Document:

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                                                                    EXHIBIT 10.1

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                          SECURITIES PURCHASE AGREEMENT

                            DATED AS OF JUNE 29, 2001

                                 BY AND BETWEEN

                           DEEPHAVEN/JE MATTHEW I, LLC

                                       AND

                                    DVI, INC.

================================================================================

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                        <C>
ARTICLE I PURCHASE AND SALE OF NOTE..........................................................2
-----------------------------------

   SECTION 1.1    PURCHASE OF NOTE...........................................................2
   -----------    -----------------
   SECTION 1.2    CLOSING DATE...............................................................3
   -----------    -------------
   SECTION 1.3    FORM OF PAYMENT............................................................3
   -----------    ----------------

ARTICLE II BUYER'S REPRESENTATIONS AND WARRANTIES............................................3
-------------------------------------------------

   SECTION 2.1    INVESTMENT PURPOSE.........................................................3
   -----------    -------------------
   SECTION 2.2    ACCREDITED INVESTOR STATUS.................................................3
   -----------    ---------------------------
   SECTION 2.3    RELIANCE ON EXEMPTIONS.....................................................3
   -----------    -----------------------
   SECTION 2.4    INFORMATION................................................................4
   -----------    ------------
   SECTION 2.5    NO GOVERNMENTAL REVIEW.....................................................4
   -----------    -----------------------
   SECTION 2.6    TRANSFER OR RESALE.........................................................4
   -----------    -------------------
   SECTION 2.7    LEGENDS....................................................................4
   -----------    --------
   SECTION 2.8    VALIDITY; ENFORCEMENT......................................................5
   -----------    ----------------------
   SECTION 2.9    ORGANIZATION AND QUALIFICATION.............................................5
   -----------    -------------------------------
   SECTION 2.10   AUTHORIZATION; ENFORCEMENT; VALIDITY.......................................5
   ------------   -------------------------------------
   SECTION 2.11   RESIDENCY..................................................................6
   ------------   ----------
   SECTION 2.12   TRADING RESTRICTIONS.......................................................6
   ------------   ---------------------
   SECTION 2.13   REGISTRATION OF ISSUANCE OF THE SHARES.....................................6
   ------------   ---------------------------------------
   SECTION 2.14   BUYER'S KNOWLEDGE..........................................................6
   ------------   ------------------

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................................6
---------------------------------------------------------

   SECTION 3.1    ORGANIZATION AND QUALIFICATION.............................................6
   -----------    -------------------------------
   SECTION 3.2    AUTHORIZATION; ENFORCEMENT; VALIDITY.......................................6
   -----------    -------------------------------------
   SECTION 3.3    ISSUANCE OF SECURITIES.....................................................7
   -----------    -----------------------
   SECTION 3.4    NO CONFLICTS...............................................................7
   -----------    -------------
   SECTION 3.5    ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF SECURITIES....................7
   -----------    --------------------------------------------------------
   SECTION 3.6    DILUTIVE EFFECT............................................................8
   -----------    ----------------
   SECTION 3.7    ELIGIBILITY TO REGISTER ON FORM S-3........................................8
   -----------    ------------------------------------
   SECTION 3.8    ACCURACY OF STATEMENTS.....................................................8
   -----------    -----------------------
   SECTION 3.9    FLEET LOAN DOCUMENTS.......................................................8
   -----------    ---------------------
   SECTION 3.10   DIRECTOR AND OFFICER LIABILITY INSURANCE...................................8
   ------------   -----------------------------------------
   SECTION 3.11   CAPITALIZATION.............................................................9
   ------------   ---------------

ARTICLE IV COVENANTS.........................................................................9
--------------------

   SECTION 4.1    COMMERCIALLY REASONABLE EFFORTS............................................9
   -----------    --------------------------------
   SECTION 4.2    REGISTRATION STATEMENT.....................................................9
   -----------    -----------------------
   SECTION 4.3    REPORTING STATUS..........................................................10
   -----------    -----------------
   SECTION 4.4    USE OF PROCEEDS...........................................................10
   -----------    ----------------
   SECTION 4.5    SEC FILINGS...............................................................10
   -----------    ------------
   SECTION 4.6    RESERVATION OF SHARES.....................................................10
   -----------    ----------------------
   SECTION 4.7    LISTING...................................................................10
   -----------    --------
   SECTION 4.8    EXPENSES..................................................................11
   -----------    ---------
   SECTION 4.9    LIMITATION ON NUMBER OF EXCHANGE SHARES AND THE WARRANT SHARES............11
   -----------    ---------------------------------------------------------------
   SECTION 4.10   OTHER FINANCING...........................................................11
   ------------   ----------------

ARTICLE V TRANSFER AGENT INSTRUCTIONS.......................................................11
-------------------------------------

ARTICLE VI CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL...................................12
---------------------------------------------------------

   SECTION 6.1    DELIVERY OF DOCUMENTS.....................................................12
   -----------    ----------------------
</TABLE>

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<TABLE>
<S>        <C>                                                                             <C>
   SECTION 6.2    PURCHASE PRICE............................................................12
   -----------    ---------------
   SECTION 6.3    REPRESENTATIONS AND WARRANTIES............................................12
   -----------    -------------------------------

ARTICLE VII CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE....................................13
--------------------------------------------------------

   SECTION 7.1    DELIVERY OF DOCUMENTS.....................................................13
   -----------    ----------------------
   SECTION 7.2    SECURITIES LAWS...........................................................13
   -----------    ----------------
   SECTION 7.3    FINANCIAL'S ACKNOWLEDGMENTS...............................................13
   -----------    ----------------------------
   SECTION 7.4    REPRESENTATIONS AND WARRANTIES............................................13
   -----------    -------------------------------
   SECTION 7.5    OPINION...................................................................13
   -----------    --------
   SECTION 7.6    NOTE......................................................................13
   -----------    -----
   SECTION 7.7    BOARD APPROVAL............................................................13
   -----------    ---------------
   SECTION 7.8    RESERVATION OF SHARES.....................................................14
   -----------    ----------------------
   SECTION 7.9    TRANSFER AGENT............................................................14
   -----------    ---------------
   SECTION 7.10   GOOD STANDING.............................................................14
   ------------   --------------
   SECTION 7.11   SECRETARY'S CERTIFICATE...................................................14
   ------------   ------------------------
   SECTION 7.12   FLEET.....................................................................14
   ------------   ------
   SECTION 7.13   OTHER.....................................................................14
   ------------   ------

ARTICLE VIII INDEMNIFICATION................................................................14
----------------------------

ARTICLE IX GOVERNING LAW; MISCELLANEOUS.....................................................16
---------------------------------------

   SECTION 9.1    GOVERNING LAW; JURISDICTION; JURY TRIAL...................................16
   -----------    ----------------------------------------
   SECTION 9.2    COUNTERPARTS..............................................................17
   -----------    -------------
   SECTION 9.3    HEADINGS..................................................................17
   -----------    ---------
   SECTION 9.4    SEVERABILITY..............................................................17
   -----------    -------------
   SECTION 9.5    ENTIRE AGREEMENT; AMENDMENTS..............................................17
   -----------    -----------------------------
   SECTION 9.6    NOTICES...................................................................17
   -----------    --------
   SECTION 9.7    SUCCESSORS AND ASSIGNS....................................................18
   -----------    -----------------------
   SECTION 9.8    NO THIRD PARTY BENEFICIARIES..............................................19
   -----------    -----------------------------
   SECTION 9.9    SURVIVAL..................................................................19
   -----------    ---------
   SECTION 9.10   PUBLICITY.................................................................19
   ------------   ----------
   SECTION 9.11   FURTHER ASSURANCES........................................................19
   ------------   -------------------
   SECTION 9.12   TERMINATION...............................................................19
   ------------   ------------
   SECTION 9.13   NO STRICT CONSTRUCTION....................................................19
   ------------   -----------------------
   SECTION 9.14   REMEDIES..................................................................20
   ------------   ---------
   SECTION 9.15   PAYMENT SET ASIDE.........................................................20
   ------------   ------------------
   SECTION 9.16   EXPENSES..................................................................20
   ------------   ---------

WAIVER AND RELEASE..........................................................................28
------------------
</TABLE>

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                                    EXHIBITS

<TABLE>
<S>            <C>
EXHIBIT A      Form of Note
EXHIBIT B      Form of Warrant
EXHIBIT C      Form of Security Agreement
EXHIBIT D      Form of Purchase Price Note
EXHIBIT E      Form of Company Counsel Opinion
EXHIBIT F      Form of Irrevocable Transfer Agent Instructions
EXHIBIT G      Form of Waiver and Release
</TABLE>

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<PAGE>   5

                            GLOSSARY OF DEFINED TERMS

<TABLE>
<S>                                                                                        <C>
1934 ACT....................................................................................10
AFFILIATE...................................................................................18
AGREEMENT....................................................................................2
AMENDMENT....................................................................................9
BUSINESS DAY.................................................................................3
BUYER........................................................................................2
BUYER INDEMNIFIED PARTIES...................................................................14
BUYER LOSSES................................................................................14
BUYER TRANSACTION DOCUMENTS..................................................................5
CLOSING......................................................................................2
CLOSING DATE.................................................................................2
COMMON STOCK.................................................................................2
COMPANY......................................................................................2
COMPANY INDEMNIFIED PARTIES.................................................................14
COMPANY LOSSES..............................................................................15
EXCHANGE SHARES..............................................................................2
FINANCIAL................................................................................2, 10
FLEET LOAN DOCUMENTS.........................................................................8
INDEMNIFIED PARTIES.........................................................................14
INDEMNIFYING PARTY..........................................................................15
IRREVOCABLE TRANSFER AGENT INSTRUCTIONS.....................................................11
ISSUANCE DATE................................................................................9
LOSSES......................................................................................15
MATERIAL ADVERSE CHANGE......................................................................7
NOTE.........................................................................................2
PRIMARY REGISTRATION STATEMENT...............................................................9
PRINCIPAL MARKET............................................................................10
PURCHASE PRICE...............................................................................2
PURCHASE PRICE NOTE..........................................................................3
REGULATION D.................................................................................3
RESALE REGISTRATION STATEMENT................................................................9
RULE 144.....................................................................................4
SEC..........................................................................................3
SECURITIES...................................................................................3
SECURITY AGREEMENT...........................................................................2
SHARES.......................................................................................2
SUBSIDIARIES.................................................................................6
TRANSACTION DOCUMENTS........................................................................6
WARRANTS.....................................................................................2
</TABLE>

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<PAGE>   6

SECURITIES PURCHASE AGREEMENT

        SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of June 29,
2001, by and between DEEPHAVEN/JE MATTHEW I, LLC, a Minnesota limited liability
company (the "Buyer"), and DVI, INC., a Delaware corporation (the "Company").

                                    RECITALS

        WHEREAS, the Company has authorized the issuance of a $12,000,000 9.5%
Asset-Backed Exchangeable Term Note, substantially in the form attached hereto
as EXHIBIT A (the "Note"), which shall be exchangeable into shares of common
stock of the Company, par value $.005 per share (the "Common Stock") (if, as and
when issued pursuant to the Note, the "Exchange Shares"), in accordance with the
terms of the Note;

        WHEREAS, the Company will contribute all of the proceeds from the sale
of the Note to DVI Financial Services, Inc. ("Financial"), a wholly-owned
subsidiary of the Company, and Financial will use such contribution for its
working capital purposes;

        WHEREAS, the Company has authorized the issuance of warrants, each
substantially in the form attached hereto as EXHIBIT B (the "Warrants"), which
Warrants may be issued as provided for in the Note or otherwise, each Warrant to
be for the purchase of shares of Common Stock (the "Warrant Shares"; the
Exchange Shares and the Warrant Shares being referred to collectively as the
"Shares") at certain exercise prices as provided for in the Warrants;

        WHEREAS, the obligations of the Company under the Note, the Warrants and
the other Transaction Documents (as hereinafter defined) shall be secured by
certain assets of Financial pursuant to a security agreement in substantially
the form attached hereto as Exhibit C (the "Security Agreement") by and between
Financial and Buyer; and

        WHEREAS, Buyer desires to purchase, and the Company desires to issue and
deliver to Buyer, the Note, all upon the terms and conditions stated in this
Agreement;

        NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties of the parties set forth in this Agreement and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and Buyer hereby agree as follows:

                                   ARTICLE I
                            PURCHASE AND SALE OF NOTE

SECTION 1.1    PURCHASE OF NOTE.

