ii) to deliver the Preferred Stock together with such
dividends and distributions and the net proceeds of any sales of rights,
preferences, privileges or other property without liability for interest
thereon, in exchange for Depositary Receipts surrendered. At any time after the
expiration of two years from the date of termination, the Preferred Stock
Depositary may sell the Preferred Stock then held by it at public or private
sales, at such place or places and upon such terms as it deems proper and may
thereafter hold the net proceeds of any such sale, together with any money and
other property then held by it, without liability for interest thereon, for the
pro rata benefit of the holders of Depositary Receipts which have not been
surrendered.
CHARGES OF PREFERRED STOCK DEPOSITARY
The Company will pay all charges of the Preferred Stock Depositary
including charges in connection with the initial deposit of the Preferred Stock,
the initial issuance of the Depositary Receipts, the distribution of information
to the holders of Depositary Receipts with respect to matters on which Preferred
Stock is entitled to vote, withdrawals of the Preferred Stock by the holders of
Depositary Receipts or redemption or conversion of the Preferred Stock, except
for taxes (including transfer taxes, if any) and other governmental charges and
such other charges as are expressly provided in the Deposit Agreement to be at
the expense of holders of Depositary Receipts or persons depositing Preferred
Stock.
MISCELLANEOUS
The Preferred Stock Depositary will make available for inspection by
holders of Depositary Receipts at its corporate office and its New York office,
all reports and communications from the Company which are delivered to the
Preferred Stock Depositary as the holder of Preferred Stock.
Neither the Preferred Stock Depositary nor the Company will be liable if it
is prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the Deposit Agreement. The obligations of the
Preferred Stock Depositary under the Deposit Agreement will be limited to
performing its duties thereunder without negligence or bad faith. The
obligations of the Company under the Deposit Agreement will be limited to
performing its duties thereunder in good faith. Neither the Company nor the
Preferred Stock Depositary is obligated to prosecute or defend any legal
proceeding in respect of any Depositary Shares or Preferred Stock unless
satisfactory indemnity is furnished. The Company and the Preferred Stock
Depositary are entitled to rely upon advice of or information from counsel,
accountants or other persons believed to be competent and on documents believed
to be genuine.
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The Preferred Stock Depositary may resign at any time or be removed by the
Company, effective upon the acceptance by its successor of its appointment;
provided, that if the successor Preferred Stock Depositary has not been
appointed or accepted such appointment within 45 days after the Preferred Stock
Depositary has delivered a notice of election to resign to the Company, the
Preferred Stock Depositary may terminate the Deposit Agreement. See "Amendment
and Termination of Deposit Agreement" above.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities may be issued from time to time in one or more series.
The particular terms of each series of Debt Securities offered by any Prospectus
Supplement will be described therein. The Debt Securities will be issued under
the Indenture (the "Indenture"), between the Company and First Trust National
Association, as trustee (the "Trustee"). The Indenture is subject to and
governed by the Trust Indenture Act of 1939, as amended.
The statements herein relating to the Debt Securities and the Indenture are
summaries and are subject to the detailed provisions of the Indenture. The
following summaries of certain provisions of the Indenture do not purport to be
complete and, where reference is made to particular provisions of the Indenture,
such provisions, including the definitions of certain terms, are incorporated by
reference as a part of such summaries or terms, which are qualified in their
entirety by such reference and with respect to any particular Debt Securities,
to the description thereof in the Prospectus Supplement related thereto. The
definitions of certain capitalized terms used in the following summary are set
forth below under "Certain Definitions."
GENERAL
The Indenture does not limit the aggregate amount of Debt Securities which
may be issued thereunder, and Debt Securities may be issued thereunder from time
to time in separate series up to the aggregate amount from time to time
authorized by the Company for each series. The Debt Securities when issued will
be direct, unsecured obligations of the Company and will rank equally with all
other unsecured and unsubordinated indebtedness of the Company.
The applicable Prospectus Supplement will describe the following terms of
the series of Debt Securities in respect of which this Prospectus is being
delivered: (1) the title of such Debt Securities; (2) any limit on the aggregate
principal amount of such Debt Securities; (3) the person to whom any interest on
any Debt Security of the series shall be payable if other than the person in
whose name the Debt Security is registered on the regular record date; (4) the
date or dates on which such Debt Securities will mature; (5) the rate or rates
of interest, if any, or the method of calculation thereof, which such Debt
Securities will bear, the date or dates from which any such interest will
accrue, the interest payment dates on which any such interest on such Debt
Securities will be payable and the regular record date for any interest payable
on any interest payment date; (6) the place or places where the principal of and
any premium and interest on such Debt Securities will be payable; (7) the period
or periods within which, the events upon the occurrence of which, and the price
or prices at which, such Debt Securities may, pursuant to any optional or
mandatory provisions, be redeemed or purchased, in whole or in part, by the
Company and any terms and conditions relevant thereto; (8) the obligations of
the Company, if any, to redeem or repurchase such Debt Securities at the option
of the Holders; (9) the denominations in which any such Debt Securities will be
issuable, if other than denominations of $1,000 and any integral multiple
thereof; (10) any index or formula used to determine the amount of payments of
principal of and any premium and interest on such Debt Securities; (11) the
currency, currencies or currency unit or units of payment of principal of and
any premium and interest on such Debt Securities if other than U.S. dollars;
(12) if the principal of, or premium, if any, or interest on such Debt
Securities is to be payable, at the election of the Company or a holder thereof,
in one or more currencies or currency units other than that or those in which
such Debt Securities are stated to be payable, the currency, currencies or
currency units in which payment of the principal of and any premium and interest
on Debt Securities of such series as to which such election is made shall be
payable, and the periods within which and the terms and conditions upon which
such election is to be made; (13) if other than the principal amount thereof,
the portion of the principal amount of such Debt Securities which will be
payable upon acceleration of the maturity thereof;
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(14) if the principal amount of any Debt Securities which will be payable at the
maturity thereof will not be determinable as of any date prior to such maturity,
the amount which will be deemed to be the outstanding principal amount of such
Debt Securities; (5) the applicability of any provisions described under
"-- Defeasance or Covenant Defeasance of Indenture"; (16) whether any of such
Debt Securities are to be issuable in permanent global form ("Global Security")
and, if so, the terms and conditions, if any, upon which interests in such Debt
Securities in global form may be exchanged, in whole or in part, for the
individual Debt Securities represented thereby; (17) the applicability of, and
modifications to, any provisions described under "Events of Default" and any
additional Event of Default applicable thereto; (18) any covenants applicable to
such Debt Securities in addition to, or in lieu of, the covenants described
under "-- Certain Covenants of the Company"; (19) whether such Debt Securities
are secured; and (20) any other terms of such Debt Securities not inconsistent
with the provisions of the Indenture.
