<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant [ ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary proxy statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
DVI, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
DVI, INC.
500 HYDE PARK
DOYLESTOWN, PENNSYLVANIA 18901
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 29, 1999
------------------------
To the Stockholders of DVI, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders of DVI,
Inc. (the "Company") will be held at the offices of the Company, 500 Hyde Park,
Doylestown, Pennsylvania 18901, on Friday, October 29, 1999, at 9:00 a.m., local
time, for the following purposes:
1. To elect six directors to constitute the Board of Directors, each
to serve until the next annual meeting of Stockholders;
2. To consider and act upon a proposal to amend the Company's 1996
Incentive Stock Option Plan to increase the number of shares for
which options may be granted thereunder from 1,500,000 to 2,700,000
common shares and approve certain option grants that were made
previously pursuant to the Plan, subject to stockholder approval.
3. To ratify the appointment of Deloitte & Touche LLP as independent
public accountants for the Company for the fiscal year ending June
30, 2000; and
4. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
The close of business on September 24, 1999 has been fixed as the record
date for the determination of all stockholders entitled to receive notice of the
Annual Meeting and to vote at such meeting or any adjournment thereof.
Holders of a majority of the outstanding shares of the Company's Common
Stock must be present either in person or by proxy in order for the meeting to
be held and it is important that your stock be represented regardless of the
number of shares you hold. If you do not expect to attend the meeting, or if you
do plan to attend but wish to vote by proxy, please date, sign and mail promptly
the enclosed proxy for which a return envelope is provided.
By Order of the Board of Directors
/s/ Melvin C. Breaux
MELVIN C. BREAUX
Secretary
Dated: September 29, 1999
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED
ADDRESSED ENVELOPE, EVEN IF YOU PLAN TO ATTEND THE MEETING. IF YOU ATTEND THE
MEETING AND VOTE IN PERSON, THE PROXY WILL NOT BE USED.
<PAGE> 3
DVI, INC.
500 HYDE PARK
DOYLESTOWN, PENNSYLVANIA 18901
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 29, 1999
------------------------
The Board of Directors of DVI, Inc., a Delaware corporation (the
"Company"), is soliciting the enclosed proxy for use at the Company's Annual
Meeting of Stockholders (the "Annual Meeting"), to be held on Friday, October
29, 1999, at 9:00 a.m., local time, at the offices of the Company, 500 Hyde
Park, Doylestown, Pennsylvania 18901 and at any adjournment thereof. Whether or
not you plan to attend the Annual Meeting, you are requested to date, sign and
return the proxy to the Company as promptly as possible in the enclosed
envelope. The shares of the Company's common stock, par value $.005 per share
(the "Common Stock"), represented by proxies will be voted in accordance with
the Board of Directors' recommendations unless the proxy indicates otherwise.
Any stockholder giving a proxy may revoke it at any time prior to its use by
filing with the Secretary of the Company at the address specified below a
written revocation or a proxy bearing a later date, or by voting in person at
the Annual Meeting.
The close of business on September 24, 1999 has been fixed as the record
date (the "Record Date") for the determination of the stockholders entitled to
receive notice of and to vote at the Annual Meeting. At such date, the Company
had outstanding 14,203,608 shares of Common Stock. Each holder of Common Stock
on the Record Date will be entitled to one vote for each share registered in
such stockholder's name on each of the matters to come before the Annual
Meeting. A majority of the outstanding shares of Common Stock will constitute a
quorum. A list of stockholders entitled to vote will be available for
examination by interested stockholders at the corporate headquarters of the
Company, office of the Secretary, 500 Hyde Park, Doylestown, Pennsylvania 18901
during ordinary business hours from September 24, 1999 to the date of the Annual
Meeting.
If a stockholder furnishes a proxy but directs the proxy holder to abstain
from voting some or all of the shares covered by the proxy on a proposal
described in this Proxy Statement, that abstention will have the same effect as
voting those shares against the proposal. If shares registered in the name of a
broker or other "street name" nominee are voted only as to certain matters
before the Annual Meeting and not as to others, because the beneficial owner has
not provided voting instructions or the broker has failed to exercise
discretionary voting power (commonly referred to as "broker non-votes"), that
will have the same effect as voting those shares against the proposal as to
which the broker does not vote. The Company expects that under the rules of the
New York Stock Exchange, Inc., brokers who hold shares in street name for
customers will have the authority to vote on all the proposals described in this
Proxy Statement except Proposal 2 if they do not receive instructions from the
beneficial owners of those shares. Shares that are the subject of abstentions
and broker non-votes are required to be counted for purposes of determining the
presence of a quorum for the transaction of business at the Annual Meeting.
The approximate date on which this Proxy Statement and form of proxy is
first being sent or given to the Company's stockholders is September 29, 1999.
The Company's Annual Report to Stockholders for the fiscal year ended June
30, 1999 accompanies this Proxy Statement. The Annual Report shall not be deemed
to be soliciting material or, except as set forth under the heading "Annual
Report to Stockholders" in this Proxy Statement, incorporated in this Proxy
Statement by reference. Brokerage houses, custodians, nominees and others may
obtain additional copies of the Annual Report or this Proxy Statement by request
to the Company.
<PAGE> 4
PROPOSAL 1
ELECTION OF DIRECTORS
Six Directors are to be elected at the Annual Meeting of Stockholders to
serve one-year terms until the 2000 Annual Meeting of Stockholders and until
their respective successors are elected and shall qualify. The persons named in
the accompanying proxy intend to vote for the election of the nominees
identified below unless authority to vote for one or more of such nominees is
specifically withheld in the proxy. All of the nominees are currently directors
of the Company and were elected Directors at the 1998 Annual Meeting of
Stockholders. The Board of Directors is informed that all the nominees are
willing to serve as Directors, but if any of them should decline to serve or
become unavailable for election as a Director at the meeting, an event which the
Board of Directors does not anticipate, the persons named in the proxy will vote
for such nominee or nominees as may be designated by the Board of Directors,
unless the Board of Directors reduces the number of Directors accordingly.
Directors shall be elected by a majority of the votes cast, in person or by
proxy, at the Annual Meeting.
