EXCHANGE AGREEMENT

This Exchange Agreement (this "Agreement"), dated as of December 28, 2001, is by
and between DVL, Inc., a Delaware  corporation  (the  "Company"),  and Blackacre
Bridge Capital,  L.L.C., a New York limited  liability  company (the "Exchanging
Holder").

WHEREAS:

A.       The  Company  has  outstanding   approximately   $3,521,000   aggregate
         principal amount of 10% Redeemable Notes due 2005 (the "Notes").

B.       The Exchanging Holder is the holder of $1,188,278  aggregate  principal
         amount of the Notes,  which amount includes  accrued  interest  through
         December 31, 2001.

C.       The  Exchanging  Holder and the Company  have  indicated  their  mutual
         desire  to  exchange  the Notes  owned by the  Exchanging  Holder  (the
         "Exchange  Notes") for Common  Stock to be issued by the  Company  and,
         after  negotiation  between such  parties,  such parties have agreed to
         effect such exchange on the terms and conditions hereinafter set forth.

NOW, THEREFORE,  in receipt of valid consideration  therefor, the parties hereto
agree as follows:

ARTICLE ONE:       AGREEMENT TO EXCHANGE NOTES

1.1      EXCHANGE OF SECURITIES.

         (a)      On the terms and subject to the  conditions  set forth herein,
                  concurrent   with  the  execution  of  this   Agreement,   the
                  Exchanging Holder agrees to transfer to the Company all of its
                  right,  title  and  interest  in and to  the  Exchange  Notes,
                  including all accrued and unpaid interest thereon, in exchange
                  for 4,753,113  shares of the Common Stock,  par value $.01 per
                  share, of the Company (the "Exchange Shares").

         (b)      The number of Exchange Shares to be exchanged pursuant to this
                  Agreement for the Exchange Notes exchanged  hereby  (including
                  all accrued and unpaid  interest  thereon) has been negotiated
                  between  the  Company  and the  Exchanging  Holder,  it  being
                  acknowledged  and agreed that upon surrender by the Exchanging
                  Holder of the Exchange  Notes for  conversion  and delivery by
                  the Company of the  Exchange  Shares,  the  Exchanging  Holder
                  shall cease to have any further  claim  against the Company in
                  respect of the Exchange Notes or any accrued interest thereon.

1.2      CLOSING.  The  completion  of the  transactions  contemplated  by  this
         Agreement  (the  "Closing")  shall take place on the date  hereof  (the
         "Effective  Date"), as follows.  The Exchanging Holder shall deliver or
         cause to be delivered to the Company the  original  executed  copies of
         the Exchange Notes to be exchanged hereunder duly endorsed for transfer
         or otherwise in such a manner as shall be acceptable to the Company and
         effective to convey all right,  title and  interest,  free and clear of
         any liens,  encumbrances,  pledges, or security interests in and to the
         Exchange  Notes to be  surrendered  by it to the

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         Company.  The Company  shall deliver to the  Exchanging  Holder (or its
         designee)   the  Exchange   Shares,   duly   issued,   fully  paid  and
         non-assessable,  represented by a stock  certificate  registered in the
         name of the Exchanging Holder or its designee.

ARTICLE TWO: REPRESENTATIONS AND WARRANTIES

2.1      MUTUAL  REPRESENTATIONS  AND  WARRANTIES.   Each  party  hereto  hereby
         represents  and  warrants  to the  other  party  that the  transactions
         contemplated  hereby  will not  violate  (i) its  charter,  articles or
         certificate  of  incorporation  or  bylaws  (or  other   organizational
         documents),  if  applicable,  or  any  agreement,  indenture  or  other
         instrument to which it is a party, (ii) any judgment,  decree, order or
         award or any  court,  governmental  body or  arbitrator  to which it is
         subject or (iii) any law,  rule or  regulation  applicable  to it. Each
         party hereto hereby represents and warrants to the other party that (i)
         it has full legal right,  power and  authority to execute,  deliver and
         perform this Agreement and the transaction  contemplated  hereby,  (ii)
         the execution, delivery and performance by it of this Agreement and the
         consummation  by it of the  transaction  contemplated by this Agreement
         have been duly  authorized by all necessary  corporate or other action,
         as the case  may be,  and no  other  proceedings  on the part of it are
         necessary to authorize this Agreement or to consummate the  transaction
         contemplated hereby, and (iii) this Agreement has been duly and validly
         executed  and  delivered  by such  party  and  constitutes  a valid and
         binding obligation of such party,  enforceable against it in accordance
         with its terms.  In addition,  each party hereto hereby  represents and
         warrants to the other party that no commission or remuneration has been
         paid or given  directly  or  indirectly  for  soliciting  the  exchange
         contemplated under this Agreement.