Debt Securities may be issued at a discount from their principal amount.
United States Federal income tax considerations and other special considerations
applicable to any such original issue discount Debt Securities will be described
in the applicable Prospectus Supplement.
If the purchase price of any of the Debt Securities is denominated in a
foreign currency or currencies or a foreign currency unit or units or if the
principal of and any premium and interest on any series of Debt Securities is
payable in a foreign currency or currencies or a foreign currency unit or units,
the restrictions, elections, general tax considerations, specific terms and
other information with respect to such issue of Debt Securities will be set
forth in the applicable Prospectus Supplement.
FORM, REGISTRATION, TRANSFER AND PAYMENT
Unless otherwise indicated in the applicable Prospectus Supplement, the
Debt Securities will be issued only in fully registered form in denominations of
$1,000 or integral multiples thereof. Unless otherwise indicated in the
applicable Prospectus Supplement, payment of principal, premium, if any, and
interest on the Debt Securities will be payable, and the transfer of Debt
Securities will be registerable, at the office or agency of the Company
maintained for such purposes and at any other office or agency maintained for
such purpose. No service charge will be made for any registration of transfer of
the Debt Securities, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge imposed in connection therewith.
All monies paid by the Company to a Paying Agent (as defined in the
Indenture) for the payment of principal of and any premium or interest on any
Debt Security which remain unclaimed for two years after such principal, premium
or interest has become due and payable may be repaid to the Company and
thereafter the Holder (as defined in the Indenture) of such Debt Security may
look only to the Company for payment thereof.
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a Depositary ("Depositary") or its nominee identified in the applicable
Prospectus Supplement. In such a case, one or more Global Securities will be
issued in a denomination or aggregate denomination equal to the portion of the
aggregate principal amount of outstanding Debt Securities of the series to be
represented by such Global Security or Global Securities. Unless and until it is
exchanged in whole or in part for Debt Securities in registered form, a Global
Security may not be registered for transfer or exchange except as a whole by the
Depositary for such Global Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any nominee to a successor Depositary or a
nominee of such successor Depositary and except in the circumstances described
in the applicable Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
will be described in the applicable Prospectus Supplement. The Company expects
that the following provisions will apply to depositary arrangements.
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Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited with
or on behalf of a Depositary will be represented by a Global Security registered
in the name of such Depositary or its nominee. Upon the issuance of such Global
Security, and the deposit of such Global Security with or on behalf of the
Depositary for such Global Security, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Debt Securities represented by such Global Security to the accounts of
institutions that have accounts with such Depositary or its nominee
("participants"). The accounts to be credited will be designated by the
underwriters of, or agents for, such Debt Securities or by the Company, if such
Debt Securities are offered and sold directly by the Company. Ownership of
beneficial interests in such Global Security will be limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interests by participants in such Global Security will be shown on, and the
transfer of that ownership interest will be effected only through, records
maintained by the Depositary or its nominee for such Global Security. Ownership
of beneficial interests in such Global Security by persons that hold through
participants will be shown on, and the transfer of such ownership interests will
be effected only through, records maintained by such participant. The laws of
some jurisdictions require that certain purchasers of securities take physical
delivery of such securities in certificated form. The foregoing limitations and
such laws may impair the ability to transfer beneficial interests in such Global
Securities.
Debt Securities will be issued in fully registered, certificated form
("Definitive Securities") to holders or their nominees, rather than to the
Depositary or its nominee, only if (i) the Depositary advises the applicable
Trustee in writing that the Depositary is no longer willing or able to discharge
properly its responsibilities as depositary with respect to such Debt Securities
and it is unable to locate a qualified successor, (ii) the Company, at its
option, elects to terminate the book-entry system or (iii) after the occurrence
of an Event of Default with respect to such Debt Securities, a Holder of Debt
Securities advises the applicable Trustee in writing that it wishes to receive a
Definitive Security.
Upon the occurrence of any event described in the immediately preceding
paragraph, the applicable Trustee will be required to notify all applicable
holders through the Depositary and its participants of the availability of
Definitive Securities. Upon surrender by the Depositary of the definitive
certificates representing the corresponding Debt Securities and receipt of
instructions for re-registration, the applicable Trustee will reissue such Debt
Securities as Definitive Securities to such holders.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or nominee will be
considered the sole owner or holder of the Securities represented by such Global
Security for all purposes under the Indenture. Unless otherwise specified in the
applicable Prospectus Supplement, owners of beneficial interests in such Global
Security will not be entitled to have Debt Securities of the series represented
by such Global Security registered in their names, will not receive or be
entitled to receive physical delivery of Debt Securities of such series in
certificated form and will not be considered the holders thereof for any
purposes under the Indenture. Accordingly, each person owning a beneficial
interest in such Global Security must rely on the procedures of the Depositary
and, if such person is not a participant, on the procedures of the participant
through which such person owns its interest, to exercise any rights of a holder
under the Indenture. The Company understands that under existing industry
practices, if the Company requests any action of holders or an owner of a
beneficial interest in such Global Security desires to give any notice or take
any action a holder is entitled to give or take under the Indenture, the
Depositary would authorize the participants to give such notice or take such
action, and participants would authorize beneficial owners owning through such
participants to give such notice or take such action or would otherwise act upon
the instructions of beneficial owners owning through them.
Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement.
CERTAIN DEFINITIONS
"Capital Stock" of any person means any and all shares, interests,
partnership interests, participations, rights in or other equivalents (however
designated) of such person's equity interest (however designated).
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"Capitalized Lease Obligation" means, with respect to any person, an
obligation incurred or assumed under or in connection with any capital lease of
real or personal property that, an obligation incurred or assumed under or in
connection with any capital lease of real or personal property that, in
accordance with GAAP, has been recorded as a capitalized lease.
"Closing Date" means, with respect to any Debt Securities, the date on
which such Debt Securities are originally issued under the Indenture.
"Consolidated Net Worth" means, at any date of determination, stockholders'
equity of the Company and its Restricted Subsidiaries as set forth on the most
recently available quarterly or annual consolidated balance sheet of the Company
and its Restricted Subsidiaries, less any amounts attributable to Disqualified
Stock or any equity security convertible into or exchangeable for Debt, the cost
of treasury stock and the principal amount of any promissory notes receivable
from the sale of the Capital Stock of the Company or any of its Restricted
Subsidiaries, each item to be determined in conformity with GAAP (excluding the
effects of foreign currency adjustments under Financial Accounting Standards
Board Statement of Financial Accounting Standards No. 52).