        Subject to the satisfaction (or waiver, if permissible) of the
conditions set forth in Article VI and Article VII of this Agreement, the
Company shall issue and sell to Buyer, and Buyer agrees to purchase from the
Company the Note at the closing (the "Closing"). The aggregate purchase price
(the "Purchase Price") for the Note at the Closing shall be $12,000,000 payable
in the manner set forth in Section 1.3 of this Agreement.

SECTION 1.2    CLOSING DATE.

        The date and time of the Closing (the "Closing Date") shall occur,
subject to the satisfaction (or waiver, if permissible) of the conditions to the
Closing set forth in Article VI and Article VII of this

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Agreement, on June 29, 2001 or such other date as is mutually agreed to by the
Company and Buyer. The Closing shall occur at the offices of Schwartz, Cooper,
Greenberger & Krauss, Chartered, 180 North LaSalle Street, 27th Floor, Chicago,
Illinois 60601.

SECTION 1.3    FORM OF PAYMENT.

        On the Closing Date, Buyer shall pay the Purchase Price to the Company
by (i) delivery to the Company of a duly executed promissory note of Fairway
Opportunity Group International Trading Company, a Cayman Island limited
liability company and one of the members of Buyer in the stated principal amount
of $3,000,000 substantially in the form attached hereto as EXHIBIT D (the
"Purchase Price Note") and (ii) a wire transfer of immediately available funds
in the amount of $9,000,000 to Account No. 2181-01-6540 at Fleet National Bank
("Fleet") and the Company shall deliver to Buyer the Note, duly executed on
behalf of the Company and registered in the name of Buyer. "Business Day" shall
mean any day other than a Saturday or Sunday or a day on which commercial banks
in the City of Chicago, Illinois or the Commonwealth of Pennsylvania are
authorized or required by law or executive order to remain closed.

                                   ARTICLE II
                     BUYER'S REPRESENTATIONS AND WARRANTIES

        Subject to the provisions of Section 2.13 of this Agreement, Buyer
hereby represents and warrants to the Company that:

SECTION 2.1    INVESTMENT PURPOSE.

        Buyer (i) is acquiring the Note and will acquire the Warrants, if
issued, (ii) upon exchange of the Note, if any, will acquire the Exchange Shares
then issuable, and (iii) upon exercise of the Warrants, will acquire the Warrant
Shares issuable upon exercise thereof, (the Note, the Exchange Shares, the
Warrants and the Warrant Shares collectively are referred to herein as the
"Securities"), as principal, for its own account for investment only and not
with a view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered or exempt from
registration under the 1933 Act.

SECTION 2.2    ACCREDITED INVESTOR STATUS.

        Buyer is an "accredited investor" as that term is defined in Rule 501(a)
of Regulation D ("Regulation D"), as promulgated by the United States Securities
and Exchange Commission ("SEC").

SECTION 2.3    RELIANCE ON EXEMPTIONS.

        Buyer understands that the Securities are being offered and sold to it
in reliance on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying in part
upon the truth and accuracy of, and Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
Buyer set forth herein in order to determine the availability of such exemptions
and the eligibility of Buyer to acquire such Securities.

SECTION 2.4    INFORMATION.

        Buyer and its advisors have been furnished with all materials relating
to the business, finances and operations of the Company and materials relating
to the offer and sale of the Securities, and have

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been furnished with such other materials as Buyer has requested. Buyer and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company. Buyer understands that its investment in the Securities involves a high
degree of risk. Buyer has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Securities.

SECTION 2.5    NO GOVERNMENTAL REVIEW.

        Buyer understands that no United States federal or state agency or any
other government or governmental agency has passed on or made any recommendation
or endorsement of the Securities or the fairness or suitability of the
investment in the Securities nor have such authorities passed upon or endorsed
the merits of the offering of the Securities.

SECTION 2.6    TRANSFER OR RESALE.

        Buyer understands that, except as provided in Section 4.2 of this
Agreement, (i) the Securities have not been and are not being registered under
the 1933 Act or any state securities laws, and may not be offered for sale,
sold, assigned or transferred unless (A) subsequently registered thereunder, (B)
Buyer shall have delivered to the Company an opinion of counsel, in a form
reasonably acceptable to the Company, to the effect that such Securities to be
sold, assigned or transferred may be sold, assigned or transferred pursuant to
an exemption from such registration, or (C) Buyer provides the Company with an
assurance (which assurance shall be acceptable to the Company in its reasonable
discretion) that such Securities could then be sold, assigned or transferred
pursuant to Rule 144 promulgated under the 1933 Act (or a successor rule
thereto) ("Rule 144"); (ii) any sale of the Securities made in reliance on Rule
144 may be made only in accordance with the terms of Rule 144 and further, if
Rule 144 is not applicable, any resale of the Securities under circumstances in
which the seller (or the person through whom the sale is made) may be deemed to
be an underwriter (as that term is defined in the 1933 Act) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register the Note and the Warrants under the
1933 Act or any state securities laws or to comply with the terms and conditions
of any exemption thereunder.

SECTION 2.7    LEGENDS.

        Buyer understands that the certificates or other instruments
representing the Note and any Warrant and, if the issuance of the Exchange
Shares or any Warrant Shares have not been registered under the 1933 Act, the
certificates representing such Exchange Shares or Warrant Shares not so
registered, except as set forth below, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed with
the Company's transfer agent against transfer of such stock certificates):

            THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
            REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
            APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED
            FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
            ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
            THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
            APPLICABLE STATE SECURITIES LAWS, OR A VALID EXEMPTION FROM SUCH
            REGISTRATION REQUIREMENTS, TOGETHER WITH AN OPINION OF COUNSEL, IN A
            FORM AND

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            SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, THAT
            REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
            SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

        The legend set forth above shall be removed and the Company shall issue
a certificate without such legend to the holder of the Securities upon which it
is stamped, if, unless otherwise required by state securities laws, (i) such
Securities are sold in a transaction registered under the 1933 Act, (ii) in
connection with a sale transaction, such holder provides the Company with an
opinion of counsel in a form reasonably acceptable to the Company to the effect
that a public sale, assignment or transfer of the Securities may be made without
registration under the 1933 Act and such legend may be removed, or (iii) such
holder provides the Company with the documentation and/or other assurances
required by Section 2.6 of this Agreement.

SECTION 2.8    VALIDITY; ENFORCEMENT.

        This Agreement has been duly and validly authorized, executed and
delivered by Buyer and is a valid and binding agreement of Buyer enforceable
against Buyer in accordance with its terms, subject as to enforceability to
general principles of equity and to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies.

SECTION 2.9    ORGANIZATION AND QUALIFICATION.

        Buyer is a duly organized limited liability company, validly existing
and in good standing under the laws of the State of Minnesota, and has the
requisite power and authority to own its properties and to carry on its business
as now being conducted.

SECTION 2.10   AUTHORIZATION; ENFORCEMENT; VALIDITY.

        (i) Buyer has the requisite power and authority to enter into and
perform its obligations under this Agreement and each of the other agreements
entered into by the Buyer in connection with the transactions contemplated by
this Agreement (collectively, the "Buyer Transaction Documents"); (ii) the
execution and delivery of the Buyer Transaction Documents by Buyer and the
consummation by it of the transactions contemplated by the Buyer Transaction
Documents has been duly authorized by Buyer's members and no further
authorization is required by the Buyer's members; (iii) the Buyer Transaction
Documents have been duly executed and delivered by Buyer; and (iv) the Buyer
Transaction Documents constitute the valid and binding obligation of Buyer
enforceable against Buyer in accordance with their respective terms, except as
such enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors' rights and
remedies.

SECTION 2.11   RESIDENCY.

        Buyer is a limited liability company organized under the laws of the
State of Minnesota and having its principal place of business in Minnesota.

SECTION 2.12   TRADING RESTRICTIONS.

        So long as the Note is outstanding, if Buyer or any of its affiliates
have, directly or indirectly, entered into any short sale of the Common Stock to
be issued pursuant to the exercise of an Exchange

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Right (as defined in the Note) then Buyer shall deliver an Exchange Notice (as
defined in the Note) for such Common Stock to the Company within 72 hours of
entering into such short sale.

SECTION 2.13   REGISTRATION OF ISSUANCE OF THE SHARES.

        If any of the Shares are issued in a transaction registered under the
1933 Act, the Buyer shall be deemed to have not made the representations and
warranties in Section 2.1, 2.2, 2.3, 2.6 or 2.7 solely with respect to such
Shares.

SECTION 2.14   BUYER'S KNOWLEDGE.

        Buyer has no actual knowledge of any fact, circumstance or other
information that would cause any misrepresentation or breach of any
representation or warranty made by the Company or Financial in the Transaction
Documents as of the date of this Agreement.

                                  ARTICLE III
                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

        The Company represents and warrants to Buyer that:

SECTION 3.1    ORGANIZATION AND QUALIFICATION.

        The Company and each of its "Subsidiaries" (which for purposes of this
Agreement means any corporation, partnership, joint venture or other entity in
which the Company owns, directly or indirectly, 50% or more of the outstanding
voting securities) are entities duly organized, validly existing and in good
standing under the laws of the jurisdiction in which they are organized, and
have the requisite power and authority to own their properties and to carry on
their business as now being conducted.

SECTION 3.2    AUTHORIZATION; ENFORCEMENT; VALIDITY.

        (i) The Company has the requisite corporate power and authority to enter
into and perform its obligations under this Agreement, the Note, the Warrants,
the Irrevocable Transfer Agent Instructions (as defined in Article V), and each
of the other agreements entered into by the Company in connection with the
transactions contemplated by this Agreement (collectively with the Security
Agreement, the "Transaction Documents"), and to issue the Securities in
accordance with the terms of the Transaction Documents to which it is a party;
(ii) the execution and delivery of the Transaction Documents to which it is a
party by the Company and the consummation by it of the transactions contemplated
by the Transaction Documents to which the Company is a party, including, without
limitation, the issuance of the Note and each of the Warrants, and the
reservation for issuance of the Exchange Shares and the Warrant Shares have been
duly authorized by the Company's Board of Directors and no further authorization
is required by the Company, its Board of Directors or its stockholders; (iii)
the Transaction Documents to which the Company is a party have been duly
executed and delivered by the Company; and (iv) the Transaction Documents to
which the Company is a party constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with their terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of creditors'
rights and remedies.

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SECTION 3.3    ISSUANCE OF SECURITIES.

        Upon issuance, any Warrants (and any Warrants issued in substitution or
replacement of any Warrant) will be and upon exchange or exercise in accordance
with the Note or any Warrant, as the case may be, the Exchange Shares and the
Warrant Shares will be, validly issued, fully paid and non-assessable. The
amount of shares of Common Stock required by SECTION 4.6 of this Agreement has
been duly authorized and reserved for issuance upon exchange of the Note and
upon exercise of the Warrants. The issuance and sale of the Securities has been
or will be registered under the 1933 Act, or provided that the representations
and warranties of the Buyer set forth in Article II are true and correct when
made, as of the Closing Date and on the date the Exchange Shares and Warrant
Shares are issued, is and will be exempt from registration under the 1933 Act.