2.2      REPRESENTATIONS AND WARRANTIES OF THE EXCHANGING HOLDER. The Exchanging
         Holder  hereby  represents  and  warrants to the  Company  that (i) the
         Exchanging  Holder  is the  sole  legal  and  beneficial  owner  of the
         Exchange Notes to be surrendered hereunder;  and (ii) upon the closing,
         the Company will acquire the Exchange  Notes to be  surrendered  by the
         Exchanging Holder free and clear of any liens,  encumbrances,  pledges,
         security  interests or other  restrictions  or claims of third parties,
         other than any of the foregoing created by the Company.

2.3      REPRESENTATIONS  AND  WARRANTIES  OF THE  COMPANY.  The Company  hereby
         represents and warrants to the Exchanging Holder that (i) upon issuance
         in accordance with the terms of this Agreement,  the Exchange Shares to
         be issued by it pursuant hereto will be duly and validly authorized and
         issued,  fully paid and non-assessable,  (ii) the Exchanging Holder (or
         its designee)  will acquire such Exchange  Shares free and clear of any
         liens,  encumbrances,  pledges, security interest or other restrictions
         or claims of third parties,  other than any of the foregoing created by
         the  Exchanging  Holder  (or its  designee)  and  (iii)  as of the date
         hereof,  the  authorized  capital  stock  of the  Company  consists  of
         90,000,000  shares  of Common  Stock,  par  value  $.01 per share  (the
         "Common Stock") of which 16,560,450  shares are outstanding  (excluding
         the Exchange  Shares),  and  90,630,355  shares are reserved for future
         issuance upon exercise of currently  outstanding options,  warrants and
         convertible securities (assuming (i) the redemption for Common Stock of
         the Company's  outstanding  Notes (other than the Exchange Notes) based
         upon  the  current  market  price  of the  Common  Stock,  and (ii) the
         exercise  of warrants  to

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         purchase an aggregate of up to 49% of the outstanding Common Stock on a
         fully diluted basis issued in connection  with the Amended and Restated
         Loan Agreement,  dated as of March 27, 1996 between the Company and NPM
         Capital  LLC),  and 100 shares of Class A  Preferred  Stock,  par value
         $10.00 per share,  of which 100 shares are  outstanding,  and 5,000,000
         shares of Preferred Stock, par value $.01 per share,  none of which are
         outstanding.

2.4      SURVIVAL  OF  REPRESENTATIONS  AND  WARRANTIES.   All  representations,
         warranties  and  agreements  of each party  hereto  shall  survive  the
         Closing.

ARTICLE THREE: RESTRICTIONS ON TRANSFERABILITY

3.1      RESTRICTIONS   ON   TRANSFERABILITY.   The  Exchange   Shares  will  be
         "Restricted Securities" and shall not be sold, assigned, transferred or
         pledged  except upon the  conditions  specified in this Article  Three,
         which conditions are intended to ensure  compliance with the provisions
         of the Securities Act of 1933, as amended (the  "Securities  Act"),  to
         preserve  certain of the Company's tax attributes,  and to grant to the
         Company a right of first offer with respect to future  transfers of the
         Exchange Shares by the Exchanging  Holder (or its designee).  Any sale,
         assignment,  transfer,  pledge,  hypothecation or other  encumbrance or
         disposition  of  Exchange  Shares  not made in  conformance  with  this
         Agreement shall be null and void, shall not be recorded on the books of
         the Company and shall not be recognized by the Company.

3.2      RESTRICTIVE LEGENDS. Each certificate  representing the Exchange Shares
         or any other  securities  issued in respect of the Exchange Shares upon
         any   stock   split,   stock   dividend,   recapitalization,    merger,
         consolidation,  or similar event, shall (unless otherwise  permitted by
         the  provisions  of Rule 144 under the  Securities  Act) be  stamped or
         otherwise  imprinted with legends in the following form (in addition to
         any legend required under applicable state securities laws):

                  "THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED
                  FOR  INVESTMENT  PURPOSES  ONLY  AND  HAVE  NOT  BEEN
                  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933 OR ANY
                  STATE  SECURITIES  LAWS.  SUCH  SECURITIES MAY NOT BE
                  SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
                  DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN
                  EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE
                  STATE SECURITIES LAWS."