"Debt" means (without duplication), with respect to any person, whether
recourse is to all or a portion of the assets of such person and whether or not
contingent (a) every obligation of such person for money borrowed, (b) every
obligation of such person evidenced by bonds, debentures, notes or other similar
instruments, (c) every reimbursement obligation of such person with respect to
letters of credit, bankers' acceptances or similar facilities issued for the
account of such person, (d) every obligation of such person issued or assumed as
the deferred purchase price of property or services, (e) Capitalized Lease
Obligations, (f) all Disqualified Stock of such person valued at its maximum
fixed repurchase price, plus accrued and unpaid dividends, (g) all obligations
of such person under or in respect of Hedging Agreements, and (h) every
obligation of the type referred to in clauses (a) through (g) of another person
and all dividends of another person the payment of which, in either case, such
person has guaranteed. For purposes of this definition, the "maximum fixed
repurchase price" of any Disqualified Stock that does not have a fixed
repurchase price will be calculated in accordance with the terms of such
Disqualified stock as if such Disqualified Stock were repurchased on any date on
which Debt is required to be determined pursuant to the Indenture, and if such
price is based upon, or measured by, the fair market value of such Disqualified
Stock, such fair market value will be determined in good faith by the board of
directors of the issuer of such Disqualified Stock. Notwithstanding the
foregoing, trade accounts payable and accrued liabilities arising in the
ordinary course of business and any liability for federal, state or local taxes
or other taxes owed by such person will not be considered Debt for purposes of
this definition.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Stock" means any class or series of Capital Stock that,
either by its terms, by the terms of any security into which it is convertible
or exchangeable or by contract or otherwise (i) is or upon the happening of any
event or passage of time would be, required to be redeemed prior to the final
Stated Maturity of the Notes, (ii) is redeemable at the option of the holder
thereof at any time prior to such final Stated Maturity or (iii) at the option
of the holder thereof, is convertible into or exchangeable for debt securities
at any time prior to such final Stated Maturity.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, that
are in effect on the Closing Date.
"Hedging Obligations" means the obligations of any person under (i)
interest rate swap agreements, interest rate cap agreements and interest rate
collar agreements and (ii) other agreements or arrangements designed to protect
such person against fluctuations in interest rates or the value of foreign
currencies.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation, assignment for security, claim, or
preference or priority or other encumbrance upon or with
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respect to any property of any kind, real or personal, movable or immovable, now
owned or hereafter acquired. A person will be deemed to own subject to a Lien
any property that such person has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement.
"Restricted Subsidiary" means any Subsidiary other than an Unrestricted
Subsidiary.
"Significant Subsidiary" means any Restricted Subsidiary of the Company
that together with its Subsidiaries, (a) for the most recent fiscal year of the
Company, accounted for more than 10% of the consolidated net sales of the
Company and its Restricted Subsidiaries or (b) as to the end of such fiscal
year, was the owner of more than 10% of the consolidated assets of the Company
and its Restricted Subsidiaries, in the case of either (a) or (b), as set forth
on the most recently available consolidated financial statements of the Company
for such fiscal year or (c) was organized or acquired since the end of such
fiscal year and would have been a Significant Subsidiary if it had been owned
during such fiscal year.
"Stated Maturity" means, when used with respect to any Note or any
installment of interest thereon, the date specified in such Note as the fixed
date on which the principal of such Note or installment of interest is due and
payable and, when used with respect to any other Debt, means the date specified
in the instrument governing such Debt as the fixed date on which the principal
of such Debt or any installment of interest thereon is due and payable.
"Subsidiary" means any person a majority of the equity ownership or Voting
Stock of which is at the time owned, directly or indirectly, by the Company
and/or one or more other Subsidiaries of the Company.
"Unrestricted Subsidiary" means (a) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary in accordance with the
"Unrestricted Subsidiaries" covenant and (b) any Subsidiary of an Unrestricted
Subsidiary.
CERTAIN COVENANTS OF THE COMPANY
Unless otherwise specified in the applicable Prospectus Supplement, the
following covenants contained in the Indenture shall be applicable with respect
to each series of Debt Securities:
LIMITATION ON INVESTMENT COMPANY STATUS. The Company shall not take any
action, or otherwise permit to exist any circumstance, that would require the
Company or any of its subsidiaries to register as an "investment company" under
the Investment Company Act of 1940, as amended.
REPORTS. The Company will be required to file on a timely basis with the
Commission, to the extent such filings are accepted by the Commission and
whether or not the Company has a class of securities registered under the
Exchange Act, the annual reports, quarterly reports and other documents that the
Company would be required to file if it were subject to Section 13 or 15(d) of
the Exchange Act. The Company will also be required (a) to file with the
applicable Trustee, and provide to each holder of Debt Securities, without cost
to such holder, copies of such reports and documents within 15 days after the
date on which the Company files such reports and documents with the Commission
or the date on which the Company would be required to file such reports and
documents if the Company were so required and (b) if filing such reports and
documents with the Commission is not accepted by the Commission or is prohibited
under the Exchange Act, to supply at the Company's cost copies of such reports
and documents to any prospective holder of Debt Securities promptly upon written
request.
EVENTS OF DEFAULT
Unless otherwise specified in the applicable Prospectus Supplement, the
following will constitute "Events of Default" under the Indenture with respect
to Debt Securities of any series (unless they are inapplicable to such series of
Debt Securities or they are specifically deleted in the supplemental indenture
or the Board Resolution under which such series of Debt Securities is issued or
has been modified):
(a) default in the payment of any interest on any Debt Security of
such series when it becomes due and payable, and continuance of such
default for a period of 30 days;
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(b) default in the payment of the principal of (or premium, if any,
on) any Debt Security of such series when due;
(c) failure to perform or comply with the Indenture provisions
described under "Consolidation, Merger and Sale of Assets";
(d) default in the performance, or breach, of any covenant or
agreement of the Company contained in the Indenture (other than a default
in the performance, or breach, of a covenant or agreement that is
specifically dealt with elsewhere therein), and continuance of such default
or breach for a period of 60 days after written notice has been given to
the Company by the Trustee or to the Company and the Trustee by the holders
of at least 25% in aggregate principal amount of the Debt Securities of
such series then outstanding as provided in the Indenture;
(e) (i) an event of default has occurred under any mortgage, bond,
indenture, loan agreement or other document evidencing an issue of Debt of
the Company or any Significant Subsidiary, which issue has an aggregate
outstanding principal amount of not less than $5.0 million, and such
default has resulted in such Debt becoming, whether by declaration or
otherwise, due and payable prior to the date on which it would otherwise
become due and payable or (ii) a default in any payment when due at final
maturity of any such Debt;
(f) failure by the Company or any of its Restricted Subsidiaries to
pay one or more final judgments the uninsured portion of which exceeds in
the aggregate $5.0 million, which judgment or judgments are not paid,
discharged or stayed for a period of 60 days;
(g) the occurrence of certain events of bankruptcy, insolvency or
reorganization with respect to the Company or any Significant Subsidiary;
or
(h) any other Event of Default specified for such series.