THE BOARD OF DIRECTORS
The following table sets forth information concerning the Company's
nominees for Director:
<TABLE>
<CAPTION>
NAME: AGE: POSITION:
----- ---- ---------
<S> <C> <C>
Gerald L. Cohn........................ 70 Director since 1986
John E. McHugh........................ 70 Director since 1990
Michael A. O'Hanlon................... 52 Chief Executive Officer since 1995 and
Director since 1993
Nathan Shapiro........................ 63 Director since 1995
William S. Goldberg................... 41 Director since 1995
Harry T.J. Roberts.................... 65 Director since 1996
</TABLE>
Mr. Cohn is a Director of the Company and has served in that capacity since
1986. Mr. Cohn is a private investor and consultant. Mr. Cohn presently serves
as a director of Niagara Steel Corporation and Diametrics Medical Corporation.
In addition to his responsibilities as a Director, Mr. Cohn also is an employee
of the Company and serves on the Company's senior credit committee. Mr. Cohn is
the father of Cynthia J. Cohn, a Company Vice President.
Mr. McHugh is a Director of the Company and has served in that capacity
since 1990. Mr. McHugh was formerly the President of, and now serves in a
marketing and public relations capacity with, James McHugh Construction Company,
a firm he has been associated with since 1954.
Mr. O'Hanlon is the Company's Chief Executive Officer since November 1995
and the Company's President since September 1994. Mr. O'Hanlon became a Director
in November 1993. From the time Mr. O'Hanlon joined the Company in March 1993
until September 1994 he served as an Executive Vice President of the Company.
Before joining the Company he served for nine years as President and Chief
Executive Officer of Concord Leasing, Inc., a major source of medical, aircraft,
ship and industrial equipment financing. Previously, Mr. O'Hanlon was a senior
executive with Pitney Bowes Credit Corporation.
Mr. Shapiro is a Director of the Company and has served in that capacity
since 1995. Mr. Shapiro is a founder and the President of SF Investments, Inc.,
a registered broker/dealer in business since 1972. Since 1979 he has been a
director of Baldwin & Lyons, Inc., a publicly traded property and casualty
insurance company. Mr. Shapiro is also the Chairman of the Investment Committee
of Baldwin & Lyons, Inc. He is a trustee for Alleghany Funds, a family of mutual
funds sponsored by Chicago Trust Company.
Mr. Goldberg is a Director of the Company and has served in that capacity
since 1995. Mr. Goldberg is currently Managing Director of GKH Partners, L.P., a
private equity investment and venture capital
2
<PAGE> 5
partnership with which he has been involved since 1988. Mr. Goldberg is current
or former director and/or executive officer of several public and
privately-owned companies controlled by GKH Partners, L.P.
Mr. Roberts is a Director of the Company and has served in that capacity
since 1996. In addition to his responsibilities as a Director, Mr. Roberts also
is an employee of the Company. Mr. Roberts has held senior positions in
international banking for the past thirty-five years.
COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended June 30, 1999, the Company paid $2,500 to each
director other than Mr. O'Hanlon for each meeting attended in person. During the
fiscal year ended June 30, 1999, the Board of Directors met a total of four
times.
Each of the incumbent directors attended all meetings of the Board and
committees of which he was a member held during the period he served on the
Board or such committee.
The Board of Directors has a standing Audit Committee and a Compensation
Committee. The Board has no nominating committee.
The Audit Committee consists of Messrs. Cohn, McHugh and Roberts and makes
recommendations concerning the engagement of the Company's independent auditors,
consults with the independent auditors concerning the audit plan and thereafter
concerning the auditor's report and management letter. During the fiscal year
ended June 30, 1999, the Audit Committee met one time.
The Compensation Committee consists of Messrs. Cohn, Goldberg, McHugh and
Roberts and met one time as a separate committee during the fiscal year ended
June 30, 1999 and also met in the normal course of each of the four Board of
Directors' meetings. The Compensation Committee reviews the annual compensation
rates of the officers and key employees of the Company, administers the
Company's compensation plans and makes recommendations in connection with such
plans.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
As permitted by the Delaware General Corporation Law, the Company's
Certificate of Incorporation limits the personal liability of a Director of the
Company for monetary damages for breach of fiduciary duty of care as a Director.
Liability is not eliminated for (i) any breach of the Director's duty of loyalty
to the Company or its stockholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
unlawful payment of dividends or stock purchases or redemptions pursuant to
Section 174 of the Delaware General Corporation Law, or (iv) any transaction
from which the Director derived an improper personal benefit.
SECTION 16(a) OF THE EXCHANGE ACT-BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Company's Directors, executive officers and any persons
holding 10% or more of the Company's Common Stock are required to report their
ownership of Common Stock and any changes in that ownership to the Securities
and Exchange Commission (the "SEC") on reports known as forms 3, 4 or 5, as
applicable, and to furnish the Company with copies of such report. Specific due
dates for these reports have been established and the Company is required to
report in this report any failure to file on a timely basis by such persons.
Based solely upon a review of copies of forms 3, 4 and 5 furnished to the
Company during the fiscal year ended June 30, 1999, all persons subject to the
reporting requirements of Section 16(a) filed all required reports on a timely
basis.
3
<PAGE> 6
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Cohn, Goldberg, McHugh and
Roberts. No Directors other than those currently serving on the Board of
Directors served as members of the Compensation Committee during the last
completed fiscal year. No member of that Committee, other than Messrs. Cohn and
Roberts, was an officer or employee of the Company or any of its subsidiaries
during the year. None of the executive officers of the Company has served on the
board of directors or on the compensation committee of any other entity any of
whose officers served either on the Board of Directors or on the Compensation
Committee of the Company.
4
<PAGE> 7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company for the
fiscal years 1999, 1998, and 1997 of (i) the Company's Chief Executive Officer
and (ii) the four most highly compensated executive officers who were serving as
executive officers at the end of the 1999 fiscal year.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
------------------- --------------------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS STOCK OPTIONS AND GRANTS (SHARES) COMPENSATION
- --------------------------- ---- -------- -------- --------------------------------- ------------
<S> <C> <C> <C> <C> <C>
Michael A. O'Hanlon......... 1999 $301,154 $250,000 100,000 $8,188(2)
President, Chief Executive 1998 301,154 200,000 100,000 4,322(3)
Officer and Director 1997 301,154 50,000 30,000 3,764(3)
Steven R. Garfinkel......... 1999 $230,885 $125,000 100,000 $4,495(4)
Executive Vice President and 1998 225,808 73,000 50,000 2,264(3)
Chief Financial Officer 1997 201,924 25,000 15,000 2,208(3)
Richard E. Miller........... 1999 $230,885 $125,000 100,000 $6,981(5)
Executive Vice President 1998 193,303 77,000 50,000 4,070(3)
1997 190,890 -0- 15,000 2,385(3)
Anthony J. Turek............ 1999 $215,769 $100,000 75,000 $4,470(6)
Executive Vice President 1998 193,154 60,000 50,000 2,197(3)
1997 170,654 12,000 15,000 2,147(3)
Jozef Osten(1).............. 1999 $292,800 -0- 15,000 $5,174(7)
Vice President 1998 -0- -0- -0- -0-
1997 -0- -0- -0- -0-
</TABLE>
- ---------------
(1) Mr. Osten became an employee of the Company on June 1, 1998.