SECTION 3.4    NO CONFLICTS.

        Upon receipt of Fleet's consent, pursuant to Section 7.12, the
execution, delivery and performance of the Transaction Documents to which the
Company is a party by the Company and the consummation by the Company of the
transactions contemplated by the Transaction Documents to which the Company is a
party (including, without limitation, the reservation for issuance and issuance
of the Exchange Shares and the Warrant Shares) will not (i) result in a
violation of the Certificate of Incorporation or the By-laws of the Company or
(ii) constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party, or result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations) applicable to the
Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected except, in the case of
the preceding clause (ii), for such defaults, giving of rights and violations as
would not have a Material Adverse Effect. Except as specifically contemplated by
this Agreement and as required under the 1933 Act or applicable state securities
laws, the Company is not required to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental agency or
any regulatory or self-regulatory agency in order for it to execute, deliver or
perform any of its obligations under or contemplated by this Agreement or any
other of the Transaction Documents to which the Company is a party, in each case
in accordance with the terms of the Transaction Documents. For purposes of this
Section 3.4, "Material Adverse Effect" shall mean any material adverse effect on
the business, properties, assets, operations, results of operations, or
financial condition of the Company and its Subsidiaries, taken as a whole.

SECTION 3.5    ACKNOWLEDGMENT REGARDING BUYER'S PURCHASE OF SECURITIES.

        The Company acknowledges and agrees that Buyer is acting solely in the
capacity of arm's length purchaser with respect to the Transaction Documents and
the transactions contemplated by the Transaction Documents. The Company further
acknowledges that Buyer is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated by the Transaction Documents and any advice
given by Buyer or any of its representatives or agents in connection with the
Transaction Documents and the transactions contemplated by the Transaction
Documents is merely incidental to Buyer's purchase of the Securities.

SECTION 3.6    DILUTIVE EFFECT.

        The Company understands and acknowledges that the number of Exchange
Shares issuable upon exchange of the Note and Warrant Shares issuable upon
exercise of any Warrant will increase in certain

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circumstances. The Company further acknowledges that its obligation to issue
Exchange Shares upon exchange of the Note in accordance with this Agreement and
the Note, and its obligation to issue any Warrant Shares upon exercise of any
Warrant in accordance with this Agreement, any Warrant and the Note, is, in each
case, absolute and unconditional regardless of the dilutive effect that such
issuance may have on the ownership interests of other stockholders of the
Company.

SECTION 3.7    ELIGIBILITY TO REGISTER ON FORM S-3.

        The Company is eligible to register the Shares to be issued to Buyer on
Form S-3 pursuant to the 1933 Act.

SECTION 3.8    ACCURACY OF STATEMENTS.

        This Agreement, the other Transaction Documents and any agreement,
schedule, exhibit or certificate furnished or to be furnished by or on behalf of
the Company in connection with this Agreement, the other Transaction Documents
or any of the transactions contemplated hereby, any Registration Statement (as
defined below) and all reports, statements and other documents incorporated by
reference in such Registration Statement and all of the written information
supplied to Buyer by the Company does not contain any untrue statement of a
material fact, or omit to state a material fact necessary to make the statements
contained therein, not misleading. Neither any inquiries nor any other due
diligence investigations conducted by Buyer or its advisors, if any, or its
representatives shall modify, amend or affect Buyer's right to rely on the
Company's representations and warranties as set forth herein or upon any of the
aforesaid documents and written information furnished by the Company or its
advisors or representatives to Buyer or its advisors or representatives;
provided, however, that Buyer may not bring any action for indemnification or
otherwise in respect of any matter of which Buyer had actual knowledge as of the
date of this Agreement or the Closing.

SECTION 3.9    FLEET LOAN DOCUMENTS.

        The representations and warranties of the Financial set forth in Article
3 of the Third Amended and Restated Loan Agreement dated as of February 28,
2000, among Financial, the banks signatory thereto, U.S. Bank National
Association, as documentation agent and Fleet, as arranger and administrative
and collateral agent, as amended (the "Fleet Loan Documents" ) , (subject to the
disclosure schedules made in part thereof) are made by the Company herein as if
such representations and warranties were set forth in this Section 3.9.

SECTION 3.10   DIRECTOR AND OFFICER LIABILITY INSURANCE.

        The Company has obtained a directors' and officers' liability insurance
policy from an insurer of recognized financial responsibility in an amount and
on such terms as management of the Company believes to be prudent and customary
in the businesses in which the Company and its Subsidiaries engage.

SECTION 3.11   CAPITALIZATION.

        The capitalization of the Company as of June 29, 2001, set forth in the
capitalization table previously delivered by the Company to Buyer is true and
accurate in all material respects. There are no preemptive rights or other
rights to subscribe for or to purchase, or any restriction upon the voting or
transfer of any shares of the Common Stock pursuant to the Company's certificate
of incorporation, by-laws or other governing documents or any agreement or other
instrument to which the Company or any of

                                       8
<PAGE>   13

its Subsidiaries is a party or by which any of them may be bound, other than as
set forth in said capitalization table.

                                   ARTICLE IV
                                    COVENANTS

SECTION 4.1    COMMERCIALLY REASONABLE EFFORTS.

        Each party to this Agreement shall use its commercially reasonable
efforts to timely satisfy each of the conditions to be satisfied by it as
provided in Article VI and Article VII of this Agreement.

SECTION 4.2    REGISTRATION STATEMENT.

                (a)     The Company shall, as soon as practicable, but in no
event later than 60 days after the date of issuance of the Note (the "Issuance
Date") file with the SEC an amendment (the "Amendment") to its Registration
Statement No. 333-50895 (the "Primary Registration Statement") for sale to Buyer
of the amount of Exchange Shares and the Warrant Shares set forth in the first
sentence of Section 4.6 of this Agreement. The Company shall use commercially
reasonable efforts to have the Primary Registration Statement declared effective
by the SEC as soon as practicable. The Company shall use its best efforts to
file post-effective amendments and amended or supplemented prospectuses to or
with the Primary Registration Statement from time to time so that the latest
available prospectus will continue to meet the requirements of Section 10 of the
1933 Act until all of the Exchange Shares and Warrant Shares to be issued under
the Note and Warrants, respectively, are issued.

                (b)     The Company shall permit Buyer or its assigns to review
and comment upon the Primary Registration Statement and all other amendments and
supplements to the Registration Statement or at least seven days prior to their
filing with the SEC.

                (c)     In the event a Registration Statement has not been
declared effective by the SEC on the 120th day following the Issuance Date, the
Company shall pay to Buyer a penalty equal to 1.5% per month (prorated for
partial months) of the outstanding principal amount of the Note, which penalty
shall continue to accrue, and be paid in cash on each monthly anniversary
thereafter until the date a Registration Statement is declared effective by the
SEC.

                (d)     Assuming the Primary Registration Statement has been
declared effective by the SEC, in the event that for any reason the Company is
no longer permitted to sell Shares under the Primary Registration Statement, the
Company shall file a registration statement ("Resale Registration Statement")
with the SEC for resale by Buyer of such of the Exchange Shares and Warrant
Shares as are set forth in the first sentence of Section 4.6 of this Agreement
that have not therefore been sold under the Primary Registration Statement, if
any. The Company shall use commercially reasonable efforts to have the Resale
Registration Statement declared effective by the SEC as soon as practicable. The
Company shall use its best efforts to file post-effective amendments and amended
or supplemented prospectuses to or with the Resale Registration Statement from
time to time so that the latest available prospectus will continue to meet the
requirements of Section 10 of the 1933 Act or until the earlier of (i) the date
as of which all of the Exchange Shares and Warrant Shares that may be issued may
be sold without restriction pursuant to Rule 144(k) promulgated under the 1933
Act (or successor thereto) or (ii) the date on which (A) all the Exchange Shares
and Warrant Shares that may be issued are sold and (B) none of the Note or any
Warrants are outstanding. If the event described in the first sentence of this
Section 4.2(d) occurs, until the Resale Registration Statement is declared
effective and a prospectus thereunder meeting the

                                       9
<PAGE>   14

requirements of Section 10 of the 1933 Act is available, the Note shall be
subject to a Mandatory Redemption Event pursuant to Section 4(a) of the Note.

                (e)     "Registration Statement" shall mean the Primary
Registration Statement or the Resale Registration Statement, as the case may be.

SECTION 4.3    REPORTING STATUS.

        Until the earlier of (i) the date all of the Exchange Shares and the
Warrant Shares may be sold without restriction pursuant to Rule 144(k)
promulgated under the 1933 Act (or successor thereto), or (ii) the date on which
(A) all the Exchange Shares and the Warrant Shares are sold and (B) no amounts
under the Note remain unpaid and there are no unexercised Exchange Rights and no
Warrants are outstanding or issuable, the Company shall file all reports
required to be filed with the SEC pursuant to the Securities Exchange Act of
1934, as amended ("1934 Act"), and the Company shall not terminate its status as
an issuer required to file reports under the 1934 Act even if the 1934 Act would
otherwise permit such termination.

SECTION 4.4 USE OF PROCEEDS.

        The Company will contribute all of the proceeds from the sale of the
Note to Financial and Financial will use such contribution for its general
working capital purposes.

SECTION 4.5    SEC FILINGS.

        If any report, registration statement or amendment or other document
required to be filed by the Company during the Registration Period is not filed
with the SEC through EDGAR then the Company shall deliver a copy of such report
to Buyer or its permitted transferees, if any, by facsimile within two days
after such report is filed with the SEC. The Company shall also deliver to the
Buyer or its permitted transferees copies of any proxy statements, notices and
other information made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving thereof to the
stockholders.

SECTION 4.6    RESERVATION OF SHARES.

        At the Closing, the Company shall take all action necessary to have
authorized, and reserved for the purpose of issuance, the maximum number of
shares of Common Stock issuable upon exercise of Exchange Rights and an exchange
of the Note and the maximum number of shares of Common Stock issuable upon
exercise of the Warrants. For purposes of this Section 4.6, such maximum number
of shares of Common Stock shall be equal to 19.99% of the total outstanding
shares of Common Stock.

SECTION 4.7    LISTING.

        The Company shall, on or before any Exchange Rights are issued, secure
the listing of the Shares issuable upon the exercise of such Exchange Rights on
the New York Stock Exchange, or other national exchange or trading market on
which the Common Stock is listed or included for trading (the "Principal
Market") (subject to official notice of issuance) and shall maintain such
listing so long as any other shares of Common Stock shall be so listed or
included for trading. Upon such listing on the Principal Market neither the
Company nor any of its Subsidiaries shall take any action which would be
reasonably expected to result in the delisting or suspension of any of the
Shares on the Principal Market. The Company shall promptly, and in no event
later than the following Business Day, provide to Buyer copies of any notices it

                                       10
<PAGE>   15

receives from the Principal Market regarding any continued eligibility of the
Shares for listing on the Principal Market.

SECTION 4.8    EXPENSES.

        At the Closing, the Company shall pay to JE Matthew, LLC a transaction
fee of Two Hundred Forty Thousand Dollars ($240,000). At the Closing, the
Company shall pay the legal fees of Buyer incurred in connection with this
transaction upon receipt of customary legal bills, but only to the extent of
Forty Thousand Dollars ($40,000).

SECTION 4.9    LIMITATION ON NUMBER OF EXCHANGE SHARES AND THE WARRANT SHARES.