                  "EACH  OF  THE  CERTIFICATE  OF  INCORPORATION   (THE
                  "CERTIFICATE") AND THE BY-LAWS (THE "BY-LAWS") OF THE
                  CORPORATION  CONTAINS  RESTRICTIONS  PROHIBITING  THE
                  SALE, TRANSFER, DISPOSITION,  PURCHASE OR ACQUISITION
                  OF  ANY  CAPITAL  STOCK  UNTIL  SEPTEMBER  30,  2009,
                  WITHOUT THE  AUTHORIZATION  OF THE BOARD OF DIRECTORS
                  OF THE CORPORATION (THE "BOARD OF DIRECTORS"),  BY OR
                  TO ANY HOLDER (A) WHO  BENEFICIALLY  OWNS DIRECTLY OR
                  THROUGH  ATTRIBUTION (AS GENERALLY

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                  DETERMINED  UNDER SECTION 382 OF THE INTERNAL REVENUE
                  CODE OF 1986,  AS AMENDED (THE  "CODE")) FIVE PERCENT
                  OR  MORE  OF  THE  VALUE  OF  THE  THEN   ISSUED  AND
                  OUTSTANDING   SHARES   OF   CAPITAL   STOCK   OF  THE
                  CORPORATION  OR (B)  WHO,  UPON THE  SALE,  TRANSFER,
                  DISPOSITION,  PURCHASE OR  ACQUISITION OF ANY CAPITAL
                  STOCK  OF  THE  CORPORATION  WOULD  BENEFICIALLY  OWN
                  DIRECTLY  OR  THROUGH   ATTRIBUTION   (AS   GENERALLY
                  DETERMINED  UNDER  SECTION  382  OF  THE  CODE)  FIVE
                  PERCENT  OR MORE OF THE VALUE OF THE THEN  ISSUED AND
                  OUTSTANDING CAPITAL STOCK OF THE CORPORATION, IF THAT
                  SALE, TRANSFER, DISPOSITION,  PURCHASE OR ACQUISITION
                  WOULD,  IN THE SOLE  DISCRETION  AND  JUDGMENT OF THE
                  BOARD  OF  DIRECTORS,  JEOPARDIZE  THE  CORPORATION'S
                  PRESERVATION  OF ITS  FEDERAL  INCOME TAX  ATTRIBUTES
                  PURSUANT TO SECTION 382 OF THE CODE. THE  CORPORATION
                  WILL FURNISH  WITHOUT  CHARGE TO THE HOLDER OF RECORD
                  OF THIS CERTIFICATE A COPY OF THE CERTIFICATE  AND/OR
                  BY-LAWS, CONTAINING THE ABOVE-REFERENCED RESTRICTIONS
                  ON TRANSFER  OF STOCK,  UPON  WRITTEN  REQUEST TO THE
                  CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS."

                  In addition,  each certificate issued to the Exchanging Holder
         (or  its  designee)  representing  the  Exchange  Shares  or any  other
         securities  issued in respect  of the  Exchange  Shares  upon any stock
         split,  stock dividend,  recapitalization,  merger,  consolidation,  or
         similar  event,  shall  be  stamped  or  otherwise  imprinted  with the
         following legend:

                  "THE  SALE,  PLEDGE,  HYPOTHECATION,   ASSIGNMENT  OR
                  TRANSFER  OF  THE  SECURITIES   REPRESENTED  BY  THIS
                  CERTIFICATE  ARE SUBJECT TO THE TERMS AND CONDITIONS,
                  INCLUDING   RESTRICTIONS  THEREON,   CONTAINED  IN  A
                  CERTAIN   EXCHANGE   AGREEMENT  BY  AND  BETWEEN  THE
                  CORPORATION  AND  BLACKACRE  BRIDGE  CAPITAL,  L.L.C.
                  COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN
                  REQUEST TO THE SECRETARY OF THE CORPORATION."