(2) Includes a $2,500 matching contribution made by the Company to the officer's
Employee Savings Plan Account. The remainder represents life insurance
premiums paid by the Company on behalf of the officer.
(3) Includes a $500 matching contribution made by the Company to the officer's
Employee Savings Plan Account. The remainder represents life insurance
premiums paid by the Company on behalf of the officer.
(4) Includes a $1,110 matching contribution made by the Company to the officer's
Employee Savings Plan Account. The remainder represents life insurance
premiums paid by the Company on behalf of the officer.
(5) Includes a $1,545 matching contribution made by the Company to the officer's
Employee Savings Plan Account. The remainder represents life insurance
premiums paid by the Company on behalf of the officer.
(6) Includes a $1,151 matching contribution made by the Company to the officer's
Employee Savings Plan Account. The remainder represents life insurance
premiums paid by the Company on behalf of the officer.
(7) Includes a $1,846 matching contribution made by the Company to the officer's
Employee Savings Plan Account. The remainder represents life insurance
premiums paid by the Company on behalf of the officer.
OPTION GRANTS IN 1999 FISCAL YEAR
During the fiscal year ended June 30, 1999, options to purchase an
aggregate of 390,000 shares of Common Stock were granted to the executive
officers listed in the Summary Compensation Table (certain of which are
contingent upon stockholder approval at the Annual Meeting). In addition, since
June 30, 1999 options to purchase an additional 390,000 shares of Common Stock
were granted to the executive officers listed in the Summary Compensation Table,
subject to stockholder approval.
5
<PAGE> 8
AGGREGATED OPTION EXERCISES IN THE LAST
FISCAL YEAR END AND FISCAL-YEAR-END-OPTION-VALUES
The following table sets forth further information for the executive
officers listed in the Summary Compensation Table with respect to previously
granted options. The option awards made through June 30, 1999 are included in
the following table; the awards made after that date are not included.
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
ACQUIRED ON VALUE UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
NAME EXERCISE (#)(1) REALIZED ($)(1) FISCAL YEAR-END (#) FISCAL YEAR-END ($)(2)
- ---- --------------- --------------- ------------------------------- ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------ -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael A. O'Hanlon..... -0- N/A 143,334 176,666 $934,876 $308,499
Steven R. Garfinkel..... -0- N/A 51,667 138,333 161,501 235,499
Richard E. Miller....... -0- N/A 106,666 138,334 655,249 235,501
Anthony J. Turek........ -0- N/A 81,666 113,334 562,119 194,872
Jozef Osten............. -0- N/A -0- 15,000 -0- 24,375
</TABLE>
- ---------------
(1) During the 1999 fiscal year, no stock options were exercised by the
executive officers listed in the Summary Compensation Table.
(2) Represents the difference between the closing price of the Company's Common
Stock on June 30, 1999 and the exercise price of the options that were
exercisable as of that date times the number of exercisable options.
EMPLOYMENT AGREEMENTS AND INCENTIVE COMPENSATION
The Company has not entered into any employment agreements with any of its
employees or executive officers and, other than the Company's 1986 Stock Option
Plan, its 1996 Stock Option Plan and the DVI, Inc. 1995 Stock Bonus Plan (the
"Stock Bonus Plan") described below, has no long-term incentive compensation
plan. The Company, however, does provide short-term incentive compensation to
certain executive officers and other employees through the award of quarterly
and/or annual bonuses based upon certain agreed-upon performance criteria.
1996 STOCK OPTION PLAN. The Board of Directors adopted the 1996 Stock
Option Plan in 1997 and the stockholders of the Company adopted the 1996 Stock
Option Plan at the 1997 Annual Meeting and ratified certain option grants
previously made under the 1996 Stock Option Plan. The purpose of the 1996 Stock
Option Plan is to authorize the grant of (i) non-qualified stock options and
(ii) incentive stock options (collectively, "Options") to eligible employees,
consultants and directors of the Company or any of its subsidiaries.
The 1996 Stock Option Plan is administered by the Compensation Committee of
the Board of Directors and such committee has exclusive authority to authorize
the granting of Options. The maximum total number of shares of Common Stock
which may be made the subject of Options granted under the 1996 Stock Option
Plan is 1,500,000. As of the date hereof Options representing 2,391,999 shares
of Common Stock are outstanding under the 1996 Option Plan. In addition, there
are options representing 431,334 shares of Common Stock outstanding under the
Company's 1986 Stock Option Plan, the predecessor plan to the 1996 Stock Option
Plan; the 1986 Stock Option Plan has expired and no more options may be issued
under that plan. Under the 1996 Stock Option Plan and the 1986 Stock Option
Plan, the number of shares which may be issued on exercise of Options is subject
to adjustment by reason of stock splits or other similar capital events.
The Options will have exercise prices not less than 100% of the fair market
value of the Common Stock at the date of grant. The holder of the Option is able
to exercise the Option from time to time as specified in the particular Option.
The expiration date of an Option is determined by the Compensation Committee but
shall be no later than ten years from the date of grant. Options are not
transferable under the 1996 Stock Option Plan other than by will or the laws of
descent and distributions and (other than with respect to incentive stock
options) as otherwise provided by the Compensation Committee.
THE STOCK BONUS PLAN. Pursuant to the Stock Bonus Plan, the Company has
agreed, subject to the discretion of the Compensation Committee, to issue, from
time to time an aggregate of not more than 200,000
6
<PAGE> 9
shares of Common Stock of the Company to certain of its employees if the last
sale price of the Company's Common Stock is $16.00 per share or higher for 30
consecutive calendar days at any time before December 31, 2000, which condition
has been satisfied. The employee must have been employed by the Company during
such 30 day period to be eligible to receive shares of Common Stock. The Company
also has agreed that, if, at any time prior to December 31, 1998, there is an
event or series of events that constitutes a sale of the Company and the
consideration to be received per share of Common Stock is $13.00 or more, the
Company will issue all 200,000 shares pursuant to the Stock Bonus Plan. As of
the date hereof no shares of Common Stock have been issued pursuant to the Stock
Bonus Plan.