        When required under the listing requirements of the Principal Market,
the Company shall not be obligated to issue more than 19.99% of its total
outstanding shares of Common Stock upon the exchange of the Note and the
exercise of all Warrants, except that such limitation shall not apply in the
event that the Company obtains the approval of its stockholders as required by
the Principal Market (or any successor rule or regulation) for issuances of
Common Stock in excess of such amount. Within 90 days of the earlier to occur of
(i) the actual issuance of an aggregate of 2,000,000 Exchange Shares and Warrant
Shares or (ii) the falling below $1.00 of the per-share closing bid price of the
Common Stock for five consecutive trading days, the Company shall hold a
stockholders meeting to seek approval of its stockholders for the issuance of
19.99% or more of its Common Stock. In the event the Company is prohibited from
issuing Exchange Shares or Warrant Shares as a result of the operation of this
SECTION 4.9, with respect to the Note, the Company shall be subject to the
restrictions described in the Note, and upon exercise of the Warrants, the
Company shall redeem for cash those Warrant Shares which cannot be issued, at a
price equal to the difference between the closing price, as reported by
Bloomberg Financial Markets ("Bloomberg"), and the exercise price of such
Warrant Shares as of the date of the attempted exercise.

SECTION 4.10   OTHER FINANCING.

        During the term of the Note, the Company shall be prohibited from
issuing any convertible variable priced debt or convertible variable priced
equity securities of any type.

                                   ARTICLE V
                           TRANSFER AGENT INSTRUCTIONS

        The Company shall issue irrevocable instructions to its transfer agent,
and any subsequent transfer agent, to issue certificates, registered in the name
of Buyer or its respective nominee(s), for the Exchange Shares and the Warrant
Shares in such amounts as specified from time to time by Buyer to the Company
upon exchange of amounts outstanding under the Note or exercise of any Warrant
(the "Irrevocable Transfer Agent Instructions"). If any of the Shares have been
issued in a transaction registered under the 1933 Act, the Company shall
promptly notify the transfer agent that any certificates evidencing such Shares
shall be issued without any restrictive legend. The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Article V, and stop transfer instructions to give effect to SECTION 2.7
hereof (in the case of the issuance of the Exchange Shares or any of the Warrant
Shares in a transaction exempt from registration under the 1933 Act) will be
given by the Company to its transfer agent and that the Shares shall otherwise
be freely transferable on the books and records of the Company as and to the
extent provided in this Agreement. If Buyer provides the Company with an opinion
of counsel, in form and substance reasonably acceptable to the Company, to the
effect that a public sale, assignment or transfer of the Shares may be made
without registration under

                                       11
<PAGE>   16

the 1933 Act or Buyer provides the Company with assurances required by Section
2.6 of this Agreement that the Shares can be sold pursuant to Rule 144, the
Company shall permit the transfer, and promptly instruct its transfer agent to
issue one or more certificates in such name and in such denominations as
specified by Buyer and without any restrictive legend. The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
Buyer by vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Article V will be inadequate and agrees, in
the event of a breach or threatened breach by the Company of the provisions of
this Article V, that Buyer shall be entitled, in addition to all other available
remedies, to an order and/or injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss
and without any bond or other security being required.

                                   ARTICLE VI
                 CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL

        The obligation of the Company hereunder to issue and sell the Note to
Buyer at the Closing is subject to the satisfaction, at or before the Closing
Date, of each of the following conditions, provided that these conditions are
for the Company's sole benefit and may be waived by the Company at any time in
its sole discretion by providing Buyer with prior written notice thereof:

SECTION 6.1    DELIVERY OF DOCUMENTS.

        Buyer shall have executed each of the Transaction Documents to which it
is a party and delivered the same to the Company or Financial, as the case may
be.

SECTION 6.2    PURCHASE PRICE.

        Buyer shall have delivered to the Company the Purchase Price at the
Closing in accordance with Section 1.3 of this Agreement.

SECTION 6.3    REPRESENTATIONS AND WARRANTIES.

        The representations and warranties of Buyer shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak
as of a specific date which shall be true and correct in all material respects
as of such date), and Buyer shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by Buyer on or prior to
the Closing Date.

                                  ARTICLE VII
                  CONDITIONS TO BUYER'S OBLIGATION TO PURCHASE

        The obligation of Buyer hereunder to purchase the Note at the Closing is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for Buyer's sole
benefit and may be waived by Buyer at any time in its sole discretion by
providing the Company with prior written notice thereof:

                                       12
<PAGE>   17

SECTION 7.1    DELIVERY OF DOCUMENTS.

        Each of the Company and Financial shall have executed each of the
Transaction Documents and all agreements and other documents required therein to
which it is a party and delivered the same to Buyer.

SECTION 7.2    SECURITIES LAWS.

        The Company shall have made all filings under all applicable federal and
state securities laws necessary to consummate the issuance of the Note and the
Warrants pursuant to this Agreement in compliance with such laws.

SECTION 7.3    FINANCIAL'S ACKNOWLEDGMENTS.

        Financial shall acknowledge receipt from DVI of the cash portion of the
Purchase Price.

SECTION 7.4    REPRESENTATIONS AND WARRANTIES.

        The representations and warranties of each of the Company and Financial
in the Transaction Documents shall be true and correct in all material respects
as of the date when made and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a specific date
which shall be true and correct in all material respects as of such date) and
each of the Company and Financial shall have performed, satisfied and complied
in all material respects with the covenants, agreements and conditions required
by the Transaction Documents to be performed, satisfied or complied with by it
on or prior to the Closing Date.

SECTION 7.5    OPINION.

        Buyer shall have received the opinion of the Company's and Financial's
counsel dated as of the Closing Date, in substantially the form of EXHIBIT E
attached hereto.

SECTION 7.6    NOTE.

        The Company shall have executed and delivered the Note to Buyer.

SECTION 7.7    BOARD APPROVAL.

        The Boards of Directors of the Company and of Financial shall have
adopted resolutions authorizing the Transaction Documents and the transactions
contemplated by the Transaction Documents.

SECTION 7.8    RESERVATION OF SHARES.

        As of the Closing Date, the Company shall have reserved out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
exercise of Exchange Rights under the Note and the exercise of the Warrants, the
number of shares required to be reserved pursuant to SECTION 4.6.

SECTION 7.9    TRANSFER AGENT.

        The Irrevocable Transfer Agent Instructions, in the form of EXHIBIT F
attached hereto, shall have been delivered to and acknowledged in writing by the
Company's transfer agent.

                                       13
<PAGE>   18

SECTION 7.10   GOOD STANDING.

        The Company shall have delivered to Buyer a certified copy of its
Certificate of Incorporation and the Certificate of Incorporation of Financial.
The Company shall also deliver to Buyer a certificate of good standing of the
Company and Financial in each corporation's state of incorporation and
certificates of good standing of the Company and Financial in the Commonwealth
of Pennsylvania. Each such certified copy or certificate is to be as of a date
within 10 days of the Closing Date.

SECTION 7.11   SECRETARY'S CERTIFICATE.

        The Company and Financial shall each have delivered to Buyer a
secretary's certificate, dated as the Closing Date, as to (i) the resolutions
described in SECTION 7.7, and (ii) the Bylaws of each such corporation, each as
in effect at the Closing.

SECTION 7.12   FLEET.

        Fleet, pursuant to the Fleet Loan Documents, shall have executed and
delivered to Buyer a Waiver and Release in the Form of EXHIBIT G attached hereto
and a consent to the transactions described herein.

SECTION 7.13   OTHER.

        The Company shall have delivered to Buyer such other documents relating
to the transactions contemplated by this Agreement as Buyer or its counsel may
reasonably request.

                                  ARTICLE VIII
                                 INDEMNIFICATION

                (a)     In consideration of Buyer's execution and delivery of
the Transaction Documents and acquiring the Securities thereunder and in
addition to all of the Company's other obligations under any of the Transaction
Documents to which it is a party, and in addition to any other rights Buyer may
have at law or in equity, the Company shall defend, protect, indemnify and hold
harmless Buyer and its affiliates, members, managers, stockholders, officers,
directors, employees, investors and any of the foregoing persons' agents,
representatives, successors and permitted assigns (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement (collectively, the "Buyer Indemnified Parties") from and against
any and all actions, causes of action, suits, claims, losses (including, without
limitation, diminutions in value), costs, penalties, deficiencies, fees,
liabilities, expenses and damages, and expenses in connection therewith, and
including reasonable attorneys' fees and disbursements (the "Buyer Losses"),
incurred by any Buyer Indemnified Party as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any representation or
warranty made by the Company or Financial in the Transaction Documents (other
than those made in Section 3.9 for which Buyer shall have no right to
indemnification hereunder) or (b) any nonfulfillment or breach of any covenant,
agreement or obligation of the Company or Financial contained in the Transaction
Documents.

                (b)     The Buyer shall, indemnify and hold harmless the Company
and its affiliates, stockholders, officers, directors, employees, investors and
any of the foregoing persons' agents, representatives, successors and permitted
assigns (including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "Company
Indemnified Parties" and together with the Buyer Indemnified Parties, the
"Indemnified Parties") from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, deficiencies, fees,

                                       14
<PAGE>   19

liabilities, expenses and damages, and expenses in connection therewith, and
including reasonable attorneys' fees and disbursements (the "Company Losses",
and together with the Buyer Losses, the "Losses"), incurred by any Company
Indemnified Party as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by Buyer in
the Transaction Documents, or (b) any nonfulfillment or breach of any covenant,
agreement or obligation of the Buyer contained in the Transaction Documents,

                (c)     Notwithstanding the foregoing, and subject to the
following sentence, upon judicial determination, which is final and no longer
appealable, that the act, omission or event giving rise to the indemnification
provided in this Agreement, resulted primarily out of or was based primarily
upon an Indemnified Party's gross negligence, fraud or willful misconduct
(unless such action was based upon such Indemnified Party's reliance in good
faith upon any of the representations, warranties, covenants or promises made by
other party in this Agreement), the party being required to indemnify such
Indemnified Party (such indemnifying party, the "Indemnifying Party") shall not
be responsible for any Losses sought to be indemnified in connection therewith,
and the Indemnifying Party shall be entitled to recover from such Indemnified
Party all amounts previously paid in full or partial satisfaction of such
indemnity, together with all costs and expenses of the Indemnifying Party
reasonably incurred in effecting such recovery, if any.

                (d)     All indemnification rights hereunder shall survive the
execution and delivery of the Transaction Documents and the consummation of the
transactions contemplated therein for the period specified in Section 9.9,
regardless of any investigation, inquiry or examination made for or on behalf
of, or any knowledge of the Buyer and/or any of the other Indemnified Parties or
the acceptance by the Buyer of any certificate or opinion, provided if Buyer has
actual knowledge that any representation or warranty of the Company or Financial
in the Transaction Documents, which otherwise would give rise to Buyer's Losses,
is untrue or incorrect, the Company shall not indemnify any Buyer Indemnified
Party from Buyer's Losses under this ARTICLE VIII.

                (e)     If for any reason the indemnity provided for in this
ARTICLE VIII is unavailable to any Indemnified Party or is insufficient to hold
each such Indemnified Party harmless from all such Losses arising with respect
to the transactions contemplated by the Transaction Documents, then the
Indemnifying Party and the Indemnified Party shall each contribute to the amount
paid or payable with respect to Losses in such proportion as is appropriate to
reflect not only the relative benefits received by the Indemnifying Party on the
one hand and such Indemnified Party on the other but also the relative fault of
the Indemnifying Party and the Indemnified Party as well as any relevant
equitable considerations. In addition, the Indemnifying Party agrees to
reimburse any Indemnified Party upon demand for all reasonable expenses
(including legal counsel fees and costs) incurred by such Indemnified Party or
any such other person in connection with investigating, preparing or defending
any such action or claim. The indemnity, contribution and expense reimbursement
obligations that the Indemnifying Party has under this ARTICLE VIII shall be the
exclusive remedy of the parties with respect to the transactions contemplated by
this Agreement, provided, however, that nothing herein shall limit any action
Buyer may have under any federal or state securities laws or any express right
or remedy granted under any Transaction Document. The parties further agree that
the indemnification and reimbursement commitments set forth in this Agreement
shall apply whether or not the Indemnified Party is a formal party to any such
lawsuits, claims or other proceedings.