                  Each  holder of  Exchange  Securities  consents to the Company
         making  a  notation  on its  records  and  giving  instructions  to any
         transfer   agent  of  the  Common  Stock  in  order  to  implement  the
         restrictions  on  transfer  established  in  this  Article  Three.

3.3      COMPLIANCE  WITH  SECURITIES  LAWS.  The  holder  of  each  certificate
         representing  Restricted  Securities  by acceptance  thereof  agrees to
         comply in all respects with the  provisions of this Section 3.3 as well
         as the restrictions  referred to in the second  restrictive  legend set
         forth in Section 3.2 above.  Prior to any  proposed  sale,  assignment,
         transfer  or pledge of any  Restricted  Securities  unless  there is in
         effect a registration  statement  under the Securities Act covering the
         proposed transfer,  the holder thereof shall give written notice

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         to the Company of such  holder's  intention  to effect  such  transfer,
         sale,  assignment or pledge,  unless the Company has engaged a transfer
         agent to administer  transfers of its capital stock, in which case, the
         procedures of such transfer  agent shall be followed.  Each such notice
         shall describe the manner and  circumstances of the proposed  transfer,
         sale,  assignment  or pledge in reasonable  detail,  and, if reasonably
         requested by the transfer agent or the Company shall be accompanied, at
         such holder's expense, by either (i) a written opinion of legal counsel
         (which  could be Company  counsel or  counsel to the  transferor),  who
         shall be, and whose legal opinion shall be, reasonably  satisfactory to
         the Company,  addressed to the Company, to the effect that the proposed
         transfer  of  the  Restricted   Securities  may  be  effected   without
         registration   under  the  Securities  Act  or  any  applicable  states
         securities laws or (ii) a "no action" letter from the Commission to the
         effect that the transfer of such securities  without  registration will
         not  result in a  recommendation  by the staff of the  Commission  that
         action be taken  with  respect  thereto,  whereupon  the holder of such
         Restricted  Securities  shall be entitled to transfer  such  Restricted
         Securities in accordance with the terms of the notice  delivered by the
         holder  to  the  Company.   Each  certificate   evidencing   Restricted
         Securities  transferred as above  provided  shall bear,  except if such
         transfer is made pursuant to Rule 144, the first restrictive legend set
         forth in Section 3.2 above, except that such certificate shall not bear
         such  restrictive  legend if in the  opinion of counsel for such holder
         and the  Company  such  legend is not  required  in order to  establish
         compliance with any provision of the Securities Act.

3.4      OTHER RESTRICTIONS.

         (a)      CERTAIN TRANSFERS PROHIBITED.  In addition to the restrictions
                  imposed upon the Exchanging Holder (or its designee)  pursuant
                  to the  restrictions  referred  to in the  second  restrictive
                  legend   set  forth  in  Section   3.2  above  (the   "Charter
                  Restrictions"),  the Exchanging Holder (or its designee) shall
                  not sell,  transfer or dispose,  or purchase or acquire in any
                  manner whatsoever,  whether  voluntarily or involuntarily,  by
                  operation  of law  or  otherwise  (any  such  sale,  transfer,
                  disposition,   purchase,   acquisition  or  contract  being  a
                  "Transfer"), any shares of capital stock of the Company or any
                  option,  warrant or other right to purchase or acquire capital
                  stock of the  Company or any  securities  convertible  into or
                  exchangeable  for  capital  stock of the  Company  without the
                  express  written  consent  of the  Board of  Directors  of the
                  Company,  which the Board may withhold  only if such  Transfer
                  would,  in the sole  discretion  and  judgment of the Board of
                  Directors,  (i) in the case of a Transfer which would occur on
                  or  prior to  December  31,  2005,  jeopardize  the  Company's
                  preservation of its Federal income tax attributes  pursuant to
                  Section 382 of the Internal  Revenue Code of 1986,  as amended
                  (the  "Code"),  or (ii) in the case of a Transfer  which would
                  occur after  December 31, 2005, be  materially  adverse to the
                  interests of the Company (it being agreed that a proposed sale
                  or other disposition of Common Stock at a premium to market or
                  other similar transaction shall not in and of itself be deemed
                  materially adverse to the interests of the Company).

