Document:

Exhibit 10.12

                             EXHIBIT A TO AGREEMENT

                           RESTRICTED STOCK AGREEMENT

                                       FOR

                                 JAMES A. BROWN

      This RESTRICTED STOCK AGREEMENT (the "Agreement") is made as of March 30,
2007, (the "Effective Date") between GALES INDUSTRIES INCORPORATED, a Delaware
corporation ("Company"), and JAMES A. BROWN, an individual resident in the State
of Florida ("Mr. Brown").

                              W I T N E S S E T H:

      WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its shareholders
to provide incentive to Mr. Brown to remain with the Company by making this
grant of common stock in accordance with the terms of this Agreement;

      NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

1. Award of Restricted Stock. The Board hereby grants to Mr. Brown Two Hundred
Thousand (200,000) shares of common stock, par value $0.0001 per share (the
"Common Stock"), of the Company (collectively the "Restricted Stock").

2. Vesting of Restricted Stock.

      (a) Except as otherwise provided in Sections 2(b), 2(c), 2(d) and 4
hereof, One Hundred Thousand (100,000) of the shares of Restricted Stock shall
become vested as of the date hereof and One Hundred Thousand (100,000) of the
shares of Restricted Stock shall become vested as of December 31, 2007 (the
"Vesting Date"), provided with respect to the second block of Restricted Stock
that the Continuous Service (as defined in Section 2(d)(iii) below) of Mr. Brown
continues through the Vesting Date.

      (b) There shall be no proportionate or partial vesting of shares of
Restricted Stock in or during the months, days or periods prior to the Vesting
Date, and all vesting of shares of Restricted Stock shall occur only on the
Vesting Date. Upon the termination or cessation of Mr. Brown's Continuous
Service, any portion of the Restricted Stock that is not yet then vested, and
which does not then become vested pursuant to this Section 2, shall be subject
to re-purchase by the Company from Mr. Brown as provided in Section 4, below.

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      (b) Notwithstanding any other term or provision of this Agreement, the
Board shall be authorized, in its sole discretion, based upon its review and
evaluation of the performance of Mr. Brown and of the Company, to accelerate the
vesting of any shares of Restricted Stock under this Agreement, at such times
and upon such terms and conditions as the Board shall deem advisable.

      (c) In the event of Mr. Brown's death prior to the vesting of any
Restricted Stock and during Mr. Brown's Continuous Service during the term of
this Agreement, all of the shares of Restricted Stock subject to this Agreement
shall be immediately vested as of the date of death and shall be delivered,
subject to any requirements under this Agreement, to the beneficiary or
beneficiaries designated by Mr. Brown, or if Mr. Brown has not so designated any
beneficiary(ies), or no designated beneficiary survives Mr. Brown, such shares
shall be delivered to the personal representative of Mr. Brown's estate.

      (e) For purposes of this Agreement, the following terms shall have the
meanings indicated:

            (i) "Continuous Service" shall mean the continuous service to the
Company or a Related Entity, without interruption, of Mr. Brown, in Mr. Brown's
capacity as a member of the Board or the board of directors of any Related
Entity. Continuous Service shall not be considered interrupted (or to have
ceased or terminated) in the case of (1) any approved leave of absence, (2)
transfers among the Company, any Related Entity, or any successor thereto, so
long as Mr. Brown continues in his capacity as a Director thereof, or (3) any
change in status (e.g., from Chairman to Director), if and so long as (x) Mr.
Brown remains in the service of the Company or a Related Entity in the capacity
of Director (except as otherwise provided herein), and (y) which change in
status is approved in writing by the Company or a Related Entity in its sole
discretion (with an express acknowledgement that such change in status
continues, and does not cease or terminate, "Continuous Service" for purposes of
this Agreement). An approved leave of absence shall include sick leave or any
other authorized personal leave approved by the Company in writing.

            (iii) "Non-Vested Shares" means any portion of the Restricted Stock
subject to this Agreement that has not become vested pursuant to this Section 2.

            (iv) "Related Entity" shall mean any Subsidiary, and any business,
corporation, partnership, limited liability company, trust or other entity in
which the Company or a Subsidiary holds a substantial ownership interest,
directly or indirectly.