                (f)     Any indemnification of any Indemnified Party pursuant to
this ARTICLE VIII shall be effected by wire transfer of immediately available
funds from the Indemnifying Party to an account designated by the Indemnified
Party within fifteen (15) days after the determination thereof.

                                       15
<PAGE>   20

                (g)     An Indemnifying Party shall be liable to the Indemnified
Party for any Losses only if the Indemnified Party delivers to the Indemnifying
Party written notice, setting forth in reasonable detail the identity, nature
and amount of Losses related to such claim or claims no later than ninety (90)
days after any such Loss has arisen, in which case the Indemnifying Party shall
be obligated to indemnify the Indemnified Party. An Indemnified Party's failure
to provide the detail required by the preceding sentence shall not constitute
either a breach of this Agreement by the Indemnified Party or any basis for the
Indemnifying Party to assert that the Indemnified Party did not comply with the
terms of this ARTICLE VIII sufficient to cause the Indemnified Party to have
waived its rights under this ARTICLE VIII, unless the Indemnifying Party
demonstrates that its ability to defend against any claims with respect thereto
has been materially prejudiced.

                                   ARTICLE IX
                          GOVERNING LAW; MISCELLANEOUS

SECTION 9.1    GOVERNING LAW; JURISDICTION; JURY TRIAL.

        All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of Delaware, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Delaware. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting in the City of Chicago, for
the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT
OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

SECTION 9.2    COUNTERPARTS.

        This Agreement may be executed in two or more identical counterparts,
all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party; provided that a facsimile signature shall be considered due
execution and shall be binding upon the signatory thereto with the same force
and effect as if the signature were an original, not a facsimile signature.

SECTION 9.3    HEADINGS.

        The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.

                                       16
<PAGE>   21

SECTION 9.4    SEVERABILITY.

        If any provision of this Agreement shall be invalid or unenforceable in
any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

SECTION 9.5    ENTIRE AGREEMENT; AMENDMENTS.

        This Agreement supersedes all other prior oral or written agreements
between Buyer, the Company, their affiliates and persons acting on their behalf
with respect to the matters discussed herein, and this Agreement and the
instruments referenced herein, including all other Transaction Documents,
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be amended other than by an instrument in writing signed by the
Company and Buyer, and no provision hereof may be waived other than by an
instrument in writing signed by the party against whom enforcement is sought.

SECTION 9.6    NOTICES.

        Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon actual receipt, when delivered
personally; (ii) upon actual receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party and followed by an overnight delivery
service); or (iii) one Business Day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:

               If to the Company:

               DVI, Inc.
               2500 York Road
               Jamison, Pennsylvania  18929
               Telephone:    (215) 488-5000
               Facsimile:    (215) 488-5414
               Attention:    Philip C. Jackson

               With copies to:

               Clifford Chance
               Rogers & Wells LLP
               200 Park Avenue
               New York, New York  10166-0153
               Telephone:    (212) 878-8000
               Facsimile:    (212) 878-8375
               Attention:    John A. Healy, Esq.

               If to Buyer:

               Deephaven/JE Matthew I, LLC

                                       17
<PAGE>   22

               c/o JE Matthew
               1849 Green Bay Road, Suite 240
               Highland Park, Illinois 60035
               Telephone:     (847) 681-8600
               Facsimile:     (847) 681-1541
               Attention:     David A. White

               With a copy to:

               Schwartz, Cooper, Greenberger & Krauss, Chartered
               180 N. LaSalle Street, Suite 2700
               Chicago, IL 60601
               Telephone:     (312) 845-5422
               Facsimile:     (312) 782-8416
               Attention:    Robert A. Smoller, Esq.

or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party five days prior to the effectiveness of such change.

SECTION 9.7    SUCCESSORS AND ASSIGNS.

        This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns. The Company shall not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of Buyer except pursuant to a Special Event (as defined in
SECTION 2(c)(ii) of the Note), with respect to which the Company has satisfied
its obligations under SECTION 2 of the Note. Buyer may not assign all or any
part of its rights hereunder without the prior written consent of the Company,
which consent shall not be unreasonably withheld; provided, however, that Buyer
may assign all or any part of its rights hereunder to a financial institution
having assets of at least $10 billion and Buyer may assign all or any part of
its rights hereunder to any affiliate of Buyer; provided, however, that any such
assignment shall not release the Buyer from its obligations hereunder unless
such obligations are assumed by such assignee. "Affiliate" means any person
which, directly or indirectly, controls or is controlled by or is under common
control with the Buyer.

SECTION 9.8    NO THIRD PARTY BENEFICIARIES.

        This Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other person.

SECTION 9.9    SURVIVAL.

        Unless this Agreement is terminated under SECTION 9.12, the
representations and warranties of the Company and Buyer contained in Articles II
and III, the agreements and covenants set forth in Article IX, and the
indemnification provisions set forth in Article VIII shall survive the Closing
for the period that the Note remains outstanding, and, except for the agreements
and covenants of the Company which by their terms expire at such time as no
amounts are due and owing under the Note, the agreements and covenants set forth
in Articles IV and V shall survive the Closing until the later of the date that
(i) Buyer does not hold any Securities or (ii) at such time as such agreements
or covenants are no longer enforceable under applicable statutes of limitations;
provided, however, nothing contained in this Section

                                       18
<PAGE>   23

9.9 shall require the Company or Buyer to remake any representation or warranty
contained herein after the Closing Date.

SECTION 9.10   PUBLICITY.

        Each of the parties hereto shall have the right to approve before
issuance any press releases or any other public statements with respect to the
transactions contemplated hereby; provided, however, that the parties shall each
be entitled, without the prior approval of the other, to make any press release
or other public disclosure with respect to such transactions as is required by
applicable law and regulations (although such party shall consult the other in
connection with any such press release or other public disclosure prior to its
release and shall be provided with a copy thereof).

SECTION 9.11   FURTHER ASSURANCES.

        Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.

SECTION 9.12   TERMINATION.

        In the event that the Closing shall not have occurred on or before ten
Business Days from the date hereof due to the Company's failure to satisfy the
conditions set forth in Articles VI and VII above (and the nonbreaching party's
failure to waive such unsatisfied condition(s)), the nonbreaching party shall
have the option to terminate this Agreement with respect to such breaching party
at the close of business on such date without liability of any party to any
other party; provided, however, that if this Agreement is terminated pursuant to
this SECTION 9.12, the Company shall remain obligated to reimburse the
nonbreaching Buyer for the expenses described in SECTION 4.8 above.

SECTION 9.13   NO STRICT CONSTRUCTION.

        The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.

SECTION 9.14   REMEDIES.

        Buyer and each holder of the Securities shall have all rights and
remedies set forth in the Transaction Documents and all rights and remedies
which Buyer has been granted at any time under any other agreement or contract
(except that only Buyer shall have the rights under Article VIII for breaches of
the Company's representations and warranties herein). Any person having any
rights under any provision of this Agreement shall be entitled to enforce such
rights specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement.

SECTION 9.15   PAYMENT SET ASIDE.

        To the extent that the Company makes a payment or payments to Buyer
hereunder or pursuant to the Note or any Warrant or Buyer enforces or exercises
its rights hereunder or thereunder, and such payment or payments or the proceeds
of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law,

                                       19
<PAGE>   24

common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred.

SECTION 9.16   EXPENSES.

                (a)     In any suit, proceeding or action brought by Buyer in
connection with any Contract (as defined in the Security Agreement) for any sum
owing thereunder, or to enforce any provisions of any Contract, the Company will
save, indemnify and hold Buyer harmless from and against all expenses, loss or
damage suffered by reason of any defense, set-off, counterclaim, recoupment or
reduction or liability whatsoever of the account debtor or Obligor (as defined
in the Security Agreement) thereunder, arising out of a breach by Financial of
any obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or Obligor or
its successors from Financial. The Company also agrees to reimburse Buyer for
all its reasonable and documented costs and expenses incurred in connection with
the enforcement or the preservation of Buyer's rights under the Security
Agreement, or any transaction contemplated hereby, including, without
limitation, the reasonable fees and disbursements of its counsel.

                (b)     The Company agrees to pay as and when billed by Buyer or
Financial all of the reasonable and documented out-of-pocket costs and expenses
incurred by Buyer in connection with the preparation and execution of any
amendment, supplement or modification to, this Agreement, any Transaction
Documents, or any other documents prepared in connection therewith. The Company
agrees to pay as and when billed by Buyer the reasonable due diligence,
inspection, testing and review costs and expenses incurred by Buyer with respect
to the Contracts pledged as Collateral under the Security Agreement.

                (c)     The Company's agreements in this Section 9.16 shall
survive the payment in full of the Note and the expiration or termination of
this Agreement.

                                   * * * * * *

                                       20
<PAGE>   25

        IN WITNESS WHEREOF, Buyer and the Company have caused this Agreement to
be duly executed and delivered as of the date first written above.

                                COMPANY:

                                DVI, Inc., a Delaware corporation

                                By: /s/ Philip C. Jackson
                                   -----------------------------------------
                                    [Name] Philip C. Jackson
                                    [Title] Authorized Signatory

                                BUYER:

                                DEEPHAVEN/JE MATTHEW I, LLC, a Minnesota
                                limited liability company

                                By: /s/ John Fern
                                    -----------------------------------------
                                         John Fern, President

                                By: /s/ Bruce Lieberman
                                    ----------------------------------------
                                         Bruce Lieberman, Chief Manager

                                       21
<PAGE>   26

                                    EXHIBIT A

                                  FORM OF NOTE

                                       22
<PAGE>   27

                                    EXHIBIT B

                                 FORM OF WARRANT

                                       23
<PAGE>   28

                                    EXHIBIT C

                           FORM OF SECURITY AGREEMENT

                                       24
<PAGE>   29

                                    EXHIBIT D

                           FORM OF PURCHASE PRICE NOTE

                                       25
<PAGE>   30

                                    EXHIBIT E

                           FORM OF OPINION OF COUNSEL

                                       26
<PAGE>   31

                                    EXHIBIT F

                 FORM OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

                                       27
<PAGE>   32

                                    EXHIBIT G

                               WAIVER AND RELEASE

                                       28
<PAGE>   33
                               FIRST AMENDMENT TO
              SECURITIES PURCHASE AGREEMENT AND SECURITY AGREEMENT

        This First Amendment to Securities Purchase Agreement and Security
Agreement (this "Amendment") is dated as of the ___ day of August, 2001 and is
by and among DVI, INC., a Delaware corporation (the "Company"), DVI FINANCIAL
SERVICES INC., a Delaware corporation ("Financial"), and DEEPHAVEN/JE MATTHEW I,
LLC, a Minnesota limited liability company ("Buyer").

                              W I T N E S S E T H:

        WHEREAS, the Company and Buyer are parties to that certain Securities
Purchase Agreement, dated as of June 29, 2001 (the same, as it may be amended,
restated, modified or supplemented and in effect from time to time, the
"Purchase Agreement") pursuant to which it purchased a $12,000,000 9.5%
Asset-Backed Exchangeable Term Note (the "Note") from the Company; and

        WHEREAS, in connection with the Purchase Agreement and as security for
the Note, Financial and Buyer entered into that certain Security Agreement,
dated as of June 29, 2001 (the same, as it may be amended, restated, modified or
supplemented and in effect from time to time, the "Security Agreement") pursuant
to which Financial granted Buyer a security interest in certain of its assets as
described therein; and

        WHEREAS, the Company and Financial have requested that Buyer amend the
Purchase Agreement and the Security Agreement in certain respects (including,
but not limited to reducing the required Collateral Value (as defined in the
Security Agreement)), as more fully set forth herein, and Buyer is agreeable to
such request, upon such terms and conditions set forth herein (including, but
not limited to the issuance and delivery of the August 2001 Warrant (as
hereinafter defined));

        NOW, THEREFORE, the parties hereto hereby agree as follows:

        1.      Definitions. Capitalized terms used in this Amendment and not
otherwise defined herein are used with the meanings given such terms in the
Purchase Agreement.