         (b)      REQUEST  PROCEDURE.  In order  to  provide  for the  effective
                  policing of the Charter  Restrictions  and the restrictions on
                  Transfer pursuant to Section 3.4(a), if the

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                  Exchanging  Holder  (or its  designee)  proposes  to  Transfer
                  shares of capital stock of the Company, it shall, prior to the
                  date  of  the  proposed   Transfer,   request  in  writing  (a
                  "Request")  that the  Board of  Directors  of the  Corporation
                  review the proposed  Transfer and  authorize or not  authorize
                  the proposed Transfer pursuant to the Charter Restrictions and
                  the  restrictions on Transfer  pursuant to Section  3.4(a).  A
                  Request  shall be mailed or delivered  to the Chief  Financial
                  Officer of the  Company at the  Company's  principal  place of
                  business or telecopied to the Company's  telecopier  number at
                  its principal place of business.  A Request shall be deemed to
                  have been delivered when actually  received by the Company.  A
                  Request  shall  include (i) the name,  address  and  telephone
                  number of the  Exchanging  Holder  (or its  designee),  (ii) a
                  description  of the shares of  capital  stock  proposed  to be
                  Transferred by or to the Exchanging  Holder (or its designee),
                  (iii) the date on which the  proposed  Transfer is expected to
                  take  place,  (iv) the  name of the  proposed  transferor  and
                  transferee of the capital stock to be Transferred by or to the
                  Exchanging  Holder (or its  designee),  and (v) a Request that
                  the Board of Directors authorize, if appropriate, the Transfer
                  pursuant to the Charter  Restrictions  and the restrictions on
                  Transfer  pursuant to Section 3.4(a) and inform the Exchanging
                  Holder (or its  designee) of its  determination  regarding the
                  proposed Transfer.  If the Exchanging Holder (or its designee)
                  seeks to sell or  dispose of shares of  capital  stock,  then,
                  within five  business  days of receipt by the  President  of a
                  Request,  a meeting of the Board of Directors shall be held to
                  determine whether to authorize the proposed Transfer described
                  in  the  Request  under  the  Charter   Restrictions  and  the
                  restrictions on Transfer  pursuant to Section  3.4(a).  If the
                  Exchanging  Holder  (or its  designee)  seeks to  purchase  or
                  acquire  shares  of  capital  stock,  at  the  next  regularly
                  scheduled  meeting  of the Board of  Directors  following  the
                  fifth  business  day  after  receipt  by  the  President  of a
                  Request, the Board of Directors will meet to determine whether
                  to authorize  the proposed  Transfer  described in the Request
                  pursuant to the Charter  Restrictions  and the restrictions on
                  Transfer pursuant to Section 3.4(a).

         (c)      AUTHORIZATION  OF  TRANSFERS.  The  Board of  Directors  shall
                  conclusively  determine  whether  to  authorize  the  proposed
                  Transfer,  in its sole  discretion  and judgment,  within five
                  business  days of receipt by the  President  of a Request  and
                  shall   immediately   cause  the  Exchanging  Holder  (or  its
                  designee) to be informed of such  determination.  The Board of
                  Directors shall authorize a Transfer by the Exchanging  Holder
                  (or  its  designee),  or to  the  Exchanging  Holder  (or  its
                  designee),   if,  in  its  sole  discretion  and  judgment  it
                  determines  that  the  Transfer  will not (i) in the case of a
                  Transfer  which would occur on or prior to December  31, 2005,
                  jeopardize  the Company's  preservation  of its Federal income
                  tax attrubutes pursuant to Section 382 of the Code, or (ii) in
                  the case of a Transfer  which would occur after  December  31,
                  2005,  be  materially  adverse to the interests of the Company
                  (it being agreed that a proposed sale or other  disposition of
                  Common  Stock  at  a  premium  to  market  or  other   similar
                  transaction  shall not in and of  itself be deemed  materially
                  adverse to the interests of the Company).