SEVERANCE AGREEMENTS. On November 20, 1995 the Company entered into a
Severance Agreement (the "Higgins Severance Agreement") with David L. Higgins,
the Company's former Chairman and Chief Executive Officer, pursuant to which Mr.
Higgins agreed to continue to perform certain consulting and other services for
the Company through December 1, 1997 (the "Initial Termination Date"). Pursuant
to the Higgins Severance Agreement the Company agreed (i) to pay Mr. Higgins an
aggregate of $275,000 through the Initial Termination Date, in installments
consistent with the Company's regular payroll schedule; (ii) to provide Mr.
Higgins, at the Company's sole expense, with healthcare and life insurance
benefits consistent with those provided to the Company's executive officers to
the Initial Termination Date; and (iii) to reimburse Mr. Higgins for certain
expenses incurred by him while performing services for the Company prior to the
Initial Termination Date. On November 26, 1997 the Company and Mr. Higgins
amended the Higgins Severance Agreement to provide that Mr. Higgins would
receive an additional $50,000 for providing certain consulting services to the
Company through December 1, 1998 and to extend the Initial Termination Date to
December 1, 1998. The Higgins Severance Agreement was further amended on
November 30, 1998 to provide for the continuation of Mr. Higgins' consulting
services to the Company through December 1, 2000 and the continuation of the
$50,000 annual payment and benefits during that period.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
This report of the Compensation Committee shall not be deemed incorporated
by reference to any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933, as amended, or under
the Exchange Act, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
A publicly held corporation may not, subject to limited exceptions, deduct
for federal income tax purposes certain compensation paid to certain executives
in excess of $1 million in any taxable year (the "Deduction Limitation"). It is
not expected that compensation to executives of the Company will exceed the
Deduction Limitation in the foreseeable future, and, therefore, the Company
generally has not attempted to qualify any of its compensation plans, programs
and arrangements for any of the exceptions to the Deduction Limitation.
OVERVIEW AND PHILOSOPHY
Messrs. Cohn, Goldberg, McHugh and Roberts, sitting as the Compensation
Committee (the "Committee"), are responsible for developing the Company's
executive compensation policies. The Committee determines the compensation to be
paid to the Chief Executive Officer and each of the other executives of the
Company. The Committee is responsible for setting and administering the policies
which govern annual compensation, the Stock Option Plan, and determination of
bonuses for executives.
There are three elements in the Company's executive compensation program:
- Base salary compensation.
- Short-term incentive compensation (bonuses).
- Long-term incentive compensation (stock options).
7
<PAGE> 10
In designing its compensation programs, the Company believes that executive
compensation should reflect the value created for stockholders and support the
Company's strategic goals. Specifically, the objectives of the program are as
follows:
- Attract and retain key executives important to the long-term success of
the Company.
- Provide incentives for performance with respect to the goals established
for each executive by management.
- Provide incentives for performance with respect to the Company's goals.
- Align the executive's interests with those of the Company's stockholders
through participation in stock-based plans.
- Reward individuals for outstanding contributions to the Company's
success.
The executive compensation program provides an overall level of
compensation opportunity that is competitive within the medical equipment
finance industry. Actual compensation levels may be greater or less than average
competitive levels in other companies based upon annual and long-term Company
performance as well as individual performance.
EXECUTIVE OFFICER COMPENSATION PROGRAM
BASE SALARY AND SHORT-TERM INCENTIVE COMPENSATION
The Company's general approach to base salary and short-term incentive
compensation is to pay salaries which when combined with bonuses are competitive
with the salaries and bonuses paid to executives of other companies in the
medical equipment finance industry based upon the individual's experience and
past and potential contribution to the Company. As described in the Company's
Proxy Statement, the base salary for the Company's executive officers for fiscal
year 1999 reflects levels deemed by the Company to have been appropriate in view
of the prior and expected contribution of the executives to the Company's
development. The Company believes that a significant part of the overall
compensation paid to executives should consist of bonuses paid annually or
quarterly based on the ability of the executive to achieve specified Company,
departmental and individual goals.
STOCK OPTION PLAN
The Board of Directors and the Committee believe that stock ownership is a
significant incentive in building stockholder wealth and aligning the interest
of employees and stockholders. Stock options will only have value if the
Company's stock price increases. In addition, the Company's stock options
utilize vesting periods to encourage key employees to continue in the employ of
the Company. The Stock Option Plan authorizes the Committee to award key
employees stock options at exercise prices, vesting schedules and with terms
established by the Committee.
Compensation Committee
Gerald L. Cohn
William S. Goldberg
John E. McHugh
Harry T.J. Roberts
September 29, 1999
PRICE PERFORMANCE GRAPH
Set forth below is a line graph comparing the Company's total stockholder
return on Common Stock with the S&P 500 Index, and a Peer Group Index, weighted
by market equity capitalization, as of the market close on June 30, 1994 through
the end of the fiscal year ended June 30, 1999. The Peer Group consists of
publicly traded specialty finance companies, selected by the Company in good
faith. The companies selected are the Finova Group Inc., Household International
Inc., Comdisco Inc., Leasing Solutions, Inc. and Prime Capital
8
<PAGE> 11
Corporation. Cumulative total returns are calculated assuming that $100 was
invested on June 30, 1994 in each of the Common Stock, the S&P 500 Index and the
Peer Group Index, and that all dividends were reinvested.
PERFORMANCE CHART
[PERFORMANCE CHART]
<TABLE>
<CAPTION>
DVI, INC. S & P 500 PEER GROUP
--------- --------- ----------
<S> <C> <C> <C>
1994 100 100 100
1995 124 126 143
1996 166 159 217
1997 153 214 336
1998 268 279 450
1999 180 342 448
</TABLE>
DATA PERIOD: JUNE 30, 1994 THROUGH JUNE 30, 1999
CERTAIN TRANSACTIONS
EMPLOYMENT ARRANGEMENTS. Gerald L. Cohn and Harry T.J. Roberts, who are
directors of the Company, also act as employees and advisors to the Company.
During the Company's 1999 fiscal year Messrs. Cohn and Roberts were paid
$110,423 and $120,462, respectively for the provision of such services.