            (v) "Subsidiary" shall mean any corporation or other entity in which
the Company has a direct or indirect ownership interest of 50% or more of the
total combined voting power of the then outstanding securities or interests of
such corporation or other entity entitled to vote generally in the election of
directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% or more of the assets on liquidation or
dissolution.

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            (vi) "Vested Shares" shall mean any portion of the Restricted Stock
subject to this Agreement that is and has become vested pursuant to this Section
2.

3. Delivery of Restricted Stock.

      (a) One or more stock certificates evidencing the Restricted Stock shall
be issued in the name of Mr. Brown but shall be held and retained by the
Secretary of the Company until the latest date on which the shares subject to
this Restricted Stock award become Vested Shares pursuant to Section 2 hereof
(the "Applicable Date"). All such stock certificates shall bear the following
legends, along with such other legends that the Board shall deem necessary and
appropriate or which are otherwise required or indicated pursuant to any
applicable stockholders agreement:

            THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
            REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
            ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE
            TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A
            REGISTRATION UNDER THE 1933 ACT AND SUCH OTHER APPLICABLE LAWS (AS
            APPLICABLE) IS IN EFFECT OR PURSUANT TO AN EXEMPTION FROM
            REGISTRATION UNDER SAID ACT AND LAWS AS CONFIRMED TO THE ISSUER BY
            AN OPINION (IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER) OF
            COUNSEL (SATISFACTORY TO THE ISSUER).

            THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
            SUBSTANTIAL VESTING AND OTHER RESTRICTIONS AS SET FORTH IN THE
            RESTRICTED STOCK AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL
            HOLDER OF THE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
            PRINCIPAL OFFICE OF THE ISSUER. SUCH RESTRICTIONS ARE BINDING ON
            TRANSFEREES OF THESE SHARES, AND INCLUDE VESTING CONDITIONS WHICH
            MAY RESULT IN THE COMPLETE FORFEITURE OF THE SHARES.

      (b) Mr. Brown shall deposit with the Company stock powers or other
instruments of transfer or assignment, duly endorsed in blank with signature(s)
guaranteed, corresponding to each certificate representing shares of Restricted
Stock until such shares become Vested Shares. If Mr. Brown shall fail to provide
the Company with any such stock power or other instrument of transfer or
assignment, Mr. Brown hereby irrevocably appoints the Secretary of the Company
as his attorney-in-fact, with full power of appointment and substitution, to
execute and deliver any such power or other instrument which may be necessary to
effectuate the transfer of the Restricted Stock (or assignment of distributions
thereon) on the books and records of the Company.

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<PAGE>

      (c) On the Applicable Date (as defined in Section 3(a) above) or as soon
as administratively practicable thereafter, the Company shall promptly cause a
new certificate or certificates to be issued for and with respect to all Vested
Shares and shall deliver the new certificate or certificates, to Mr. Brown. The
new certificate or certificates shall continue to bear those legends and
endorsements that the Company shall deem necessary or appropriate (including
those relating to restrictions on transferability and/or obligations and
restrictions under the Securities Laws).

4. Termination or Cessation of Continuous Service. Upon the termination or
cessation of Mr. Brown's Continuous Service, any portion of the Restricted Stock
that is not yet then vested, and which does not then become vested pursuant to
Section 2, shall be subject to re-purchase by the Company from Mr. Brown, and
Mr. Brown shall sell to the Company upon the exercise of such right by the
Company, at a purchase price of fifteen cents per share (adjusted as reasonably
determined by the Board for any dividends, splits or recapitalizations that
occur after the date hereof), the number of shares of Restricted Stock (rounded
up to the nearest whole share) not yet then vested. The number of shares of Mr.
Brown's Shares subject to repurchase, at the time of any stock dividend or other
distribution made on or in respect of Mr. Brown's Shares or any subdivision,
combination, redemption or reclassification of the outstanding capital stock of
the Company or received in exchange for Mr. Brown's Shares or any part thereof,
shall be adjusted to give effect to such stock dividend, other distribution,
subdivision, combination, redemption or reclassification. The Board shall have
the power and authority to enforce on behalf of the Company any and all rights
of the Company under this Agreement in the event of Mr. Brown's forfeiture of
Non-Vested Shares pursuant to this Section 4.