3.5      CERTAIN PUT RIGHTS.  In the event that, at any time after  December 31,
         2005,  the  Exchanging  Holder  (or its  designee)  is  prevented  from
         disposing of any of the Exchange

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         Shares or any other shares of capital  stock of the Company as a result
         of the Board of Director's determination (an "Adverse  Determination"),
         then the  Exchanging  Holder  (or its  designee)  shall have the right,
         beginning  after  December  31, 2005,  to sell to the Company,  and the
         Company shall be obligated to purchase from the  Exchanging  Holder (or
         its  designee),  up to the  number of shares of Common  Stock (or other
         shares of capital stock of the Company) which,  when added to all prior
         sales of shares of Common  Stock (or other  shares of capital  stock of
         the Company) to the Company pursuant to this Section 3.5, would have an
         aggregate  market  value of not more than  $1,000,000.  Such  aggregate
         market  value in each such sale shall be  calculated  based upon a sale
         price per share of Common Stock equal to the average of the closing bid
         and asked  prices of the  Company's  Common  Stock on the OTC  bulletin
         board over the 15 consecutive  trading days ending immediately prior to
         the date on which the Board of Directors makes an Adverse Determination
         with respect to such shares.  The  Exchanging  Holder (or its designee)
         shall  exercise  this put right by means of delivering  written  notice
         (the "Put Notice") to the Company  within 15 days after the delivery of
         such  Adverse  Determination,  and if not so  exercised  such put right
         shall lapse with  respect to such Adverse  Determination.  In the event
         the Exchanging  Holder  exercises this put right in accordance with the
         terms of this Section 3.5,  the full  purchase  price for the shares of
         Common Stock (or other capital stock as to which the put right has been
         exercised)  with  respect to such  exercise  of the put right  shall be
         payable by the  Company as  follows:  (i) 12.5% of the  purchase  price
         shall be payable in cash; and (ii) 87.5% of the purchase price shall be
         payable in the form of a  promissory  note (a "Note")  executed  by the
         Company in favor of the Exchanging  Holder (or its designee).  The Note
         shall bear interest at the rate of 10% per annum, with interest payable
         quarterly,  and the  principal  thereof shall be payable in eight equal
         quarterly  installments,  with both  interest  and  principal  payments
         payable on the last day of each fiscal quarter of the Company. The Note
         may be  prepaid  in  whole or in part at any time  without  penalty  or
         premium  together with all accrued interest with respect to the portion
         of the principal balance so prepaid.  The closing of any sale of shares
         of Common Stock (or other  capital  stock as to which the put right has
         been  exercised),  with respect to such exercise of the put right shall
         be on the fifth  business  day  following  delivery  by the  Exchanging
         Holder  (or  its  designee)  of  the  Put  Notice  to the  Company.  In
         connection  with each closing the  Exchanging  Holder (or its designee)
         shall deliver such stock  certificates  representing  all of the shares
         with  respect  to such  exercise  of the put right  duly  endorsed  for
         transfer  and  other  documents  and take  such  other  actions  as may
         reasonably  be requested by the Company,  and the Company shall deliver
         by wire  transfer or  certified  or bank check the cash  portion of the
         purchase  price and  execute  and deliver a Note for the balance of the
         purchase price with respect to such exercise of the put right.

3.6      RIGHT OF FIRST OFFER.

         (a)      TRANSFER NOTICE.  If at any time the Exchanging Holder (or its
                  designee)  proposes to Transfer,  in any transaction or series
                  of related transactions, 500,000 or more Exchange Shares, then
                  the Exchanging Holder shall give the Company written notice of
                  the Exchanging  Holder's  intention to make such Transfer (the
                  "Offer  Notice"),  which  notice  shall  specify the number of
                  shares proposed to be transferred.

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         (b)      COMPANY'S  OPTION.  The  Company  shall  have an option  for a
                  period of five (5)  business  days from  receipt  of the Offer
                  Notice  to offer  to  purchase  the  Exchange  Shares.  If the
                  Exchanging  Holder  (or its  designee)  wishes to accept  such
                  offer,  it  shall  so  specify  within  a  period  of five (5)
                  business  days from  receipt of the  Company's  offer.  If the
                  Exchanging  Holder (or its designee)  accepts such offer, then
                  payment  for the  Offered  Shares  shall  be by  check or wire
                  transfer,  against  delivery  of  the  Offered  Shares  to  be
                  purchased  at a place  agreed upon  between the parties and at
                  the time of the scheduled closing therefor,  which shall be no
                  later than five (5) business days after the Exchanging  Holder
                  (or its designee) accepts the Company's offer.