FACILITIES LEASE. The Company's principal executive offices located in
Doylestown, Pennsylvania are leased from Mr. Walter S. Smerconish, who is the
step-son of one of the directors of the Company. During the 1999 fiscal year the
Company paid rent of approximately $447,074 to Mr. Smerconish. Also during the
1999 fiscal year, the Company signed a ten-year lease with Mr. Smerconish to
rent from him a new 60,000 square foot building to which, upon the completion
thereof, the Company will move its headquarters. The initial annual base rent
for the new headquarters building will be $960,000.
OFFICER LOANS. As of the date hereof, Michael A. O'Hanlon, the Company's
President and Chief Executive Officer and a member of the Board of Directors of
the Company, has loans outstanding from the Company in the aggregate principal
amount of $516,000. Of that amount, $316,000 was borrowed for Mr. O'Hanlon's
personal use and bears interest at 6%. In addition, during 1998 the Company
loaned
9
<PAGE> 12
Mr. O'Hanlon, Richard E. Miller, an Executive Vice President of the Company, and
Anthony J. Turek, an Executive Vice President of the Company, $200,000, $150,000
and $124,724, respectively, in connection with purchases of Company Common Stock
by these officers. Messrs. Miller and Turek have additional indebtedness to the
Company for personal purposes aggregating, respectively, $2,250 and $41,258.
Each of the loans is outstanding in full as of the date hereof and bears
interest at 6%, payable quarterly, except that the interest on Mr. O'Hanlon's
loans is payable annually.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth information regarding beneficial ownership
of shares of Common Stock as of September 21, 1999 by each stockholder known to
the Company to be the beneficial owner of more than 5% of the outstanding shares
of Common Stock, each director, each of the officers named in the Summary
Compensation Table and all current officers and directors as a group. Persons
named in the following table have sole voting and investment powers with respect
to all shares shown as beneficially owned by them, subject to community property
laws where applicable and other information contained in the footnotes to the
table. Information with respect to beneficial ownership is based upon the
Company's Common Stock records and data supplied to the Company by its
stockholders.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------------------------ -------------------- ----------------
<S> <C> <C>
Gerald L. Cohn***............................. 406,805(1)(2)(3)(4) 2.84
Steven R. Garfinkel***........................ 110,366(5) *
William S. Goldberg***........................ 11,666(4) *
John E. McHugh***............................. 42,066(1)(4)(6) *
Richard E. Miller**........................... 172,971(7)(8) 1.20
Michael A. O'Hanlon***........................ 374,131(9)(10) 2.59
Harry T. J. Roberts***........................ 13,666(4) *
Nathan Shapiro***............................. 68,866(4) *
Anthony J. Turek**............................ 145,733(11) *
Jozef Osten................................... 5,000(12) *
Ronald Baron****.............................. 2,983,100(13) 21.00
CIBC Trust Company (Bahamas) Limited*****..... 2,540,720(14)(15) 17.03
Walter F. Harrison******...................... 719,100(16) 5.06
All directors & officers as a group (14 1,623,229(1)(2)(3)(4)(5)(6)(7) 10.79
persons)....................................
(8)(9)(10)(11)(12)(17)
</TABLE>
- ---------------
* Less than 1%
** 4041 MacArthur Boulevard, Suite 401, Newport Beach, California 92660
*** 500 Hyde Park, Doylestown, Pennsylvania 18901
**** 767 Fifth Avenue, New York, New York 10153
***** P.O. Box N-3933, Nassau, Bahamas
****** 126 East 56th Street, 25th Floor, New York, New York 10022
(1) Includes 10,000 shares of Common Stock which may be purchased on the
exercise of warrants granted to certain directors of the Company.
(2) Does not include (a) 56,500 shares of Common Stock held of record by
Cynthia J. Cohn, who is a Vice President of the Company and one of Mr.
Cohn's daughters, and the Cynthia J. Cohn Revocable Trust and (b) 9,750
shares of Common Stock held of record by a trust established for the
benefit of Clayton Schmidt, Mr. Cohn's grandchild, as to all of which Mr.
Cohn disclaims any beneficial interest.
10
<PAGE> 13
(3) Includes 75,472 shares of Common Stock which may be exercised upon
conversion of $800,000 of the Company's 9 1/8% Convertible Subordinated
Notes due 2002.
(4) Includes 11,666 shares of Common Stock which may be purchased on the
exercise of stock options.
(5) Includes 106,666 shares of Common Stock which may be purchased on the
exercise of stock options.
(6) Does not include 2,000 shares of Common Stock held of record by Mr.
McHugh's wife, as to which Mr. McHugh disclaims beneficial ownership.
(7) Includes 161,666 shares of Common Stock which may be purchased on the
exercise of stock options.
(8) Includes 305 shares of Common Stock held through the Employee Savings
Plan.
(9) Includes 219,999 shares of Common Stock which may be purchased on the
exercise of stock options.
(10) Includes 1,832 shares of Common Stock held through the Employee Savings
Plan.
(11) Includes 118,333 shares of Common Stock which may be purchased on the
exercise of stock options.
(12) Includes 5,000 shares of Common Stock which may be purchased on the
exercise of stock options.
(13) According to Amendment No. 8 to a Schedule 13D dated July 29, 1998 (the
"Baron Schedule 13D") filed with the Securities and Exchange Commission,
Mr. Baron holds an aggregate of 2,983,150 shares of Common Stock directly
and as a controlling person of certain entities as follows: (i) 200,000
shares in his capacity as a controlling person of Baron Capital Group,
Inc.; (ii) 224,300 shares as a controlling person of BAMCO, Inc., a
registered investment adviser that controls Baron Asset Fund; (iii)
1,680,000 shares as a controlling person of Baron Asset Fund; (iv)
878,000 shares as a controlling person of Baron Capital Management, Inc.,
a registered investment adviser; and (v) 50 shares directly. Mr. Baron,
according to the Baron Schedule 13D, disclaims beneficial ownership of
the shares described in (ii), (iii) and (iv) of the preceding sentence.
(14) Held by Canadian Imperial Bank of Commerce Trust Company (Bahamas)
Limited ("CIBC"), as trustee of trusts for the benefit of the
grandchildren of A.N. Pritzker, deceased. Does not include 56,339 shares
of Common Stock owned by a partnership comprised of trusts for the
benefit of members of the Pritzker Family. CIBC is not the trustee of
such trusts. As used herein, the term "Pritzker Family" refers to the
lineal descendants of Nicholas J. Pritzker, deceased.
(15) Includes 716,981 shares of Common Stock held by CIBC, as trustee for
certain trusts which may be exercised upon conversion of $7,600,000 of
the Company's 9 1/8% Convertible Subordinated Notes due 2002.