5. Rights with Respect to Restricted Stock.

      (a) Except as otherwise provided in this Agreement, Mr. Brown shall have,
with respect to all of the shares of Restricted Stock, whether Vested Shares or
Non-Vested Shares, all of the rights of a holder of shares of common stock of
the Company, including without limitation (i) the right to vote such Restricted
Stock, (ii) the right to receive cash dividends, if any, as may be declared on
the Restricted Stock from time to time, and (iii) the rights available to all
holders of shares of common stock of the Company upon any merger, consolidation,
reorganization, liquidation or dissolution, stock split-up, stock dividend or
recapitalization undertaken by the Company; provided, however, that all of such
rights shall be subject to the terms, provisions, conditions and restrictions
set forth in this Agreement (including without limitation conditions under which
all such rights shall be forfeited).

      (b) If at any time while this Agreement is in effect (or shares granted
hereunder shall be or remain unvested while Mr. Brown's Continuous Service
continues and has not yet terminated or ceased for any reason), there shall be
any increase or decrease in the number of issued and outstanding shares of
Common Stock of the Company through the declaration of a stock dividend or
through any recapitalization resulting in a stock split-up, combination or
exchange of such shares, then and in that event, the Board shall make any
adjustments it deems fair and appropriate, in view of such change, in the number
of shares of Restricted Stock then subject to this Agreement. If any such
adjustment shall result in a fractional share, such fraction shall be
disregarded.

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<PAGE>

      (c) Notwithstanding any term or provision of this Agreement to the
contrary, the existence of this Agreement, or of any outstanding Restricted
Stock awarded hereunder, shall not affect in any manner the right, power or
authority of the Company to make, authorize or consummate: (i) any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business; (ii) any merger, consolidation or
similar transaction by or of the Company; (iii) any offer, issue or sale by the
Company of any capital stock of the Company, including any equity or debt
securities, or preferred or preference stock that would rank prior to or on
parity with the Restricted Stock and/or that would include, have or possess
other rights, benefits and/or preferences superior to those that the Restricted
Stock includes, has or possesses, or any warrants, options or rights with
respect to any of the foregoing; (iv) the dissolution or liquidation of the
Company; (v) any sale, transfer or assignment of all or any part of the stock,
assets or business of the Company; or (vi) any other corporate transaction, act
or proceeding (whether of a similar character or otherwise).

6. Transferability. The shares of Restricted Stock are not transferable until
and unless they become Vested Shares in accordance with this Agreement. The
terms of this Agreement shall be binding upon the executors, administrators,
heirs, successors and assigns of Mr. Brown. Any attempt to effect a Transfer of
any shares of Restricted Stock prior to the date on which the shares become
Vested Shares shall be void ab initio. For purposes of this Agreement,
"Transfer" shall mean any sale, transfer, encumbrance, gift, donation,
assignment, pledge, hypothecation, or other disposition, whether similar or
dissimilar to those previously enumerated, whether voluntary or involuntary, and
including, but not limited to, any disposition by operation of law, by court
order, by judicial process, or by foreclosure, levy or attachment.
Notwithstanding the foregoing, the shares of restricted Stock may be Transferred
to any member of Mr. Brown's immediate family, to any trust or other entity of
which Mr. Brown and members of his family are the sole beneficiaries or the
beneficial holders of all equity interests. Any shares of Restricted Stock
transferred pursuant to the immediately preceding sentence shall remain subject
to the right of repurchase in favor of the Company provided for herein.

7. Amendment, Modification & Assignment; Non-Transferability. This Agreement may
only be modified or amended in a writing signed by the parties hereto.

8. Complete Agreement. This Agreement embodies the complete agreement between
the parties with respect to the subject matter hereof, and supersedes any and
all prior promises, assurances, commitments, agreements, undertakings or
representations, whether oral, written, electronic or otherwise, and whether
express or implied, which may relate to the subject matter hereof in any way.

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<PAGE>

9. Miscellaneous.

      (a) No Right to Continued Employment or Service. This Agreement shall not
confer upon Mr. Brown any right to continued employment or service with the
Company or any Related Entity.