If an Event of Default (other than as specified in clause (g) above) occurs
and is continuing under the Indenture applicable to any series of Debt
Securities, the Trustee or the holders of not less than 25% in aggregate
principal amount of the Debt Securities of such series then outstanding may
declare the principal of all of the outstanding Debt Securities of such series
immediately due and payable and, upon any such declaration, such principal will
become due and payable immediately.
If an Event of Default specified in clause (g) above occurs and is
continuing, then the principal of all of the outstanding Debt Securities of any
series will ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any holder of Debt
Securities of such series.
At any time after a declaration of acceleration under the Indenture, but
before a judgment or decree for payment of the money due has been obtained by
the Trustee, the holders of a majority in aggregate principal amount of the
outstanding Debt Securities of any series, by written notice to the Company and
the Trustee, may rescind such declaration and its consequences if (i) the
Company has paid or deposited with the Trustee a sum sufficient to pay (A) all
overdue interest on all Debt Securities of such series, (B) all unpaid principal
of (and premium, if any, on) any outstanding Debt Securities of such series that
has become due otherwise than by such declaration of acceleration and interest
thereon at the rate borne by the Debt Securities of such series, (C) to the
extent that payment of such interest is lawful, interest upon overdue interest
and overdue principal at the rate borne by the Debt Securities of such series
and, (D) all sums paid or advanced by the Trustee under the Indenture and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel; and (ii) all Events of Default, other than the
non-payment of amounts of principal of (or premium, if any, on) or interest on
the Debt Securities of such series that have become due solely by such
declaration of acceleration, have been cured or waived. No such rescission will
affect any subsequent default or impair any right consequent thereto.
The holders of not less than a majority in aggregate principal amount of
the outstanding Debt Securities of any series may, on behalf of the holders of
all of the Debt Securities of such series, waive any past defaults under the
Indenture, except a default in the payment of the principal of (and premium, if
any on) or interest
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on any Debt Securities of such series, or in respect of a covenant or provision
that under the Indenture cannot be modified or amended without the consent of
the holder of each such Debt Security outstanding.
If a Default or an Event of Default occurs with respect to a series of Debt
Securities and is continuing and is known to the Trustee, the Trustee will mail
to each holder of the Debt Securities of such series notice of the Default or
Event of Default within 90 days after the occurrence thereof. Except in the case
of a Default or an Event of Default in payment of principal of (and premium, if
any, on) or interest on any Debt Securities of any series, the Trustee may
withhold the notice to the holders of the Debt Securities of such series if a
committee of its trust officers in good faith determines that withholding such
notice is in the interests of the holders of the Debt Securities of such series.
The Company is required to furnish to the Trustee annual statements as to
the performance by the Company and any Subsidiary Guarantors (as defined in the
Indenture) of their respective obligations under the Indenture and as to any
default in such performance. The Company is also required to notify the Trustee
within five days of any Default.
SATISFACTION AND DISCHARGE OF THE INDENTURE AND THE DEBT SECURITIES
Upon the request of the Company, the Indenture will cease to be of further
effect (except as to surviving rights of registration of transfer of the Debt
Securities of any series outstanding under the Indenture, as expressly provided
for in the Indenture) and the Trustee, at the expense of the Company, will
execute proper instruments acknowledging satisfaction and discharge of the
Indenture when (a) either (i) all the Debt Securities of any series theretofore
authenticated and delivered (other than destroyed, lost or stolen Debt
Securities of any series that have been replaced or paid and Debt Securities of
any series that have been subject to defeasance under "Defeasance or Covenant
Defeasance of Indenture") have been delivered to the Trustee for cancellation or
(ii) all Debt Securities of any series not theretofore delivered to the Trustee
for cancellation (A) have become due and payable, (B) will become due and
payable at maturity within one year or (C) are to be called for redemption
within one year under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the expense, of the
Company, and the Company has irrevocably deposited or caused to be deposited
with the Trustee funds in trust for the purpose and in an amount sufficient to
pay and discharge the entire Debt on such Debt Securities of any series not
theretofore delivered to the Trustee for cancellation, for principal (and
premium, if any, on) and interest on the Debt Securities of any series to the
date of such deposit (in the case of Debt Securities of any series that have
become due and payable) or to the Stated Maturity or Redemption Date (as defined
in the Indenture), as the case may be; (b) the Company has paid or caused to be
paid all sums payable under the Indenture by the Company; and (c) the Company
has delivered to the Trustee an officers' certificate and an opinion of counsel,
each stating that all conditions precedent provided in the Indenture relating to
the satisfaction and discharge of the Indenture have been complied with.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the holders of a majority in aggregate
outstanding principal amount of the Debt Securities of any series to be offered
under the Indenture; provided, however, that no such modification or amendment
may, without the consent of the holder of each outstanding Debt Security of such
series affected thereby,
(a) change the Stated Maturity of the principal of, or any installment
of interest on, any Debt Securities of such series, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable upon
the redemption thereof, or change the coin or currency in which any Debt
Securities of such series or any premium or the interest thereon is
payable, or impair the right to institute suit for the enforcement of any
such payment after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date);
(b) reduce the percentage in principal amount of outstanding Debt
Securities of such series, the consent of whose holders is required for any
waiver of compliance with certain provisions of, or certain defaults and
their consequences provided for under, the Indenture; or
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(c) modify any provisions relating to "-- Modification and Waiver"
except to increase the percentage of outstanding Debt Securities of such
series required for such actions or to provide that certain other
provisions of the Indenture cannot be modified or waived without the
consent of the holder of each outstanding Debt Security of such series
affected thereby.