        2.      Amendment of the Security Agreement.

                (a)     Section 5(a) of the Security Agreement is hereby amended
        and restated as follows:

                      "SECTION 5. MAINTENANCE OF COLLATERAL. (a) The Grantor
               shall at all times maintain a Collateral Value equal to not less
               than 225% of the Outstanding Secured Note, plus, after the
               occurrence and during the continuance of a Cash Collateral Event,
               the Cash Collateral Reserve."

<PAGE>   34

                (b)     The definition of "Contract Schedule" set forth in
        Section 20 of the Security Agreement is hereby amended by deleting
        subsection (x) regarding the discounted principal balance of the
        Contract.

        3.     Amendment of the Purchase Agreement.

                (a)     The terms "Amendment", "Primary Registration Statement"
        and "Resale Registration Statement" shall be deleted from the glossary
        of the Purchase Agreement.

                (b)     Section 4.2 of the Purchase Agreement is hereby amended
        and restated in its entirety as follows:

                "SECTION 4.2 REGISTRATION STATEMENT.

                        (a) The Company shall, as soon as practicable, but in no
                event later than 60 days after the date of issuance of the Note
                (the "Issuance Date") file with the SEC a registration statement
                ("Registration Statement") for resale by Buyer of Exchange
                Shares and Warrant Shares in an amount equal to 19.99% of the
                outstanding shares of Common Stock or such lesser amount equal
                to the maximum number of Exchange Shares and Warrant Shares
                which the Company is permitted to register under the rules,
                regulations and interpretations of the SEC as in effect from
                time to time. The Company shall use its best efforts to have the
                Registration Statement declared effective by the SEC as soon as
                practicable. The Company shall use its best efforts to file
                post-effective amendments and amended or supplemented
                prospectuses to or with the Registration Statement from time to
                time so that the latest available prospectus will continue to
                meet the requirements of Section 10 of the 1933 Act until the
                earlier of (i) the date as of which all of the Exchange Shares
                and Warrant Shares that may be issued may be sold without
                restriction pursuant to Rule 144(k) promulgated under the 1933
                Act (or successor thereto) or (ii) the date on which (A) all the
                Exchange Shares and Warrant Shares that may be issued are sold
                and (B) none of the Note or any Warrants are outstanding.

                        (b) The Company shall permit Buyer or its assigns to
                review and comment upon the Registration Statement and all other
                amendments and supplements to the Registration Statement at
                least seven days prior to their filing with the SEC."

        4.      August 2001 Warrant. In consideration of Buyer amending the
Security Agreement as aforesaid, the Company shall issue a Warrant to Buyer
identical to EXHIBIT A attached hereto (the "August 2001 Warrant"). The August
2001 Warrant shall be deemed to be a Warrant under the Purchase Agreement and
all shares of Common Stock purchased pursuant to the August 2001 Warrant shall
be deemed to be Warrant Shares under the Purchase Agreement.

        5.      Conditions. This Amendment shall become effective on the date on
which the following conditions precedent have been satisfied or waived in
writing:

               (a)    The Company, Financial and Buyer shall have each executed
        and delivered this Amendment to each other; and

                                        2
<PAGE>   35

                (b)     Buyer receives the August 2001 Warrant from the Company.

                (c)     Buyer receives certified resolutions of the board of
        directors of the Company and Financial authorizing the issuance and
        delivery of this Amendment and the August 2001 Warrant.

        6.      Representations and Warranties. To induce Buyer to enter into
this Amendment, the Company and Financial hereby represent and warrant to Buyer
that:

                (a)     Since June 29, 2001, there has been no development or
        event, which has had or could reasonably be expected to have a material
        adverse effect on the business, properties, assets, operations, results
        of operation, or financial condition of the Company and its
        Subsidiaries, taken as a whole.

                (b)     The Company and Financial each have the corporate power
        and authority, and the legal right, to make and deliver this Amendment,
        and with respect to the Company, the August 2001 Warrant, and to perform
        all of their respective obligations under the Security Agreement and the
        Purchase Agreement, as amended by this Amendment, and each have taken
        all necessary corporate action to authorize the execution and delivery
        of this Amendment, and with respect to the Company, the August 2001
        Warrant, and the performance of the Security Agreement and the Purchase
        Agreement, as so amended.

                (c)     When executed and delivered, this Amendment and the
        Security Agreement and the Purchase Agreement, as amended by this
        Amendment, will constitute legal, valid and binding obligations of the
        Company and Financial, enforceable against them, in accordance with
        their terms, except as such enforceability may be limited by general
        principals of equity or applicable bankruptcy, insolvency,
        reorganization, moratorium, liquidation or similar laws relating to, or
        affecting generally, the enforcement of creditors' rights and remedies.

                (d)     The representations and warranties made by the Company
        in the Purchase Agreement and the representations and warranties made by
        Financial in the Security Agreement are true and correct in all material
        respects on and as of the date hereof, before and after giving effect to
        the effectiveness of this Amendment, as if made on and as of the date
        hereof, other than those that relate to an earlier or specific date. The
        Buyer Indemnified Parties shall be entitled to all rights to
        indemnification contained in Article VIII of the Purchase Agreement with
        respect to breaches of any representations or warranties made by the
        Company or Financial in this Amendment notwithstanding the fact that
        such representations and warranties will be made after the Closing Date;
        provided, however, nothing contained herein shall require the Company to
        remake any representation or warranty contained in the Purchase
        Agreement after the later of (i) the date of this Amendment or (ii) the
        date of the issuance and delivery of the August 2001 Warrant.

        7.      Reaffirmation and Confirmation of Security Interests. Financial
hereby confirms to Buyer that Financial has granted to Buyer a security interest
in or lien upon the assets described in the Contract Schedule (as defined in the
Security Agreement) to the Security Agreement, to secure

                                        3
<PAGE>   36

the Secured Obligations (as defined in the Security Agreement). Financial hereby
reaffirms its grant of such security interest and lien to Buyer for such purpose
in all respects.

        8.      Miscellaneous.

                (a)     The Company hereby agrees to pay all of Buyer's costs
        and expenses, including, without limitation, attorneys' fees, related to
        this Amendment.

                (b)     This Amendment may be executed in one or more
        counterparts, each of which shall be deemed to be an original, but all
        of which shall together constitute but one and the same document.

                (c)     This Amendment shall be binding upon and inure to the
        benefit of the parties hereto and their respective successors and
        assigns.

                (d)     Section captions and headings used in this Amendment are
        for convenience only and are not part of and shall not affect the
        construction of this Amendment.

                (e)     From and after the date of execution of this Amendment,
        any reference to the Purchase Agreement or Security Agreement contained
        in any notice, request, certificate or other instrument, document or
        agreement executed concurrently with or after the execution and delivery
        of this Amendment shall be deemed to include this Amendment unless the
        context shall otherwise require.

                (f)     Except as expressly set forth herein, nothing in this
        Amendment is intended to or shall be deemed to have amended the Purchase
        Agreement or the Security Agreement, which are hereby reaffirmed in all
        respects. Notwithstanding anything contained herein, the terms of this
        Amendment are not intended to and do not serve to effect a novation as
        to the Purchase Agreement or the Security Agreement. The Purchase
        Agreement and the Security Agreement, as amended hereby remain in full
        force and effect and are hereby reaffirmed in all respects.

             [Balance of page intentionally left blank; signature page follows.]

                                       4
<PAGE>   37

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

                                     DVI, INC.

                                    By: /s/ Philip C. Jackson
                                        ---------------------------------------
                                    Its : Authorized Signatory
                                        ---------------------------------------

                                     DVI FINANCIAL SERVICES INC.

                                    By: /s/ Philip C. Jackson
                                        ---------------------------------------
                                    Its : Vice President of Banking and Finance
                                        ---------------------------------------

                                    DEEPHAVEN/JE MATTHEW I, LLC

                                    By: /s/ John Fern
                                        ----------------------------------
                                            John Fern, President

                                    By: /s/ Bruce Lieberman
                                        ----------------------------------
                                            Bruce Lieberman, Chief Manager

                                       5<PAGE>   1

                                                                    EXHIBIT 4.10

                              COMPUWARE CORPORATION

                        2001 EMPLOYEE STOCK PURCHASE PLAN

1.       PURPOSE.

         The purpose of the Compuware Corporation 2001 Employee Stock Purchase
Plan is to encourage employee stock ownership by offering employees of Compuware
Corporation and specified subsidiaries Purchase Rights (as such term is defined
in Section 2) to purchase Common Shares at discounted prices and without payment
of brokerage costs. By means of this Plan, the Company seeks to retain the
services of its employees, to secure and retain the services of new employees,
and to provide incentives for such persons to exert maximum efforts for the
ssuccess of the Company. The Plan is intended to be an "employee stock purchase
plan" as defined in Section 423 of the Code. The provisions of the Plan shall,
accordingly, be construed so as to extend and limit the participation in a
manner consistent with the requirements of Section 423 of the Code.

2.       CERTAIN DEFINITIONS.

         "Board" means the Board of Directors of Compuware Corporation and/or
any committee of at least two directors to which the Board of Directors has
delegated any of its duties under the Plan. The Board of Directors may abolish
any such committee at any time and may re-vest in the Board of Directors all or
any part of the Board's duties under the Plan.

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Common Shares" means the common shares, par value $.01 per share, of
Compuware Corporation.

         "Company" means Compuware Corporation, a Michigan corporation, and each
of the parent corporations or subsidiary corporations of Compuware Corporation
(as those terms are defined for purposes of Section 423(b) of the Code)
designated by the Board from time to time. As of the date of adoption of this
Plan, no subsidiary corporations of Compuware Corporation are so designated by
the Board.

         "Custodian" means such firm, firms, person and/or persons as the Board
shall designate from time to time.

         "Exercise Date" means the last day of an Offering Period, on which date
all Participants' outstanding Purchase Rights will automatically be exercised.

                               Page 10 of 35 Pages
<PAGE>   2

         "Fair Market Value" means the average of the high and low quoted sale
prices of a Common Share reported in the table entitled "Nasdaq National Market
Issues" or any successor table in The Wall Street Journal for such date or, if
no Common Shares were traded on that date, on the next preceding day on which
there was such a trade, or, if the Common Shares are not traded in The Nasdaq
National Market, "Fair Market Value" shall be determined by a method determined
by the Board.

         "Offering Period" shall have the meaning provided in Section 5(b).

         "Participant" means an employee of the Company who is eligible under
Section 3 and who has enrolled in the Plan by providing a Participation Form to
the Plan Administrator.

         "Participation Form" shall have the meaning provided in Section 4(a).

         "Plan" means this Compuware Corporation 2001 Employee Stock Purchase
Plan.

         "Plan Administrator" means such person so designated by the Board.

         "Purchase Right" means a Participant's option to purchase Common Shares
that is deemed to be outstanding during a Offering Period. A Purchase Right
represents an "option" as such term is used under Section 423 of the Code.