      (b) No Limit on Other Compensation Arrangements. Nothing contained in this
Agreement shall preclude the Company or any Related Entity from adopting or
continuing in effect other or additional compensation plans, agreements or
arrangements, and any such plans, agreements and arrangements may be either
generally applicable or applicable only in specific cases or to specific
persons.

      (c) Severability. If any term or provision of this Agreement is or becomes
or is deemed to be invalid, illegal or unenforceable in any jurisdiction or
under any applicable law, rule or regulation, then such provision shall be
construed or deemed amended to conform to applicable law (or if such provision
cannot be so construed or deemed amended without materially altering the purpose
or intent of this Agreement and the grant of Restricted Stock hereunder, such
provision shall be stricken as to such jurisdiction and the remainder of this
Agreement and the award hereunder shall remain in full force and effect).

      (d) Law Governing. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York (without
reference to the conflict of laws rules or principles thereof).

      (e) Interpretation. Mr. Brown accepts the Restricted Stock subject to all
of the terms, provisions and restrictions of this Agreement. Mr. Brown hereby
accepts as binding and conclusive all decisions or interpretations of the Board
upon any questions arising under this Agreement.

      (f) Headings. Section, paragraph and other headings and captions are
provided solely as a convenience to facilitate reference and such headings and
captions shall not be deemed in any way relevant to the meaning or
interpretation of any provision of this Agreement.

      (g) Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by air courier or first class certified or registered mail, return
receipt requested and postage prepaid, addressed as follows:

           If to Mr. Brown, to:     6162 Via Venetia North
                                    Delray Beach, FL  33484-6438

                with a copy to:     Greenberg Traurig, P.A.
                                    777 S. Flagler Drive, Suite 300-East Tower
                                    West Palm Beach, Florida 33401
                                    Attn: Morris C. Brown, Esq.

         If to the Company, to:     Gales Industries Incorporated
                                    1479 Clinton Avenue
                                    Bay Shore, New York 11706
                                    Attn: President

                with a copy to:     Eaton & Van Winkle
                                    3 Park Avenue
                                    New York, New York 10016
                                    Attn: Vincent J. McGill, Esq.

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<PAGE>

or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of delivery if
personally delivered; on the business day after the date when sent if sent by
air courier; and on the third business day after the date when sent if sent by
mail, in each case addressed to such party as provided in this Section or in
accordance with the latest written direction from such party.

      (h) Non-Waiver of Breach. The waiver by any party hereto of the other
party's prompt and complete performance, or breach or violation, of any term or
provision of this Agreement shall be effected solely in a writing signed by such
party, and shall not operate nor be construed as a waiver of any subsequent
breach or violation, and the waiver by any party hereto to exercise any right or
remedy which he or it may possess shall not operate nor be construed as the
waiver of such right or remedy by such party, or as a bar to the exercise of
such right or remedy by such party, upon the occurrence of any subsequent breach
or violation.

      (i) Counterparts. This Agreement may be executed in two or more separate
counterparts, each of which shall be an original, and all of which together
shall constitute one and the same agreement.

      IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed this Agreement as of the date first written above.

                                               GALES INDUSTRIES INCORPORATED.

                                               By: /s/ Peter D. Rettaliata
                                                   -----------------------------
                                                   President

AGREED AND ACCEPTED:

JAMES. BROWN:

/s/ James A. Brown
----------------------------------
James A. Brown

                                       7Stock Repurchase Agreement

      This Stock Repurchase Agreement (this "Agreement"), dated as of March 16,
2007, is by and among DVL, Inc., a Delaware corporation (the "Company"),
Blackacre Bridge Capital, L.L.C., a New York limited liability company
("Blackacre Bridge") and Blackacre Capital Group, L.P., a Delaware limited
partnership ("Blackacre Capital").

      WHEREAS, Blackacre Bridge and Blackacre Capital (collectively, the
"Sellers") own 4,753,113 (the "Blackacre Bridge Shares") and 653,000 ( the
"Blackacre Capital Shares" which, together with the Blackacre Bridge Shares, are
collectively referred to herein as the "Shares"), respectively, of the common
stock, par value $.01 per share of the Company; and

      WHEREAS, the Company desires to purchase all of the Shares from the
Sellers at a purchase price of $.12 per Share, all on the terms and conditions
set forth herein.