(16) According to a Form 13F filed with the Securities and Exchange Commission
on August 12, 1999, Mr. Harrison holds an aggregate of 719,100 shares of
Common Stock as a controlling person of Granite Capital International
Group and its affiliated companies. According to representatives of
Granite Capital International Group, Mr. Harrison disclaims beneficial
ownership of all such shares.
(17) Includes 134,164 shares which may be purchased on the exercise of stock
options, in addition to those shares that may be purchased on the
exercise of options and warrants and upon conversion of certain notes set
forth in footnotes (1), (3), (4), (5), (7), (9), (11) and (12).
VOTE REQUIRED; BOARD RECOMMENDATION
The affirmative vote of a majority of the shares of Common Stock present
and voting in person or by proxy at the Annual Meeting is required for the
election of each nominee specified in this proposal.
The Board of Directors unanimously recommends that you vote FOR the
election of each nominee specified in this proposal. Proxies solicited by the
Board of Directors will be voted for the nominees specified in this proposal
unless authority to vote for one or more of such nominees is specifically
withheld in the proxy.
11
<PAGE> 14
PROPOSAL 2
PROPOSAL TO AMEND THE DVI 1996 STOCK OPTION PLAN
GENERAL
The stockholders are being asked to vote on a proposal to amend the
Company's 1996 Stock Option Plan (the "Option Plan") to permit the Company to
increase the number of shares of Common Stock subject to options under the
Option Plan from 1,500,000 to 2,700,000, subject to adjustments by reason of
stock splits or similar capital adjustments. By approving this proposal, the
stockholders also will be approving the grants previously authorized by the
Board, subject to stockholder approval, of options to acquire an aggregate of
891,999 shares of Common Stock. The Option Plan was approved by the stockholders
at the Annual Shareholders' Meeting held on December 4, 1997.
The terms and provisions of the Option Plan are summarized below. This
summary, however, does not purport to be a complete description of the Option
Plan and this description is qualified in its entirety by the terms of the
Option Plan.
PURPOSE
The purpose of the Option Plan is to authorize the grant of (i)
non-qualified stock options and (ii) incentive stock options (collectively,
"Options") to eligible employees, consultants and directors of the Company or
any subsidiary thereof. This granting of Options is intended to benefit the
Company by attracting such employees, consultants, and directors to, and
inducing them to remain with, the Company and its subsidiaries and by giving
such eligible employees, consultants and directors equity-based incentives to
increase their efforts to make the Company's business more successful.
ADMINISTRATION
The Option Plan is administered by the Compensation Committee. That
Committee has exclusive authority to authorize the granting of Options. Any
interpretation and construction of any provision of the Option Plan made by the
Compensation Committee is final, binding and conclusive on all persons having
any interest thereunder.
SECURITIES SUBJECT TO THE OPTION PLAN
The shares issued upon an exercise of an Option under the Option Plan may
be either authorized but unissued shares or treasury shares of the Company or
shares purchased on the open market or otherwise. Presently, the maximum
aggregate number of shares which may be made the subject of Options granted
under the Option Plan is 1,500,000. That limit will increase to 2,700,000 if the
Shareholders approve this Proposal 2. No Optionee may receive Options for more
than 1,000,000 shares of Common Stock over the life of the Option Plan.
ELIGIBILITY
The Compensation Committee will determine the eligibility of each proposed
recipient, based on, among other factors, the position and responsibilities of
the proposed recipient, the nature and value to the Company of the proposed
recipient's services, accomplishments and his or her potential contribution to
the success of the Company.
OPTIONS
The Options have exercise prices not less than 100% of the fair market
value (as defined in the Stock Option Plan) of the Common Stock at the date of
grant. Unless otherwise provided by the particular Option, the exercise price
may be paid by check or bank draft.
12
<PAGE> 15
The Optionee is able to exercise Options from time to time as specified in
the particular Option. The Compensation Committee determines the expiration date
of the Options, which date shall be no later than ten years from the date of
grant. Except in the circumstances described below and except as provided in any
award agreement, the Option must be exercised during the period the Optionee is
in the employ (or, in the case of consultants or directors, other service) of
the Company. If an Optionee's employment (or other service) terminates, for any
reason, within the first twelve months following the grant of an Option, such
Option, to the extent then unexercised, shall cease to be exercisable and shall
be forfeited immediately, unless the applicable award agreement provides
otherwise. If an Optionee's service to the Company terminates by reason of
disability, after the first twelve months following the grant, the Optionee may,
unless otherwise provided in the applicable award agreement, exercise his
Options on, or any time within the one-year period following, the date of such
termination to the extent that the Optionee was entitled to exercise the Options
at the date of the termination. If an Optionee dies while in the service of the
Company after the first twelve months following the grant of the Option, unless
otherwise provided in the applicable award agreement, such Option is exercisable
by the Optionee's legal representative for the period of one-year next
succeeding the date of his death, to the extent that the Optionee was entitled
to exercise the Option on the date he terminated service. Unless otherwise
provided in the applicable award agreement, if the Optionee should die after
termination of service, such termination for a reason other than disability or
retirement, but while the Option is still in effect, the Option (if and to the
extent otherwise exercisable by the Optionee at the time of death) may be
exercised until the earlier of (i) one year from the date of termination of
service of the Optionee, or (ii) the date on which the term of the Option
otherwise expires. If an Optionee's service to the Company terminates due to
retirement after the twelfth month following the date on which the option was
granted, unless otherwise provided in the applicable award agreement, the
Optionee may exercise his Options on, or any time within the three-month period
following, the date of such termination to the extent that the Optionee was
entitled to exercise the Options at the date of the termination. Upon voluntary
termination of the Optionee's employment by the Optionee or upon the termination
of the Optionee's employment for cause, all Options held by the Optionee, to the
extent then unexercised, shall automatically cease to be exercisable and shall
be forfeited immediately, unless the applicable award agreement provides
otherwise. If the Optionee's employment by the Company terminates, after the
twelfth month following the date of the grant of the option, for any reason
other than death, disability, retirement, for cause, or voluntary termination by
the Optionee and unless the Optionee's award agreement provides otherwise, the
Optionee may exercise his Options for a period of three months following the
termination to the extent that the Optionee was entitled to exercise the Options
at the date of the termination. Subject to the above conditions, the exercise
price and duration of the Options will be set by the Compensation Committee. No
Option shall be transferable other than by will or the laws of descent and
distribution and (other than with respect to incentive stock options) as
otherwise provided by the Compensation Committee.