The holders of a majority in aggregate principal amount of the Debt
Securities of any series outstanding may waive compliance with certain
restrictive covenants and provisions of the Indenture with respect to such
series.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may not consolidate with or merge with or into any other person
or, directly or indirectly, convey, sell, assign, transfer, lease or otherwise
dispose of its properties and assets substantially as an entirety to any other
person (in one transaction or a series of related transactions), unless:
(a) either (i) the Company is the surviving corporation or (ii) the
person (if other than the Company) formed by such consolidation or into
which the Company is merged or the person that acquires by sale,
assignment, transfer, lease or other disposition of the properties and
assets of the Company substantially as an entirety (the "Surviving Entity")
(A) is a corporation, partnership or trust organized and validly existing
under the laws of the United States, any state thereof or the District of
Columbia and (B) expressly assumes, by a supplemental indenture in form
satisfactory to the Trustee, all of the Company's obligations under the
Indenture and the Debt Securities;
(b) immediately after giving effect to such transaction and treating
any obligation of the Company or a Restricted Subsidiary in connection with
or as a result of such transaction as having been incurred as of the time
of such transaction, no Default or Event of Default has occurred and is
continuing;
(c) immediately after giving effect to such transaction on a pro forma
basis, the Consolidated Net Worth of the Company (or of the Surviving
Entity if the Company is not the continuing obligor under the Indenture) is
equal to or greater than the Consolidated Net Worth of the Company
immediately prior to such transaction;
(d) immediately after giving effect to such transaction on a pro forma
basis (on the assumption that the transaction occurred at the beginning of
the most recently ended four full fiscal quarter period for which internal
financial statements are available, the Company (or the Surviving Entity if
the Company is not the continuing obligor under the Indenture) could incur
at least $1.00 of additional Debt (other than Permitted Debt (as defined in
the Indenture)) pursuant to the first paragraph of any "Limitation on Debt"
covenant applicable to any series of Debt Securities;
(e) if any of the property or assets of the Company or any of its
Restricted Subsidiaries would thereupon become subject to any Lien, the
provisions of any "Limitation on Liens" covenant applicable to any series
of Debt Securities are complied with; and
(f) the Company delivers, or causes to be delivered, to the Trustee,
in form and substance reasonably satisfactory to the Trustee, an officers'
certificate and an opinion of counsel, each stating that such transaction
complies with the requirements of the Indenture.
In the event of any transaction described in and complying with the
conditions listed in the first paragraph of this covenant in which the Company
is not the continuing obligor under the Indenture, the Surviving Entity will
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the Indenture, and thereafter the Company will be discharged
from all its obligations and covenants under the Indenture and the Debt
Securities.
DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE
If the Prospectus Supplement relating to the offered Debt Securities so
provides, the Company may, at its option and at any time, terminate the
obligations of the Company and any Subsidiary Guarantors with respect to the
outstanding Debt Securities of any series ("defeasance"). Such defeasance means
that the Company
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will be deemed to have paid and discharged the entire Debt represented by the
outstanding Debt Securities of such series, except for (i) the rights of holders
of outstanding Debt Securities of such series to receive payments in respect of
the principal of (and premium, if any, on) and interest on such Debt Securities
when such payments are due, (ii) the Company's obligations to issue temporary
Debt Securities of such series, register the transfer or exchange of any Debt
Securities of such series, replace mutilated, destroyed, lost or stolen Debt
Securities of such series, maintain an office or agency for payments in respect
of the Debt Securities of any series and segregate and hold such payments in
trust, (iii) the rights, powers, trusts, duties and immunities of the Trustee
and (iv) the defeasance provisions of the Indenture. In addition, the Company
may, at its option and at any time, elect to terminate the obligations of the
Company and any Subsidiary Guarantor with respect to certain covenants set forth
in the Indenture, and any failure to comply with such obligations would not
constitute a Default or an Event of Default with respect to the Debt Securities
of such series ("covenant defeasance").
In order to exercise either defeasance or covenant defeasance, (a) the
Company must irrevocably deposit or cause to be deposited with the Trustee, as
trust funds in trust, specifically pledged as security for, and dedicated solely
to, the benefit of the holders of the Debt Securities of a series, money in an
amount, or U.S. Government Obligations (as defined in the Indenture) that
through the scheduled payment of principal and interest thereon will provide
money in an amount, or a combination thereof, sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay and
discharge the principal of (and premium, if any, on) and interest on the
outstanding Debt Securities of such series at maturity (or upon redemption, if
applicable) of such principal or installment of interest; (b) no Default or
Event of Default has occurred and is continuing on the date of such deposit or,
insofar as an event of bankruptcy under clause (g) of "Events of Default" above
is concerned, at any time during the period ending on the 91st day after the
date of such deposit; (c) such defeasance or covenant defeasance may not result
in a breach or violation of, or constitute a default under, the Indenture or any
material agreement or instrument to which the Company or any Subsidiary
Guarantor is a party or by which it is bound; (d) in the case of defeasance, the
Company must deliver to the Trustee an opinion of counsel stating that the
Company has received from, or there has been published by, the U.S. Internal
Revenue Service a ruling, or there has been a change in applicable federal
income tax law, to the effect, and based thereon such opinion must confirm that,
the holders of the outstanding Debt Securities of such series will not recognize
income, gain or loss for federal income tax purposes as a result of such
defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such defeasance
had not occurred; (e) in the case of covenant defeasance, the Company must have
delivered to the Trustee an opinion of counsel to the effect that the Holders of
the outstanding Debt Securities of such series will not recognize income, gain
or loss for federal income tax purposes as a result of such covenant defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such covenant
defeasance had not occurred; and (f) the Company must have delivered to the
Trustee an officers' certificate and an opinion of counsel, each stating that
all conditions precedent provided for relating to either the defeasance or the
covenant defeasance, as the case may be, have been complied with.
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York.
REGARDING THE TRUSTEE
The Indenture contains certain limitations on the right of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize for its own account on certain property received in
respect of any such claim as security or otherwise. The Trustee will be
permitted to engage in certain other transactions; however, if it acquires any
conflicting interest and there is a default under the Debt Securities, it must
eliminate such conflict or resign.
The Trustee may resign or be removed with respect to one or more series of
Debt Securities and a successor Trustee may be appointed to act with respect to
such series. In the event that two or more persons
23
<PAGE> 25
are acting as Trustee with respect to different series of Debt Securities, each
such Trustee shall be a Trustee of a trust under the Indenture separate and
apart from the trust administered by any other such Trustee, and any action
described herein to be taken by the "Trustee" may then be taken by each such
Trustee with respect to, and only with respect to, the one or more series of
Debt Securities for which it is Trustee.
DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of Debt Securities, Common
Stock, Preferred Stock or any combination thereof. Warrants may be issued
independently, together with any other Securities offered by a Prospectus
Supplement, and may be attached to or separate from such Securities. Warrants
may be issued under warrant agreements (each, a "Warrant Agreement") to be
entered into between the Company and a warrant agent specified in the applicable
Prospectus Supplement (the "Warrant Agent"). The Warrant Agent will act solely
as an agent of the Company in connection with the Warrants of a particular
series and will not assume any obligation or relationship of agency or trust for
or with any holders or beneficial owners of Warrants. The following sets forth
certain general terms and provisions of the Warrants offered hereby. Further
terms of the Warrants and the applicable Warrant Agreement will be set forth in
the applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the terms of the
Warrants in respect of which this Prospectus is being delivered, including,
where applicable, the following: (i) the title of such Warrants; (ii) the
aggregate number of such Warrants; (iii) the price or prices at which such
Warrants will be issued; (iv) the designation, number and terms of the Debt
Securities, Common Stock, Preferred Stock, Depositary Shares or combination
thereof, purchasable upon exercise of such Warrants; (v) the designation and
terms of the other Securities, if any, with which such Warrants are issued and
the number of such Warrants issued with each such Security; (vi) the date, if
any, on and after which such Warrants and the related underlying Securities will
be separately transferable; (vii) the price at which each underlying Security
purchasable upon exercise of such Warrants may be purchased; (viii) the date on
which the right to exercise such Warrants shall commence and the date on which
such right shall expire; (ix) the minimum amount of such Warrants which may be
exercised at any one time; (x) information with respect to book-entry
procedures, if any; (xi) a discussion of any applicable federal income tax
considerations; and (xii) any other terms of such Warrants, including terms,
procedures and limitations relating to the transferability, exchange and
exercise of such Warrants.