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

            1.    Sale and Purchase of the Shares

            Subject to the terms and conditions of this Agreement, (a) Blackacre
            Bridge hereby transfers, assigns, conveys, delivers and sells all
            right, title and interest in and to the Blackacre Bridge Shares to
            the Company, and the Company hereby accepts, acquires and purchases
            all of the Blackacre Bridge Shares from Blackacre Bridge for an
            aggregate purchase price of $570,373.56 (the "Blackacre Bridge
            Purchase Price"), and (b) Blackacre Capital hereby transfers,
            assigns, conveys, delivers and sells all right title and interest in
            and to the Blackacre Capital Shares, and the Company hereby accepts,
            acquires and purchases all of the Blackacre Capital Shares from
            Blackacre Capital for an aggregate purchase price of $78,360 (the
            "Blackacre Capital Purchase Price").

            2.    Payment for and Delivery of the Shares.

            (a)   The Blackacre Bridge Purchase Price and the Blackacre Capital
                  Purchase Price are hereby paid to Blackacre Bridge and
                  Blackacre Capital, respectively, by wire transfer of
                  immediately available funds to account(s) designated in
                  writing by each such Seller or by certified or bank check made
                  payable to each such Seller.

            (b)   Contemporaneously herewith, each of the Sellers shall deliver
                  to the Company the stock certificates (the "Certificates")
                  evidencing all of the Shares, together with duly executed
                  stock powers and other documents of transfer, conveyance and
                  assignment in form and substance reasonably satisfactory to
                  the Company and Company's counsel required to transfer all
                  right, title and interest in and to the Shares to the Company
                  and vest in the Company good and marketable title to the
                  Shares free and clear of all Liens (as defined in Section 3(b)
                  hereof).

<PAGE>

            3.    Representations and Warranties

            (a)   Mutual Representations and Warranties. Each of the Sellers
                  hereby represents and warrants to the Company, and the Company
                  hereby represents and warrants to the Sellers, 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 of any court,
                  governmental body or arbitrator to which it is subject, or
                  (iii) any law, rule or regulation applicable to it. Each of
                  the Sellers hereby represents and warrants to the Company, and
                  the Company hereby represents and warrants to the Sellers,
                  that (i) it has full legal right, power and authority to
                  execute, deliver and perform this Agreement and the
                  transactions 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 transactions 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 of the Sellers hereby
                  represents and warrants to the Company, and the Company hereby
                  represents and warrants to the Sellers, that no commission or
                  remuneration has been paid or given directly or indirectly for
                  soliciting the sale or purchase of the Shares contemplated
                  under this Agreement.

            (b)   Representations and Warranties of the Sellers. By executing
                  this Agreement, each of the Sellers hereby represents and
                  warrants to the Company that (i) other than with the Company,
                  the Sellers do not presently have any undertaking, contract,
                  agreement or other such arrangement to sell or transfer any of
                  the Shares to any natural person, corporation, partnership,
                  limited liability company, trust, incorporated organization,
                  unincorporated association, or similar entity or any
                  government, governmental agency or political subdivision, (ii)
                  each of Blackacre Bridge and Blackacre Capital is the record
                  and beneficial owner of the Blackacre Bridge Shares and the
                  Blackacre Capital Shares, respectively, free and clear of all
                  liens, pledges, encumbrances, restrictions options and claims
                  of any kind (the "Liens"), (iii) at the time the Company
                  offered to purchase the Shares, the Sellers were and at the
                  date hereof are an "accredited investor" as defined in Rule
                  501(a) under the Securities Act of 1933, as amended, (iv) the
                  Sellers have experience in the kinds of transactions
                  contemplated by this Agreement and are able by reasons of
                  business and financial experience, to protect their own
                  interests in connection with such transactions hereby and have
                  the knowledge and sophistication in evaluating the merits and
                  risks of the sale of the Shares and have so evaluated such
                  merits and risks, (v) the Sellers and their advisors, if any,
                  have requested, received and considered all information