         "Total Compensation" means wages, salaries and other amounts received
from the Company for personal services rendered to the Company as an employee,
including amounts paid as commissions, amounts paid as bonuses and any amounts
of salary or bonus reduction contributions to any Company plan under Section
401(k) or Section 125 of the Code, but excluding severance pay, ordinary income
received upon disposition of Common Shares acquired under this Plan, amounts
paid in cash for accrued vacation not taken as of the end of the year, any other
contributions paid by the Company under any employee benefit plan of the
Company, other non-cash employee benefits provided to employees at Company
expense, taxable income resulting from exercises of non-qualified stock options
and other taxable benefits income not paid to the employee in cash.

         "Trading Day" refers to a day during which The Nasdaq Stock Market is
available for trading Common Shares.

         "Withdrawal Form" shall have the meaning provided in Section 9(a).

3.       ELIGIBILITY.

         Participation in the Plan is voluntary. All employees of the Company,
including officers and directors who are employees, are eligible to participate
in the Plan, except for an employee whose customary employment with the Company
as of the beginning of the applicable Offering Period (1) is 20 hours or less
per week, or (2) is for not more than 5 months in any calendar year.

                               Page 11 of 35 Pages
<PAGE>   3

4.       PARTICIPATION.

         (a) Eligible employees become Participants in the Plan by authorizing
payroll deductions for that purpose through a form, electronic authorization or
other enrollment means provided by the Company (the "Participation Form") that
is provided to the Plan Administrator no later than five calendar days after the
beginning date of an Offering Period, except as provided in Section 4(b). That
Participation Form would be effective for payrolls occurring after the beginning
of the applicable Offering Period.

         (b) An eligible employee who is newly-hired or re-hired by the Company
may become a Participant in the Plan during an Offering Period by authorizing
payroll deductions for that purpose through a Participation Form that is
provided to the Plan Administrator no later than 45 days after his or her date
of hire. That Participation Form would be effective for payrolls occurring at
least 10 business days after the Company receives the Participation Form.

         (c) Notwithstanding any provision of the Plan to the contrary, no
employee may participate in the Plan:

                  (i) if following a grant of Purchase Rights under the Plan,
         the employee would own, directly or by attribution, stock, Purchase
         Rights or other stock options to purchase stock representing 5% or more
         of the total combined voting power or value of all actually issued and
         outstanding classes of Compuware Corporation's stock or stock in any
         parent or subsidiary corporation (as those terms are defined for
         purposes of Section 423(b) of the Code) of Compuware Corporation; for
         purposes of this Section 4(c)(i), the rules of Section 424(d) of the
         Code shall apply in determining the stock ownership of any employee; or

                  (ii) to the extent a grant of Purchase Rights under the Plan
         would permit the employee's rights to purchase stock, under all the
         Code Section 423 employee stock purchase plans of the Company and of
         any parent or subsidiary corporation (as those terms are defined for
         purposes of Code Section 423(b)) of the Company, to accrue at a rate
         exceeding $25,000.00, based on the Fair Market Value of the stock (at
         the time of grant), for each calendar year in which such Purchase
         Rights are outstanding.

5.       SECURITIES SUBJECT TO THE PLAN AND OFFERING PERIODS.

         (a) The Plan and the Compuware Corporation 2001 International Employee
Stock Purchase Plan (the "International Plan") on a combined basis cover an
aggregate of 15,000,000 Common Shares (subject to adjustment as provided in
Section 15), which may be authorized but unissued shares or reacquired shares,
bought on the open market or otherwise. If any Purchase Right that shall have
been granted under either plan shall expire or terminate for any reason without
having been exercised in full, the unpurchased underlying Common Shares shall
again become available for purposes of the Plan and the International Plan,
unless the Plan or the International Plan shall have been terminated.

                               Page 12 of 35 Pages

<PAGE>   4

         (b) The first Offering Period (an "Offering Period") under the Plan
will begin on October 1, 2001 and end on March 31, 2002. Thereafter, for so long
as the Plan remains in effect, there will be semi-annual Offering Periods with
the following beginning and ending dates:

         SEMI-ANNUAL OFFERING PERIODS
<TABLE>
<CAPTION>
                           Beginning Date                     Ending Date
                           --------------                     -----------
<S>                                                           <C>
                           April 1                            September 30
                           October 1                          March 31
</TABLE>

6.       PAYROLL DEDUCTIONS.

         (a) In order to purchase Common Shares, an employee must indicate on
the Participation Form the contribution amount he or she wishes to authorize the
Company to deduct out of the employee's Total Compensation. Subject to the
limitation specified by Section 423(b) of the Code, the authorized contribution
amount must be an integral percentage amount (i.e., a whole number percentage)
ranging from 1% to 10% of such Participant's Total Compensation during the
Offering Period. The Participation Form will include authorization for the
Company to make payroll deductions from the Participant's Total Compensation.

         (b) To comply with the federal tax laws, a Participant may not be
granted Purchase Rights under the Plan or any other Code Section 423 employee
stock purchase plan of the Company, or of any parent or subsidiary corporation
(as those terms are defined for purposes of Section 423(b) of the Code) of the
Company, with respect to more than $25,000.00 worth of Common Shares for any
calendar year such Purchase Rights to purchase Common Shares are outstanding
pursuant to the terms of the Plan. The $25,000.00 limit is determined according
to the Fair Market Value of the Common Shares on the first day (grant date) of
the Offering Period. Participants will be notified if these limitations become
applicable to them.

         (c) The amounts deducted shall be credited to the Participant's account
under the Plan, but no actual separate account will be established by the
Company to hold such amounts. There shall be no interest paid on the balance
outstanding in a Participant's account. The deducted amounts may be commingled
with the general assets of the Company and may be used for its general corporate
purposes.

         (d) Payroll deductions begin on the first payday of each Offering
Period, and end on the last payday of each Offering Period. Eligible employees
may participate in the Plan and purchase shares only by means of payroll
deductions. A Participant may not make any separate cash payment into his or her
account.

         (e) So long as a Participant remains an employee of the Company
eligible to participate in the Plan, payroll deductions will continue in effect
from Offering Period to Offering Period unless the Participant:

                               Page 13 of 35 Pages

<PAGE>   5

                  (i) on or before the end of the current Offering Period,
         elects a different contribution percentage by providing a new
         Participation Form to the Plan Administrator; such change in
         contribution percentage will become effective by the beginning of the
         next Offering Period following the Plan Administrator's receipt of the
         Participant's new Participation Form; or

                  (ii) withdraws in accordance with Section 9.

         (f) Unless a Participant elects a different contribution percentage as
permitted by Section 6(e)(i) or elects to withdraw prior to 10 business days
before the end of the current Offering Period as permitted under Section 9, the
Participant's payroll deductions will continue throughout the next Offering
Period and his or her Purchase Right to purchase Common Shares will be deemed to
be fully and automatically exercised on the last day of such Offering Period
with respect to payroll deductions made during that period.

7.       PURCHASE PRICE.

         (a) On the first day of each Offering Period, a Participant is deemed
to have been granted a Purchase Right to purchase on the last day of the
Offering Period as many whole Common Shares as such Participant will be able to
purchase with the payroll deductions credited to such Participant's account
during that Offering Period.

         (b) The price at which each Purchase Right to purchase Common Shares
may be exercised is the lower of the following (rounded up to the nearest whole
cent per Common Share):

                  (i) 85% of the Fair Market Value of the Common Shares on the
         first day of an Offering Period, or if that day is not a Trading Day,
         then on the first preceding day that is a Trading Day; or

                  (ii) 85% of the Fair Market Value of the Common Shares on the
         last Trading Day of such Offering Period.

         (c) The number of shares purchasable by each Participant per Offering
Period will be the number of whole Common Shares obtained by dividing the amount
collected from the Participant under the Plan for that Offering Period by the
purchase price in effect for that Offering Period.

8.       EXERCISE OF PURCHASE RIGHT.

         (a) Each outstanding Purchase Right will be exercised automatically on
the Exercise Date. The exercise of the Purchase Right is to be effected by
applying the amount credited to each Participant's account as of the Exercise
Date to the purchase on the Exercise Date of whole Common Shares at the purchase
price in effect for the Offering Period.

                               Page 14 of 35 Pages
<PAGE>   6

         (b) Fractional shares will not be issued under the Plan, and any amount
remaining in the Participant's account after such application (i.e., amounts not
sufficient to purchase a whole Common Share) will be held for the purchase of
Common Shares in the next Offering Period.

         (c) If the number of shares for which Purchase Rights are exercised
exceeds the number of shares remaining available in any Offering Period under
the Plan, the shares available for sale will be allocated by the Plan
Administrator pro rata among the Participants in such Offering Period in
proportion to the relative amounts in their accounts, subject to rounding to
allocate only whole Common Shares. Any amounts not thereby applied to the
purchase of Common Shares under the Plan will be refunded to the Participants
after the end of the Offering Period.

9.       WITHDRAWAL AND TERMINATION OF PURCHASE RIGHTS.

         (a) A Participant may withdraw (i.e., terminate his or her payroll
deductions) by providing a notice of withdrawal to the Plan Administrator at any
time prior to 10 business days before the end of the current Offering Period.
Such notice shall be through a form, electronic authorization or other
withdrawal means (the "Withdrawal Form") provided by the Plan Administrator for
that purpose, and shall be effective by the tenth business day after it is
received by the Plan Administrator. The Withdrawal Form will permit a
Participant to make the following election:

                  (i) The Participant may elect to stop the Participant's
         payroll deductions under the Plan and use all of the amounts credited
         to such Participant's account to purchase on the Exercise Date whole
         Common Shares at the purchase price in effect for the Offering Period.
         If this election is made, the Company shall distribute to such
         Participant after such Offering Period any such amounts which remain
         after such purchase on account of being insufficient to purchase a
         whole Common Share at the applicable purchase price, unless the
         Participant has re-enrolled in the Plan, in which case such amounts
         shall be used to purchase Common Shares in the new Offering Period.

                  (ii) The Participant may elect to continue his or her
         participation in the Plan through the end of the current Offering
         Period, and thus exercise such Participant's outstanding Purchase
         Rights on the following Exercise Date, but terminate his or her
         participation in the Plan for subsequent Offering Periods. Payroll
         deductions for such a Participant will continue until the end of the
         current Offering Period. If this election is made, the Company shall
         distribute to such Participant after such Offering Period any amounts
         which remain in the Participant's account after the purchase of Common
         Shares on the Exercise Date on account of being insufficient to
         purchase a whole Common Share at the applicable purchase price, unless
         the Participant has re-enrolled in the Plan, in which case such amounts
         shall be used to purchase Common Shares in the new Offering Period.

                               Page 15 of 35 Pages
<PAGE>   7

         (b) Any Participant who withdraws from the Plan pursuant to Section
9(a) will not be eligible to rejoin the Plan for the Offering Period under way
at the time of withdrawal, and will have to re-enroll in the Plan by completing
and providing to the Plan Administrator a new Participation Form should such
individual wish to resume participation in a subsequent Offering Period.

         (c) If a Participant ceases to be an employee of the Company for any
reason during an Offering Period, his or her outstanding Purchase Right will
immediately terminate, his or her payroll deductions will immediately cease, and
all sums previously collected from such Participant during such Offering Period
under the terminated Purchase Right will be refunded; provided, however, that if
such termination is the result of the Participant's death, (1) the outstanding
Purchase Right shall terminate only for future Offering Periods, (2) the
Participant or the person or persons to whom the Participant's rights under the
Plan pass by will or by the laws of descent and distribution shall continue as a
Participant until the end of the Offering Period in which such death occurs
(except that no further payroll deductions shall be made under the Plan), (3)
the sums previously collected from such Participant during such Offering Period
under the Plan shall not be refunded during the Offering Period, and (4) the
Company shall use all of the amounts credited to such Participant's account for
the purchase on the Exercise Date of whole Common Shares at the purchase price
in effect for the Offering Period, and shall distribute to such Participant
after such Offering Period any such amounts remaining after such purchase. For
purposes of this Plan, a Participant receiving short-term disability payments
shall not be deemed to have ceased to be an employee of the Company (and such
payments shall be deemed to be part of his or her Total Compensation) unless and
until he or she becomes eligible to receive long-term disability benefits.