         (c)      NON-EXERCISE OF RIGHTS. To the extent that the Company has not
                  exercised  its right of first  offer  within the time  periods
                  specified in this Agreement or the  Exchanging  Holder (or its
                  designee) has not accepted the Company's offer, the Exchanging
                  Holder (or its  designee)  shall have a period of ninety  (90)
                  days from the  delivery  of the Offer  Notice in which to sell
                  the Offered  Shares to one or more  unrelated  third  parties;
                  and, in the event the  Exchanging  Holder has not accepted the
                  Company's offer, the sale of such Offered Shares shall be upon
                  terms and conditions  (including  the purchase  price) no more
                  favorable to the third-party  transferee(s) than those offered
                  by the  Company.  In the event the  Exchanging  Holder (or its
                  designee)  does not  consummate the sale or disposition of the
                  Offered  Shares  within  the ninety  (90) day period  from the
                  delivery of the Offer  Notice,  the  Company's  right of first
                  offer  shall  continue  to be  applicable  to  any  subsequent
                  disposition  of the Offered  Shares by the  Exchanging  Holder
                  until such rights lapse in  accordance  with the terms of this
                  Agreement.

ARTICLE FOUR: MISCELLANEOUS

4.1      NOTICES.  All  notices,  requests,  demands  and  other  communications
         hereunder  shall be in writing and shall be deemed  given if  delivered
         personally or by facsimile  transmission or two days after being mailed
         by  certified or  registered  mail,  postage  prepaid,  return  receipt
         requested,  to the  parties,  their  successors  in  interest  or their
         assignees at the following addresses, or at such other addresses as the
         parties may designate by written notice in the manner aforesaid:

         If to the Exchanging Holder         Blackacre Bridge Capital L.L.C.
         (or its designee):                  450 Park Avenue
                                             New York, New York 10022
                                             Attention: Ron Kravit
                                             Facsimile:


         with a copy to:                     Schulte Roth & Zabel LLP
                                             919 Third Avenue
                                             New York, New York 10022
                                             Attention: Alan S. Waldenberg
                                             Facsimile: (212) 593-5955

                                       8
<PAGE>


         If to the Company:                  DVL, Inc.
                                             70 East 55th Street
                                             New York, New York 10022
                                             Attention:  Chief Financial Officer
                                             Facsimile: (212) 350-9911

         with a copy to:                     Rosenman & Colin LLP
                                             575 Madison Avenue
                                             New York, New York 10022
                                             Attention:  Howard S. Jacobs
                                             Facsimile:  (212) 940-8776

4.2      ASSIGNABILITY  AND PARTIES IN  INTEREST.  This  Agreement  shall not be
         assignable  by any of the  parties  hereto  without  the consent of the
         other party hereto. This Agreement shall inure to the benefit of and be
         binding upon the parties and their respective  permitted successors and
         assigns.

4.3      GOVERNING  LAW. This  Agreement  shall be governed by and construed and
         enforced in accordance with the internal  substantive  law, and not the
         law pertaining to conflicts or choice of law, of the State of New York.

4.4      COUNTERPARTS.  This Agreement may be executed in several  counterparts,
         each of which  shall be  deemed  an  original,  but all of which  shall
         constitute one and the same instrument.

4.5      COMPLETE   AGREEMENT.   This  Agreement  is  an  integrated   agreement
         containing the entire agreement between the parties hereto with respect
         to the subject matter hereof and shall supersede all previous,  and all
         contemporaneous   oral  or   written   negotiations,   commitments   or
         understandings.

4.6      MODIFICATIONS,  AMENDMENTS AND WAIVERS. This agreement may be modified,
         amended or otherwise supplemented only by a writing signed by the party
         against  whom it is  sought to be  enforced.  No waiver of any right or
         power  hereunder shall be deemed  effective  unless and until a writing
         waiving such right or power is executed by the party waiving such right
         or power.

4.7      NO THIRD PARTY  BENEFICIARIES.  There are no third party  beneficiaries
         under this Agreement or intended by any party hereto.

4.8      EXPENSES.  Each party  hereto  shall  bear its own costs and  expenses,
         including, without limitation,  attorneys' fees, incurred in connection
         with  this  Agreement  and  the   consummation   of  the   transactions
         contemplated hereby.

4.9      TERMINATION. This Agreement shall terminate upon the dissolution of the
         Company or the written agreement of the parties hereto.

                                       9
<PAGE>


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

                                    DVL, INC.



                                    By:
                                       -----------------------------------------
                                       Name:
                                       Title:


                                    BLACKACRE BRIDGE CAPITAL, L.L.C.



                                    By:
                                       -----------------------------------------
                                       Name:
                                       Title:

                                       10