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<PAGE>

                  relating to the business, properties, operations, condition
                  (financial or other), results of operations or prospects of
                  the Company and the information relating to the transactions
                  contemplated by this Agreement, and (vi) the Sellers and their
                  advisors, if any, have been afforded the opportunity to ask
                  questions of the Company concerning the terms of the sale of
                  the Shares and the business, properties, operations, condition
                  (financial or other), results of operations and prospects of
                  the Company and its subsidiaries, and have received
                  satisfactory and sufficient answers to any such inquires, and
                  have received all information from the Company, sufficient to
                  enable the Sellers to evaluate their respective investment
                  decisions hereby; without limiting the generality of the
                  foregoing, the Sellers have had the opportunity to obtain and
                  to review the Company's Annual Reports on Form 10-KSB, the
                  Company's Quarterly Reports on Form 10-QSB, the Company's
                  Current Reports on Form 8-K, in each case as filed with the
                  Securities and Exchange Commission (the "SEC") including the
                  information and documents (other than exhibits) incorporated
                  by reference as well as all other publicly filed documents and
                  all additional information that is necessary to make an
                  informed decision with respect to the transactions
                  contemplated hereby. Each of the Sellers hereby represents,
                  warrants and covenants to file (or cause to be filed in the
                  case of filings required to be made by any affiliate of the
                  Sellers) all documents required to be filed with the SEC under
                  the Securities Exchange Act of 1934, as amended (the "Exchange
                  Act") and the rules and regulations thereunder by or on behalf
                  of the Sellers or any of their respective affiliates as a
                  result of or in connection with the transactions contemplated
                  herein, within the time periods required by the Exchange Act
                  and the rules and regulations thereunder.

            (c)   Survival. All representations, warranties and covenants made
                  herein shall survive delivery of any payment for the Shares,
                  any transfer of the Certificates as well as any other
                  consummation of the transactions contemplated herein. The
                  Company makes no representations or warranties in any oral or
                  written information provided to either of the Sellers, other
                  than the representations and warranties included herein.

            4.    Indemnification and Release

            (a)   The Sellers hereby agree, jointly and severally (i) to
                  indemnify and hold harmless the Company and its directors,
                  officers, shareholders, employees, agents, advisors,
                  successors and assigns (the "Company Parties") against, and to
                  reimburse the Company Parties on demand with respect to, any
                  and all losses, liabilities, obligations, suits, proceedings,
                  demands, judgments, damages, claims, expenses and costs
                  (including, without limitation, reasonable fees, expenses and
                  disbursements of counsel) (collectively, "Damages") which each

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<PAGE>

                  may suffer, incur or pay by reason of (A) the breach by either
                  of the Sellers of any representation or warranty contained in
                  this Agreement, or in any agreement, certificate or instrument
                  executed by it and contemplated hereby, or (B) the failure of
                  either of the Sellers to perform any of the obligations
                  required by this Agreement or any additional agreement,
                  certificate or instrument contemplated hereby, and (ii) in all
                  respects to release the Company from any and all liability
                  that may occur in connection with the sale of the Shares as of
                  the date hereof and after this Agreement is hereby executed
                  other than with respect to the performance by the Company of
                  its obligations required by this Agreement and under the
                  indemnification provisions in Section 4(b)(i) below.

            (b)   The Company hereby agrees (i) to indemnify and hold harmless
                  each of the Sellers and each of its respective directors,
                  officers, shareholders, employees, agents, advisors,
                  successors and assigns (the "Seller Parties") against, and to
                  reimburse the Seller Parties on demand with respect to, any
                  and all Damages which each may suffer, incur or pay by reason
                  of (A) the breach by the Company of any representation or
                  warranty contained in this Agreement, or in any agreement,
                  certificate or instrument executed by it and contemplated
                  hereby, or (B) the failure of the Company to perform any of
                  the obligations required by this Agreement or any additional
                  agreement, certificate or instrument contemplated hereby, and
                  (ii) in all respects to release the Sellers from any and all
                  liability that may occur in connection with the sale of the
                  Shares as of the date hereof and after this Agreement is
                  hereby executed other than with respect to the performance by
                  each of the Sellers of its respective obligations required by
                  this Agreement and under the indemnification provisions in
                  Section 4(a)(i) above.