10.      RIGHTS AS SHAREHOLDER.

         (a) A Participant is not a shareholder, and does not have any rights of
a shareholder, with respect to any Common Shares subject to Purchase Rights
under the Plan until the Participant exercises his or her Purchase Right and
certificates representing such shares have been issued, and then only with
respect to whole Common Shares issued to the Participant or credited to the
Participant's account. Thus, a Participant will not have a right to any dividend
or distribution on those shares made prior to the Exercise Date.

         (b) The Participant will be entitled to receive, as soon as practicable
after the Exercise Date, a stock certificate for the number of whole purchased
shares, if the Participant has so elected. The Participant may also elect to
have the Custodian hold his or her Common Shares acquired under the Plan. The
Custodian may impose upon, or pass through to, the Participant a reasonable fee
for withdrawal of Common Shares in the form of stock certificates. It is the
responsibility of each Participant to keep his or her address current with the
Company through the Plan Administrator and with the Custodian.

                               Page 16 of 35 Pages
<PAGE>   8

11.      SALE OR DISTRIBUTION OF COMMON SHARES ACQUIRED UNDER THE PLAN.

         (a) Participants who elect to have the Custodian or a broker-dealer
selected by the Company hold the Common Shares they acquire under the Plan may
sell those shares only as of the first business day of each calendar quarter and
only if the Participant submits a sales request form, electronic authorization
or other sales authorization means provided by the Company to the Plan
Administrator at least ten business days before the date on which the
Participant desires to have the Common Shares sold. Other Participants who elect
to receive a certificate for the Common Shares they acquire under the Plan may
sell those Common Shares at any time without restriction under the Plan.

         (b) Participants and former Participants who elect to have the
Custodian or a broker-dealer selected by the Company hold the Common Shares they
acquire under the Plan may withdraw those shares and have certificates issued in
the Participant's name only as of the first business day of each calendar
quarter and only if the Participant submits a share withdrawal request form,
electronic authorization or other share withdrawal authorization means provided
by the Company to the Plan Administrator at least ten business days before the
date on which the Participant desires to have the Common Shares withdrawn.

         (c) A Participant shall immediately provide information to the Plan
Administrator if the Participant transfers any shares purchased through the Plan
within two years from the date of grant of the related Purchase Right. Such
transfers shall include transfers into street name and dispositions by sale,
gift or other manner. The Participant shall disclose the name of the transferee,
the manner of the transfer, the date of the transfer, the number of shares
involved and the transfer price. By executing the Participation Form, each
Participant obligates himself or herself to provide such information to the Plan
Administrator.

         (d) The Company is authorized to withhold from any payment to be made
to a Participant, including any payroll and other payments not related to the
Plan, amounts of withholding and other taxes due in connection with any
transaction under the Plan or any transaction involving Common Shares acquired
under the Plan, and a Participant's enrollment in the Plan will be deemed to
constitute his or her consent to such withholding.

12.      PLAN ADMINISTRATION.

         (a) The Plan shall be administered by the Board.

         (b) The Board shall have the plenary power, subject to, and within the
limits of, the express provisions of the Plan:

                  (i) to determine the commencement and termination date of the
         offering of Common Shares under the Plan;

                               Page 17 of 35 Pages

<PAGE>   9

                  (ii) to interpret the terms of the Plan and the rights granted
         under it, establish, amend and revoke rules for the administration of
         the Plan and correct or reconcile any defect, omission or inconsistency
         in the Plan;

                  (iii) to amend the Plan as provided in Section 16; and

                  (iv) to exercise such powers and to perform such acts as the
         Board deems necessary or expedient to carry out the purposes of the
         Plan or to promote the best interests of the Company.

         (c) The Board may delegate all or part of its authority to administer
the Plan to the Plan Administrator, who may in turn delegate the day-to-day
operations of the Plan to the Custodian or any other person or entity the Plan
Administrator designates. The Custodian will establish and maintain, as agent
for the Participants, accounts for the purpose of holding Common Shares as may
be necessary or desirable for the administration of the Plan for those
Participants electing to have the Custodian hold the Common Shares they acquire
under the Plan.

         (d) The Board may waive or modify any requirement that a notice or
election be made, provided or filed under the Plan a specified period in advance
in an individual case or by adoption of a rule or regulation under the Plan,
without the necessity of an amendment to the Plan.

13.      TRANSFERABILITY.

         (a) Any account maintained by the Custodian for the benefit of a
Participant with respect to shares acquired pursuant to the Plan may only be in
the name of the Participant.

         (b) Neither payroll deductions credited to a Participant's account nor
any Purchase Rights or other rights to acquire Common Shares under the Plan may
be assigned, transferred, pledged or otherwise disposed of by Participants other
than by will or the laws of descent and distribution and Purchase Rights may be
exercised only by a Participant during the lifetime of a Participant.

14.      MERGER OR LIQUIDATION OF THE COMPANY.

         If (1) Compuware Corporation dissolves or is liquidated, (2) Compuware
Corporation merges with another entity and the Company is not the surviving
entity, (3) more than 50% of the stock of Compuware Corporation is acquired by
another entity, (4) all or substantially all of the assets of Compuware
Corporation are acquired by another entity, or (5) any other similar transaction
occurs, the Board may, in its discretion, in connection with such transaction,
cancel each outstanding Purchase Right and refund all sums previously collected
from Participants under the canceled Purchase Rights, or cause each Participant
with outstanding Purchase Rights to have his or her outstanding Purchase Rights
exercised immediately prior to such transaction and thereby have the balance of
his or her account applied to the purchase of Common Shares at

                               Page 18 of 35 Pages
<PAGE>   10

the purchase price in effect for the Offering Period, which would be treated as
ending with the effective date of such transaction. In the event of a merger in
which the Company is the surviving entity, each Participant is entitled to
receive, for each share as to which such Participant's Purchase Rights are
exercised, the securities or property that a holder of one Common Share was
entitled to receive upon the merger.

15.      ADJUSTMENT.

         To prevent dilution or enlargement of the rights of Participants under
the Plan, appropriate adjustments shall be made in the event any change is made
to the Company's outstanding Common Shares (or other securities then subject to
the Plan or any Purchase Right) by reason of any stock dividend, stock split,
combination of shares, exchange of shares, change in corporate structure,
merger, reorganization, recapitalization, dividend in property other than cash,
liquidating dividend or other change in the Common Shares effected without the
Company's receipt of consideration. Adjustments shall be made to the maximum
number and class of securities issuable under the Plan and the number and class
of securities and price per share in effect under each outstanding Purchase
Right. Any such adjustments will be made by the Board, and its determination of
the appropriate adjustments shall be made in its sole discretion.

16.      AMENDMENT AND TERMINATION.

         The Board may terminate or amend the Plan and any Purchase Rights at
any time and from time to time; provided, however, (1) such termination or
amendment may not impair any rights and obligations under Purchase Rights
previously granted under the Plan without the consent of each of the affected
Participants, and (2) any amendment that increases the number of shares reserved
for issuance upon exercise of Purchase Rights under the Plan (except pursuant to
Section 14 or 15 and any other changes authorized by the Plan to be made by the
Board or the Plan Administrator) or changes the eligibility requirements for
participation in the Plan, shall be subject to shareholder approval to the
extent required by the Code. The Board may, from time to time, designate the
parent corporations or subsidiary corporations (as such terms are defined for
purposes of Code Section 423(b)) of Compuware Corporation that may participate
in the Plan. The Plan expressly contemplates that the Board may amend the Plan
in any respect the Board deems necessary or advisable to provide eligible
employees with the benefits provided or to be provided under the provisions of
the Code and the regulations promulgated under the Code relating to employee
stock purchase plans and/or to bring the Plan and/or the Purchase Rights into
compliance with those provisions and regulations. If not sooner terminated by
the Board or terminated by expiration, the Plan shall terminate at the time
Purchase Rights have been exercised with respect to all Common Shares reserved
for acquisition under the Plan. Unless sooner terminated, the Plan shall
terminate ten years after its initial adoption by the Board. No Purchase Rights
may be granted under the Plan after it is terminated.

                               Page 19 of 35 Pages

<PAGE>   11

17.      SHAREHOLDER APPROVAL.

         The Plan is subject to the approval of shareholders of Compuware
Corporation at the 2001 Annual Meeting of Shareholders. Purchase Rights will not
be granted or exercised under the Plan if shareholder approval of the Plan is
not obtained before September 30, 2001.

18.      NO EMPLOYMENT RIGHTS.

         Participation in the Plan will not impose any obligations upon the
Company to continue the employment of a Participant for any specific period and
will not affect the right of the Company to terminate a Participant's employment
at any time, with or without cause.

19.      COSTS.

         Except as set forth in Section 10(b), costs and expenses incurred in
the administration of the Plan and the maintenance of accounts with the
Custodian will be paid by the Company, to the extent provided in this Section
19. Any brokerage fees and commissions for the purchase of Common Shares under
the Plan will be paid by the Company, but any brokerage fees and commissions for
the sale of Common Shares acquired under the Plan by a Participant will be borne
by such Participant.

20.      REPORTS.

         After the close of each Offering Period, each Participant in the Plan
will receive a report indicating the amount of the Participant's contributions
to the Plan during the Offering Period, the amount of the contributions applied
to the purchase of Common Shares for the Offering Period, and the purchase price
per share in effect for the Offering Period.

21.      GOVERNING LAW.

         The validity, construction and effect of the Plan and any rules and
regulations relating to the Plan will be determined in accordance with laws of
the State of Michigan, without giving effect to principles of conflict of laws,
and applicable federal law.

22.      COMPLIANCE WITH LEGAL AND OTHER REQUIREMENTS.

         The Plan, the granting and exercising of Purchase Rights under the
Plan, and the obligations of the Company, the Plan Administrator and the
Custodian under the Plan will be subject to all applicable federal and state
laws, rules, and regulations, and to such approvals by any regulatory or
governmental agency as may be required. The Company may, in its discretion,
postpone the issuance or delivery of Common Shares upon exercise of Purchase
Rights until

                               Page 20 of 35 Pages

<PAGE>   12

completion of registration or qualification of such Common Shares or other
required action under any federal or state law, rule, or regulation, listing or
other required action with respect to any automated quotation system or stock
exchange upon which the Common Shares or other Company securities are designated
or listed, or compliance with any other contractual obligation of the Company,
as the Company may consider appropriate, and may require any Participant to make
such representations and furnish such information as it may consider appropriate
in connection with the issuance or delivery of Common Shares in compliance with
applicable laws, rules, and regulations, designation or listing requirements, or
other contractual obligations. If the Company is unable to obtain from any such
regulatory commission or agency the authority that counsel for the Company deems
necessary for the lawful issuance and sale of Common Shares under the Plan, the
Company shall be relieved from any liability for failure to issue and sell
Common Shares upon exercise of Purchase Rights unless and until such authority
is obtained.

23.      INDEMNIFICATION.

         To the extent permitted, the Company shall indemnify and save harmless
the Board, Plan Administrator and Custodian members who are officers, directors,
shareholders or employees of the Company against any liabilities incurred by
them in the exercise and performance of their powers and duties under the Plan.

24.      NOTICES AND AGREEMENTS.

         Any notices or agreements provided for in the Plan shall be given in
writing, in a form provided by the Company, and unless specifically provided for
in the Plan, shall be deemed effectively given upon receipt or, in the case of
notices and agreements delivered by the Company, three days after deposit in the
United States mail, postage prepaid.

                               Page 21 of 35 Pages

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