SPECIAL LIMITATIONS FOR INCENTIVE STOCK OPTIONS
The Option Plan imposes certain limitations with respect to incentive stock
options, including the following limitations:
(i) The aggregate fair market value (determined at the time the incentive
stock options are granted) of the shares of Common Stock or shares of stock of
any Subsidiary of the Company with respect to which incentive stock options
under the Option Plan or any other plan are exercisable for the first time by
any Optionee during any calendar year shall not exceed $100,000.
(ii) If an incentive stock option is to be granted to an employee who
immediately before such grant owned 10% or more of the total combined voting
power of all classes of stock of the Company or any Subsidiary of the Company,
the exercise price per share of Common Stock shall be not less than 110% of the
fair market value at the time of the grant of the incentive stock option, and
the incentive stock option shall expire not more than five years from the date
of grant.
13
<PAGE> 16
STOCKHOLDER RIGHTS
Neither the Optionee nor any person entitled to exercise the Optionee's
rights in the event of death shall have any rights of a stockholder with respect
to the Shares subject to an Option, except to the extent that a certificate for
such Shares shall have been issued upon the exercise of the Option as provided
for in the Option Plan.
AMENDMENT AND TERMINATION
The Board may amend the Option Plan as it shall deem advisable, except that
(i) no amendment may adversely affect an Optionee with respect to Options
previously granted unless such amendments are in compliance with applicable laws
and (ii) no amendment shall be made by the Board without the approval of the
stockholders of the Company, if such amendment would cause the Option Plan to
fail to comply with any requirement of applicable law or regulation if it were
not so approved by the stockholders.
No Option shall be granted under the Option Plan after ten years from the
effective date of the Plan.
STOCK OPTION PLAN BENEFITS
Options to purchase 2,391,999 shares of Common Stock are outstanding under
the Option Plan pursuant to option grants to a total of 261 persons. Those
options in excess of 1,500,000 were issued, and are subject to, Shareholder
approval for the Company to increase the number of shares of Common Stock
subject to options under the Option Plan. The following table sets forth the
number of shares of Common Stock underlying options granted subject to
shareholder approval and the dollar value such options would have had on
September 21, 1999 (the difference between the closing price of the Common Stock
on such date and, if less, the exercise price times the number of options:
<TABLE>
<CAPTION>
STOCK OPTION PLAN
------------------------------
NAME NO. OF OPTIONS DOLLAR VALUE
- ---- -------------- ------------
<S> <C> <C>
Michael A. O'Hanlon......................................... 130,179 $13,218
Steven R. Garfinkel......................................... 130,179 13,218
Richard E. Miller........................................... 130,179 13,218
Anthony J. Turek............................................ 97,634 9,914
Jozef Osten................................................. 19,527 1,983
Director Group (excluding Mr. O'Hanlon)..................... 147,634 9,915
Non-Executive Officer/Employee Group (excluding all other
individuals listed above)................................. 236,667 0
</TABLE>
FEDERAL TAX CONSEQUENCES
INCENTIVE STOCK OPTIONS. In general, neither the grant nor the exercise of
an incentive stock option will result in taxable income to an Optionee or a
deduction for the Company. To receive special tax treatment as an incentive
stock option under the Internal Revenue Code of 1986, as amended (the "Code"),
as to shares acquired upon exercise of an incentive stock option, an Optionee
must neither dispose of such shares within two years after the incentive stock
option is granted nor within one year after the transfer of the shares to the
Optionee pursuant to exercise of the option. In addition, the Optionee must be
an employee of the Company or a qualified Company subsidiary at all times
between the date of grant and the date three months (one year in the case of
death or disability) before exercise of the option. Special tax treatment as an
incentive stock option under the Code generally allows the sale of Common Stock
received upon the exercise of an incentive stock option to result in any gain
being treated as a capital gain to the Optionee, but the Company will not be
entitled to a tax deduction. However, the exercise of an incentive stock option
(if the holding period rules described in this paragraph are satisfied) will
give rise to income includable by the Optionee in his or her alternative minimum
taxable income for purposes of the alternative minimum tax in an amount equal to
the excess of the fair market value of the stock acquired on the date of the
exercise of the option over the option price.
14
<PAGE> 17
If the holding period rules noted above are not satisfied, gain recognized
on the disposition of the shares acquired upon the exercise of an incentive
stock option will be characterized as ordinary income. Such gain will be equal
to the difference between the option price and the fair market value of the
shares at the time of exercise. (Special rules may apply to disqualifying
dispositions where the amount realized is less than the value at exercise.) The
Company will generally be entitled to a deduction equal to the amount of such
gain included by an Optionee as ordinary income. Any excess of the amount
realized upon such disposition over the fair market value at exercise will
generally be long-term or short-term capital gain depending on the holding
period involved. Notwithstanding the foregoing, in the event that exercise of
the Option is permitted other than by cash payment of the exercise price,
various special tax rules may apply.
NON-QUALIFIED STOCK OPTIONS. No income will be recognized by an Optionee
at the time a non-qualified stock option is granted. Generally, ordinary income
will, however, be recognized by an Optionee at the time a non-qualified stock
option is exercised in an amount equal to the excess of the fair market value of
the underlying Common Stock on the exercise date over the option price. The
Company will generally be entitled to a deduction for Federal income tax
purposes in the same amount as the amount included in ordinary income by the
Optionee with respect to his or her non-qualified stock option.
Gain or loss on a subsequent sale or other disposition of the shares
acquired upon the exercise of a non-qualified stock option will be measured by
the difference between the amount realized on the disposition and the tax basis
of such shares, and will generally be long-term or short-term capital gain
depending on the holding period involved. The tax basis of the shares acquired
upon the exercise of any non-qualified stock option will be equal to the sum of
the option price of such non-qualified stock option and the amount included in
income with respect to such option. Notwithstanding the foregoing, in the event
that exercise of the Option is permitted other than by cash payment of the
exercise price, various special tax rules may apply.
Additional special tax rules may apply to those Stock Option Plan
participants who are subject to Section 16 of the Securities and Exchange Act of
1934, as amended.
The foregoing tax discussion is a general description of certain expected
Federal income tax results under current law, and all affected individuals
should consult their own advisors if they wish any further details or have
special questions.