            5.    Further Assurances

            At any time or from time to time following the execution of this
            Agreement, each of the Sellers agree to cooperate with the Company
            and at the request of the Company to execute and deliver any further
            instruments or documents and to take all such further action as the
            Company may reasonably request in order to evidence or effectuate
            the transactions contemplated hereby.

            6.    Waiver of Rights

            Contemporaneously herewith, that certain Exchange Agreement dated as
            of December 28, 2001 (the "Exchange Agreement"), by and between the
            Company and Blackacre Bridge is hereby terminated in all respects
            and has no further force and effect and Blackacre Bridge hereby
            waives in all respects any and all rights it may have under the
            Exchange Agreement; provided, however, that the representations and
            warranties contained in Article Two of the Exchange Agreement shall
            continue to survive such termination and waiver.

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<PAGE>

            7. Confidentiality

            Each of the Sellers will hold, and will cause its officers,
            directors, managers, partners, employees, consultants, advisors and
            agents (collectively, the "Representatives") to hold in confidence
            any information which the Company provides to any of the Sellers in
            connection with this Agreement; provided, however, that the Sellers
            shall not be required to maintain confidentiality with respect to
            information which (i) is or becomes generally available to the
            public other than as a result of a disclosure by either of the
            Sellers or their respective Representatives, (ii) is or becomes
            available to either of the Sellers from a source other than the
            Company or its agents or advisors, or (iii) was available to the
            Sellers prior to its disclosure to either of the Sellers by the
            Company or its agents or advisors.

            8.    Miscellaneous

            (a)   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 Blackacre Bridge:        Blackacre Bridge Capital L.L.C.
                                           299 Park Avenue
                                           New York, New York 10022
                                           Attention: Mark Neporent
                                                      Ronald J. Kravit

            with a copy to:                Schulte Roth & Zabel LLP
                                           919 Third Avenue
                                           New York, New York 10022
                                           Attention: Gregory Pressman, Esq.

            If to Blackacre Capital:       Blackacre Capital Group, L.P.
                                           299 Park Avenue
                                           New York, New York 10022
                                           Attention: Mark Neporent
                                                      Ronald J. Kravit

            with a copy to:                Schulte Roth & Zabel LLP
                                           919 Third Avenue
                                           New York, New York 10022
                                           Attention: Gregory Pressman, Esq.

                                       5
<PAGE>

            If to the Company:             DVL, Inc.
                                           70 East 55th Street
                                           New York, New York 10022
                                           Attention: Chief Financial Officer

            with a copy to:                Katten Muchin Rosenman LLP
                                           575 Madison Avenue
                                           New York, New York 10022
                                           Attention: Wayne A. Wald, Esq.
                                           and Howard S. Jacobs, Esq.

            (b)   Assignability and Parties in Interest. This Agreement shall
                  not be assignable by any of the parties hereto without the
                  consent of the other parties hereto. This Agreement shall
                  inure to the benefit of and be binding upon the parties and
                  their respective permitted successors and assigns.

            (c)   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.

            (d)   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.

            (e)   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.

            (f)   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.

            (g)   Third Party Beneficiaries. There are no third party
                  beneficiaries under this Agreement or intended by any party
                  hereto.

            (h)   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.

                                       6
<PAGE>

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

                                     DVL, INC.

                                     By: /s/ Henry Swain
                                         ---------------------------------------
                                         Name: Henry Swain
                                         Title: Executive Vice President & Chief
                                                Financial Officer

                                     BLACKACRE BRIDGE CAPITAL, L.L.C.

                                     By: Blackacre Capital Management, LLC. its
                                           Managing Member

                                           By: /s/ Ronald J. Kravit
                                               ---------------------------------
                                               Name: Ronald J. Kravit
                                               Title: Vice President

                                     BLACKACRE CAPITAL GROUP, L.P.

                                     By: Blackacre Capital Management, LLC, its
                                           General Partner

                                           By: /s/ Ronald J. Kravit
                                               ---------------------------------
                                               Name: Ronald J. Kravit
                                               Title: Vice President

                                       7

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