PLAN OF DISTRIBUTION
The Company may sell Securities to or through underwriters or dealers,
directly to other purchasers, or through agents. The Prospectus Supplement with
respect to any Securities will set forth the terms of the offering of the
Securities, including the name or names of any underwriters, dealers or agents,
the price of the offered Securities and the net proceeds to the Company from
such sale, any underwriting discounts or other items constituting underwriters'
compensation, any discounts or concessions allowed or reallowed or paid to
dealers and any national securities exchanges on which such Securities may be
listed.
If underwriters are used in the sale, the Securities will be acquired by
the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
price or at varying prices determined at the time of sale. The underwriter or
underwriters with respect to a particular underwritten offering of Securities
will be named in the Prospectus Supplement relating to such offering, and if an
underwriting syndicate is used, the managing underwriter or underwriters will be
set forth on the cover of such Prospectus Supplement. Unless otherwise set forth
in the Prospectus Supplement, the obligations of the underwriters or agents to
purchase the Securities will be subject to certain conditions precedent and the
underwriters will be obligated to purchase all the Securities if any are
purchased. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
24
<PAGE> 26
If a dealer is utilized in the sale of any Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to the
dealer, as principal. The dealer may then resell such Securities to the public
at varying prices to be determined by such dealer at the time of resale. The
name of the dealer and the terms of the transaction will be set forth in the
Prospectus Supplement relating thereto.
Securities may be sold directly by the Company to one or more institutional
purchasers, or through agents designated by the Company from time to time, at a
fixed price, or prices, which may be changed, or at varying prices determined at
the time of sale. Any agent involved in the offer or sale of the Securities will
be named, and any commissions payable by the Company to such agent will be set
forth, in the Prospectus Supplement relating thereto. Unless otherwise indicated
in the Prospectus Supplement, any such agent will be acting on a best efforts
basis for the period of its appointment.
In connection with the sale of the Securities, underwriters or agents may
receive compensation from the Company or from purchasers of Securities for whom
they may act as agents in the form of discounts, concessions, or commissions.
Underwriters, agents, and dealers participating in the distribution of the
Securities may be deemed to be underwriters, and any discounts or commissions
received by them from the Company and any profit on the resale of the Securities
by them may be deemed to be underwriting discounts or commissions under the
Securities Act.
Unless otherwise specified in the applicable Prospectus Supplement, each
series of Securities, other than the Common Stock, will be a new issue with no
established trading market. Any shares of Common Stock sold pursuant to a
Prospectus Supplement will be listed on the NYSE subject to official notice of
issuance. The Company may elect to list any series of the Securities on an
exchange, but it is not obligated to do so. Any underwriters to whom Securities
are sold by the Company for public offering and sale may make a market in such
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for any Securities.
Under agreements entered into with the Company, underwriters, dealers, and
agents may be entitled to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments that such agents, dealers, or underwriters may be
required to make with respect thereto. Underwriters, dealers, or agents and
their associates may be customers of, engage in transactions with and perform
services for, the Company in the ordinary course of business.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase Securities from the Company
pursuant to contracts providing for payment and delivery on a future date.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will be subject to the condition that the purchase of
the Securities shall not at the time of delivery be prohibited under the laws of
the jurisdiction to which such purchaser is subject. The underwriters and such
other agents will not have any responsibility in respect in respect of the
validity or performance of such contracts.
In order to comply with the securities laws of certain states, if
applicable, the Securities offered hereby will be sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in certain
states Securities may not be sold unless they have been registered or
qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of Securities offered hereby may not engage in
market making activities with respect to the Securities for a period of two
business days prior to the commencement of such distribution.
25
<PAGE> 27
EXPERTS
The financial statements and the related financial statement schedules
included and incorporated in this Prospectus and elsewhere in the Registration
Statement by reference from the Company's Annual Report on Form 10-K for the
year ended June 30, 1997, as amended, have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report, which is included and
incorporated herein by reference, and have been so included and incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
LEGAL MATTERS
Certain legal matters, including the legality of the Securities covered by
this Prospectus, will be passed upon for the Company by Rogers & Wells LLP, New
York, New York.
26
<PAGE> 28
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, to be paid by the Registrant in
connection with the sale of Securities being registered. All amounts are
estimates except the Securities and Exchange Commission filing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $ 147,500
Printing and Engraving...................................... 200,000
Accounting Fees............................................. 125,000
Legal Fees and Expenses..................................... 350,000
Blue Sky Fees and Expenses.................................. 15,000
Rating Agencies Fees........................................ 80,000
Miscellaneous Fees and Expenses............................. 125,000
----------
Total............................................. $1,042,500
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145(a) of the DGCL provides, in general, that a corporation shall
have power to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation), by reason of the fact that he is or was
a director or officer of the corporation. Such indemnity may be against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with such action, suit or
proceeding, if the indemnitee acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, the indemnitee must not have
had reasonable cause to believe his conduct was unlawful.
Section 145(b) of the DGCL provides, in general, that a corporation shall
have power to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor by reason of the
fact that he is or was a director or officer of the corporation against expenses
(including attorney's fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation.
Section 145(g) of the DGCL provides in general that a corporation shall
have power to purchase and maintain insurance on behalf of any person who is or
was a director or officer of the corporation against any liability asserted
against and incurred by him in any such capacity, or arising out of his status
as such, whether or not the corporation would have the power to indemnify him
against such liability under the provisions of the law.
The Company's By-laws require the Company to indemnify each of its
directors, officers and employees to the fullest extent permitted by law in
connection with any actual or threatened action or proceeding arising out of his
service to the Company or to other organizations at the Company's request.