VOTE REQUIRED; BOARD RECOMMENDATION
The affirmative vote of a majority of the shares of Common Stock present
and voting in person or by proxy at the Annual Meeting is required for the
approval of the proposed amendment to the 1996 Stock Option Plan and the option
grants that were made thereunder, subject to stockholder approval, by the Board
of Directors in respect of an aggregate of 891,999 shares of Common Stock which
exceed the current limit of 1,500,000. The Board of Directors unanimously
recommends that you vote FOR the approval of the amendment to the Option Plan.
Proxies solicited by the Board of Directors will be voted for the approval of
this proposal unless a vote against the proposal or an abstention is
specifically indicated.
15
<PAGE> 18
PROPOSAL 3
PROPOSAL TO RATIFY APPOINTMENT OF ACCOUNTANTS
The Company proposes to select Deloitte & Touche LLP as the Company's
independent accountants for the fiscal year ending June 30, 2000. Deloitte &
Touche LLP has been the independent accountants for the Company since May, 1987.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting and will be available to respond to appropriate questions and to
make such statements as they may desire.
VOTE REQUIRED; BOARD RECOMMENDATION
The affirmative vote of a majority of the outstanding shares of Common
Stock present and voting in person or by proxy at the Annual Meeting is required
to ratify the appointment of Deloitte & Touche LLP as the Company's independent
certified public accountants. The Board of Directors unanimously recommends that
you vote FOR the ratification of Deloitte & Touche LLP as the Company's
independent certified public accountants. Proxies solicited by the Board of
Directors will be voted for the proposal unless a vote against the proposal or
an abstention is specifically indicated.
ANNUAL REPORT TO STOCKHOLDERS
The Company's Annual Report to Stockholders for the fiscal year ended June
30, 1999 (the "Annual Report"), which accompanies this Proxy Statement, contains
the consolidated financial statements of the Company. Such consolidated
financial statements, including the notes thereto and management's discussion
and analysis of financial condition and results of operations (collectively, the
"Financial Statements"), are incorporated by reference herein and are considered
a part of the Company's proxy soliciting material. Except for the Financial
Statements, the Annual Report is not incorporated in this Proxy Statement and is
not considered a part of the Company's proxy soliciting material.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
The Company has received no stockholder proposals to be voted on at this
meeting. Appropriate stockholder proposals which are intended to be presented at
the 2000 Annual Stockholders' Meeting must be received by the Company no later
than August 16, 2000, in order to be included in the 2000 proxy materials.
OTHER MATTERS
All expenses in connection with the solicitation of proxies will be paid by
the Company. The Company will pay brokers, nominees, fiduciaries or other
custodians for their reasonable expenses in sending proxy materials to, and
obtaining instructions from, persons for whom they hold stock of the Company.
The Company expects to solicit proxies primarily by mail, but directors,
officers and other employees of the Company may also solicit proxies in person
or by telephone, facsimile, or telegraph.
16
<PAGE> 19
As of the date of this Proxy Statement, the management has no knowledge of
any matters to be presented at the meeting other than those referred to above.
If any other matters properly come before the meeting, the persons named in the
accompanying form of proxy intend to vote such proxy in accordance with their
best judgment.
By Order of the Board of Directors
/s/ Melvin C. Breaux
MELVIN C. BREAUX
Secretary
September 29, 1999
STOCKHOLDERS MAY OBTAIN WITHOUT CHARGE A COPY OF THE COMPANY'S 1999 ANNUAL
REPORT ON FORM 10-K BY SENDING A WRITTEN REQUEST TO INVESTOR COMMUNICATIONS,
DVI, INC., 500 HYDE PARK, DOYLESTOWN, PENNSYLVANIA 18901.
17
<PAGE> 20
PROXY
DVI, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 29, 1999
The undersigned hereby constitutes and appoints Michael A. O'Hanlon and
Melvin C. Breaux, or either of them, attorneys and proxies of the undersigned
with full power of substitution to vote all shares of Common Stock of DVI, Inc.
(the "Company") owned or held by the undersigned at the Annual Meeting of
Stockholders of the Company to be held at the offices of the Company, 500 Hyde
Park, Doylestown, Pennsylvania 18901, on Friday, October 29, 1999, at 9:00 a.m.
and at any adjournment thereof.
The Board of Directors recommends a vote "FOR ALL NOMINEES" in Item 1 and
"FOR" Item 2.
ITEM 1. Election of Directors
/ / For all nominees listed below (except as marked to the contrary below)
/ / WITHHOLD AUTHORITY to vote for all nominees
INSTRUCTION: To withhold authority to vote for any individual nominee
strike a line through the nominee's name in the list below.
G. Cohn, J. McHugh, M. O'Hanlon, N. Shapiro, W. Goldberg, H. Roberts
ITEM 2. To approve and ratify an amendment of the Company's 1996 Incentive
Stock Option Plan to increase the number of shares for which options may be
granted thereunder to 2,700,000 shares and to approve the option grants made
pursuant to the Company's 1996 Stock Option Plan in excess of 1,500,000 shares.
/ / For / / Against
/ / Abstain
ITEM 3. To ratify the appointment of Deloitte & Touche LLP as independent
public accountants for the Company for the fiscal year ending June 30, 2000.
/ / For / / Against
/ / Abstain
ITEM 4. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE
AND RETURN PROMPTLY.
18
<PAGE> 21
PAGE 2
THE PROXY HOLDERS ARE DIRECTED TO VOTE AS SET FORTH ABOVE. THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER. IF NO
DIRECTION IS GIVEN WHEN THE DULY EXECUTED AND DATED PROXY IS RETURNED, SUCH
SHARES WILL BE VOTED "FOR ALL NOMINEES" IN ITEM 1 AND "FOR" ITEM 2 AND IN
ACCORDANCE WITH THE JUDGMENT OF SUCH PROXIES ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE ANNUAL MEETING. IF ANY OF THE NOMINEES FOR DIRECTOR IS
UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE, THE PROXY HOLDERS WILL VOTE
FOR SUCH OTHER PERSON OR PERSONS AS THE BOARD OF DIRECTORS MAY RECOMMEND.
The undersigned hereby acknowledges receipt of the Company's Annual Report
to Stockholders and of the Notice of Annual Meeting of Stockholders and Proxy
Statement relating to the Annual Meeting.
Dated:___________________, 1999
Signature(s):
Please mark, date and sign as your name appears above and return in
the enclosed envelope. When signing as an agent, attorney, or
fiduciary, or for a corporation or partnership, indicate the capacity
in which you are signing. Shares registered in joint names should be
signed by each joint tenant or trustee.
19