II-1
<PAGE> 29
ITEM 16. EXHIBITS
(a) Exhibits
<TABLE>
<S> <C> <C>
1.1**** -- Form of Underwriting Agreement (for Common Stock, Preferred
Stock and Depositary Shares)
1.2**** -- Form of Underwriting Agreement (for Debt Securities)
1.3**** -- Form of Underwriting Agreement (for Warrants)
3.1* -- Certificate of Incorporation of the Company
3.2* -- By-Laws of the Company
4.1** -- Indenture for Debt Securities dated January 27, 1997 between
the Company and the Trustee
4.2**** -- Form of Debt Securities
4.3* -- Specimen of stock certificate for DVI's Common Stock, par
value $.005 per share
4.4**** -- Form of specimen certificate representing Preferred Stock
4.5**** -- Form of Warrant
5.1*** -- Opinion of Rogers & Wells LLP
23.1*** -- Consent of Rogers & Wells LLP (Included in Exhibit 5.1)
23.2*** -- Consent of Deloitte & Touche LLP
25.1***** -- Statement of Eligibility and Qualification on Form T-1 of
Trustee under the Indenture
</TABLE>
- ---------------
* Filed as an Exhibit to the Company's Registration Statement on Form S-3
(Registration No. 33-84604) and incorporated herein by reference.
** Filed as an Exhibit to the Company's Current Report on Form 8-K dated
January 30, 1997 and incorporated herein by reference.
*** Filed herewith.
**** To be filed by amendment, by incorporation by reference or by filing of a
Current Report on Form 8-K in connection with the offering of Securities.
***** Filed as an Exhibit to the Company's Registration Statement on Form S-3
(Registration No. 333-17097) and incorporated herein by reference.
(b) Financial Statements
Inapplicable.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
in the information set forth in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain at the termination of
the offering.
II-2
<PAGE> 30
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the registrant's Certificate of Incorporation, By-laws,
or otherwise, the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE> 31
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Doylestown, State of Pennsylvania on April 23, 1998.
DVI, INC.
By: /s/ MICHAEL A. O'HANLON
------------------------------------
Name: Michael A. O'Hanlon
Title: Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of DVI, Inc. hereby severally constitute Michael A. O'Hanlon and
Steven R. Garfinkel and each of them singly, our true and lawful attorneys with
full power to them, and each of them singly, to sign for us and in our names in
the capacities indicated below, the Registration Statement filed herewith and
any and all amendments to said Registration Statement (including without
limitation any amendments filed pursuant to Section 462(b) of the Securities Act
of 1933), and generally to do all such things in our names and in our capacities
as officers and directors to enable DVI, Inc. to comply with the provisions of
the Securities Act of 1933, and all requirements of the Securities and Exchange
Commission, hereby ratifying and confirming our signature as they may be signed
by our said attorneys, or any of them, to said Registration Statement and any
and all amendments thereto.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ MICHAEL A. O'HANLON Chief Executive Officer, April 23, 1998
- --------------------------------------------------- President and Director
Michael A. O'Hanlon
/s/ STEVEN R. GARFINKEL Senior Vice President and Chief April 23, 1998
- --------------------------------------------------- Financial Officer (Principal
Steven R. Garfinkel Financial Officer)
/s/ JOHN P. BOYLE Vice President and Chief April 23, 1998
- --------------------------------------------------- Accounting Officer (Principal
John P. Boyle Accounting Officer)
/s/ GERALD L. COHN Director April 23, 1998
- ---------------------------------------------------
Gerald L. Cohn
/s/ WILLIAM S. GOLDBERG Director April 23, 1998
- ---------------------------------------------------
William S. Goldberg
/s/ JOHN E. MCHUGH Director April 23, 1998
- ---------------------------------------------------
John E. McHugh
</TABLE>
II-4
<PAGE> 32
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ NATHAN SHAPIRO Director April 23, 1998
- ---------------------------------------------------
Nathan Shapiro
</TABLE>
II-5
<PAGE> 33
EXHIBIT INDEX
<TABLE>
<S> <C> <C>
1.1**** -- Form of Underwriting Agreement (for Common Stock, Preferred
Stock and Depositary Shares)
1.2**** -- Form of Underwriting Agreement (for Debt Securities)
1.3**** -- Form of Underwriting Agreement (for Warrants)
3.1* -- Certificate of Incorporation of the Company
3.2* -- By-Laws of the Company
4.1** -- Indenture for Debt Securities dated January 27, 1997 between
the Company and the Trustee
4.2**** -- Form of Debt Securities
4.3* -- Specimen of stock certificate for DVI's Common Stock, par
value $.005 per share
4.4**** -- Form of specimen certificate representing Preferred Stock
4.5**** -- Form of Warrant
5.1*** -- Opinion of Rogers & Wells LLP
23.1*** -- Consent of Rogers & Wells LLP (Included in Exhibit 5.1)
23.2*** -- Consent of Deloitte & Touche LLP
25.1***** -- Statement of Eligibility and Qualification on Form T-1 of
Trustee under the Indenture
</TABLE>
- ---------------
* Filed as an Exhibit to the Company's Registration Statement on Form S-3
(Registration No. 33-84604) and incorporated herein by reference.
** Filed as an Exhibit to the Company's Current Report on Form 8-K dated
January 30, 1997 and incorporated herein by reference.
*** Filed herewith.
**** To be filed by amendment, by incorporation by reference or by filing of a
Current Report on Form 8-K in connection with the offering of Securities.
***** Filed as an Exhibit to the Company's Registration Statement on Form S-3
(Registration No. 333-17097) and incorporated herein by reference.
<PAGE> 1
EXHIBIT 5
Rogers & Wells LLP
200 Park Avenue
New York, NY 10166
Tel: (212) 878-8000 Fax: (212)
878-8375
April 24, 1998
DVI, Inc.
500 Hyde Park
Doylestown, PA 18901
Re: Registration on Form S-3
Ladies and Gentlemen:
We have acted as special counsel for DVI, Inc., a Delaware corporation (the
"Company"), in connection with the Registration Statement on Form S-3 (the
"Registration Statement"), filed by the Company with the Securities and Exchange
Commission (the "Commission") for registration under the Securities Act of 1933,
as amended (the "Securities Act"), of securities of the Company consisting of
(i) common stock, par value $.005 per share (the "Common Stock"); (ii) preferred
stock, par value $10.00 per share (the "Preferred Stock"); (iii) debt securities
consisting of debentures, notes or other evidences of indebtedness and having
such prices and terms as are determined at the time of sale ("Debt Securities");
(iv) shares of Preferred Stock represented by depositary shares (the "Depositary
Shares"); and (v) warrants or other rights to purchase Common Stock, Preferred
Stock, Depositary Shares, Debt Securities, or any combination thereof, as may be
designated by the Company at the time of the Offering ("Warrants" and
collectively with the Common Stock, Preferred Stock, Debt Securities and
Depositary Shares, the "Securities") to be offered from time to time by the
Company for aggregate proceeds of up to $500,000,000. Capitalized terms used and
not otherwise defined herein have the respective meanings ascribed to such terms
in the Registration Statement.
In so acting, we have examined and relied upon originals or copies,
certified or otherwise identified to our satisfaction, of such corporate
records, documents, certificates and other instruments as in our judgment are
necessary or appropriate to enable us to render the opinions expressed below. As
to factual matters relevant to the opinions set forth below we have, with your
permission, relied upon certificates of officers of the Company and public
officials.
Based upon the foregoing and on such examination of law as we have deemed
necessary, we are of the opinion that:
1. Pursuant to the Certificate of Incorporation of the Company (the
"Charter"), the Company is authorized to issue up to 25,000,000 shares
of Common Stock. Assuming that the aggregate number of shares of Common
Stock issued and sold pursuant to the Registration Statement by the
Company, along with all other shares of Common Stock from time to time
issued and outstanding or reserved for issuance, does not exceed
25,000,000 shares (or such other number of shares of Common Stock as may
be authorized for issuance under the Charter), when shares of Common
Stock have been legally and validly authorized for issuance by all
necessary action of the Company's Board of Directors (the "Board") and
have been issued, delivered and paid for in accordance with such
authorization, or upon conversion, exchange or exercise of any Preferred
Stock, Depositary Shares or Warrants in accordance with the terms of
such Preferred Stock, Depositary Shares or Warrants, as the case may be,
or the instrument governing such Preferred Stock, Depositary Shares or
Warrants providing for such conversion, exchange or exercise as approved
by the Board, for the consideration approved by the Board, such shares
of Common Stock will be validly issued, fully paid and non-assessable.
2. Pursuant to the Charter, the Company is authorized to issue up to
100,000 shares of Preferred Stock. Assuming that the aggregate number of
shares of Preferred Stock issued and sold pursuant to the
<PAGE> 2
Registration Statement by the Company, along with all other shares of
Preferred Stock, including Preferred Stock represented by Depositary
Shares, issued by the Company or reserved for issuance, does not exceed
100,000 shares (or such other number of shares of Preferred Stock as may
then be authorized for issuance under the Charter), the Preferred Stock
and the representation of such Preferred Stock by Depositary Shares, as
described in the prospectus contained in the Registration Statement,
have been duly authorized and when (a) the Board has created the
Preferred Stock by setting the preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends, qualifications
or terms or conditions of redemption and the Office of the Secretary of
State of the State of Delaware has accepted for filing resolutions
setting forth the foregoing characteristics of each series of Preferred
Stock prior to the issuance thereof, and (b) the shares of Preferred
Stock and, if applicable, Depositary Shares, have been legally and
validly authorized for issuance by the Board issued, delivered and paid
for, such shares of Preferred Stock and, if applicable, Depositary
Shares, will be validly issued, fully paid and non-assessable.
3. With respect to Debt Securities, when (a) the definitive terms of any
series of Debt Securities and of their issuance and sale have been duly
established in accordance with the provisions of the Indenture so as not
to violate any applicable law or agreement or instrument then binding on
the Company, (b) such series of Debt Securities has been duly executed
by the Company and authenticated by the Trustee, (c) such series of Debt
Securities has been issued and delivered in the manner contemplated by
the Indenture, the Registration Statement, the prospectus contained
therein and the applicable prospectus supplement and (d) such series of
Debt Securities has been duly paid for by the purchasers thereof, such
series of Debt Securities will be entitled to the benefits of the
Indenture, and will be the valid and binding obligation of the Company,
enforceable in accordance with its terms, except as the enforceability
thereof may be limited by the laws of bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and
subject, as to enforceability, to general principles of equity
(regardless of whether such enforceability is considered in a proceeding
in equity or at law).
4. With respect to the Warrants, when (a) the Board has taken all necessary
corporate action to approve the creation of and the issuance and terms
of the Warrants, the terms of the offering thereof, and related matters,
(b) the warrant agreement or agreements relating to the Warrants have
been duly authorized and validly executed and delivered by the Company
and the warrant agent appointed by the Company, and (c) the Warrants or
certificates representing the Warrants have been duly executed,
countersigned, registered and delivered in accordance with the
appropriate warrant agreement or agreements and the applicable
definitive purchase, underwriting or similar agreement approved by the
Board and against payment of the consideration therefor provided for
therein, the Warrants will be validly issued.
In rendering the foregoing opinions, we have assumed that (i) the
definitive terms of each class and series of the Securities not presently
provided for in the Registration Statement or the Charter will have been
established in accordance with all applicable provisions of law, the Indenture,
the Charter and the Company's by-laws and the authorizing resolutions of the
Board, and reflected in appropriate documentation approved by us, (ii) the
interest rate on the Debt Securities will not be higher than the maximum lawful
rate permitted from time to time under applicable law, (iii) the Registration
Statement, and any amendments thereto, will have become and at the time of
issuance of the Securities will continue to be effective, (iv) a Prospectus
Supplement describing each class or series of Securities offered pursuant to the
Registration Statement will have been filed with the Commission, (v) the
resolutions authorizing the Company to register, offer, sell, and issue the
Securities will remain in effect and unchanged at all times during which the
Securities are offered, sold, or issued by the Company and (vi) all Securities
will be issued in compliance with applicable federal and state securities laws.
We are members of the Bar of the State of New York and the opinions set
forth in this letter relate only to the federal laws of the United States of
America, the laws of the State of New York and the General Corporation Law of
the State of Delaware. References in this letter to governmental authorities are
limited to federal and New York State authorities.
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We understand that prior to offering for sale any Securities you will
advise us in writing of the terms of such offering and of such Securities, will
afford us an opportunity to review the operative documents (including the
applicable Prospectus Supplement and any applicable Underwriting Agreement,
Indenture or Supplemental Indenture) pursuant to which the Securities are to be
offered, sold, and issued and will file as an exhibit to the Registration
Statement such supplement or amendment to this opinion (if any) as we may
reasonably consider necessary or appropriate by reason of the terms of such
Securities or any changes in the Company's capital structure or other pertinent
circumstances.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to us in the Prospectus under the
caption "Legal Matters." In giving this consent, we do not admit that we are
within the category of persons whose consent is required under Section 7 of the
Securities Act, or the Rules and Regulations of the Commission thereunder.
Very truly yours,
/s/ ROGERS & WELLS LLP
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Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
on Form S-3 dated April 24, 1998, of DVI, Inc. of our report dated July 31,
1997, appearing in and incorporated by reference in the Annual Report on Form
10-K of DVI, Inc. for the year ended June 30, 1997, and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
DELOITTE & TOUCHE LLP
Parisippany, New Jersey
April 24, 1998
