Second Amendment to Revolving Credit Loan and Security Agreement



 Exhibit 10.3 
 SECOND AMENDMENT TO REVOLVING CREDIT LOAN AND SECURITY 
 AGREEMENT

 $3,000,000 REVOLVING CREDIT LOAN 

This Second Amendment to Revolving Credit Loan and Security Agreement (the “Second Amendment”) is entered
into effective the 14th day of October, 2011, by and among
FIFTH THIRD BANK, an Ohio banking corporation, having a mailing address of 201 East Kennedy Boulevard, Suite 1800, Tampa, Florida 33602 (the “Bank”), DEER VALLEY FINANCIAL CORP., a Florida corporation (“DVFC”),
having its principal place of business at 205 Carriage Street, Guin, Alabama 35563, DEER VALLEY CORPORATION, a Florida corporation (“DVC”), having a mailing address of 3111 West Dr. MLK Boulevard, Suite 100, Tampa, Florida
33607, and DEER VALLEY HOMEBUILDERS, INC., an Alabama corporation authorized to do business in the State of Florida (“DVHI”), having its principal place of business at 205 Carriage Street, Guin, Alabama 35563, jointly and severally
(collectively the “Borrowers”), and amends and modifies that certain Revolving Credit Loan and Security Agreement dated October 14, 2009, as amended by Amendment dated April 7, 2010 (collectively the “Loan Agreement”),
as follows: 
 1. Terms. All of the capitalized terms in this Second Amendment shall have the meanings as defined
in the Loan Agreement. 
 2. Loan Renewal. The Bank has reduced and renewed the Loan in the amount of
$3,000,000.00 (the “Renewal Loan”) as evidenced by a Renewal Revolving Credit Note dated effective October 14, 2011 (the “Renewal Note”). 
 3. Loan and Note. The term “Loan” under the Loan Agreement is hereby modified to include the Renewal Loan, and the term “Note” under the Loan Agreement is hereby modified
to reference the Renewal Note. 
 4. Definitions. In Section 1.2, the definition of “Eligible Accounts
Receivable” is deleted in its entirety and the following definition of Eligible Accounts Receivable is hereby substituted in its place and stead: 
 “Eligible Accounts Receivable” shall mean, at any date of determination thereof, all Accounts Receivable of DVHI and DVFC: (a) which are bona fide, valid and legally enforceable obligations
of the account debtors in respect thereof, which are unconditionally owing by such account debtors, and which do not represent sales on consignment, sales on return or other similar understandings; (b) which, except for the security interest in
the Accounts Receivable granted to the Bank, are solely owned by the Borrowers, free and clear of any and all mortgages, liens, security interests, encumbrances, claims or rights of others, except sellers’ rights (if any) to reclaim goods under
Uniform Commercial Code Section 2-702; (c) which are not the subject of any defense, offset, counterclaim or claim; (d) as to which no more than 90 days (or are 30 days past due) shall have elapsed from the original date of the
relevant invoice; (e) with respect to a single account debtor (other than an account debtor that is a governmental agency), whose total obligations owing exceeds 20% of all Eligible Accounts Receivable shall be limited to 20% of Eligible
Accounts Receivable; (f) as to which the account debtors are (1) solvent, going concerns unaffiliated with any of the Borrowers, and (2) reasonably satisfactory to the Bank from a credit standpoint (the Bank’s satisfaction may be
assumed unless the Bank shall at any time advise the Borrowers to the contrary). 







 5. Borrowing Base and Borrowing Base Certificate. The Borrowing Base
definition in the Loan Agreement and the Borrowing Base Certificate are hereby modified to provide that total advances under the Loan shall not exceed $3,000,000.00, or such lesser amount as permitted by the Borrowing Base, and the Borrowing Base
Certificate is revised and restated as set forth in Exhibit “A” attached hereto. 
 6. Financial
Statements and Reports. Section 6.4 is deleted in its entirety and the following Section 6.4 is hereby substituted in its place and stead: 
 “6.4 Financial Statements and Reports. Each of the Borrowers shall maintain a system of accounting established and administered in accordance with Generally Accepted Accounting
Principles. Borrowers, as appropriate, will furnish to the Bank: 
 (a) Within one hundred twenty (120) days after the end
of each fiscal year, each of the Borrowers shall deliver to the Bank, consolidated, audited balance sheets and statements of income, retained earnings and changes in financial position for such year, an audited inventory of DVHI, all of which shall
be accompanied by supporting schedules and the unqualified opinion of independent certified public accountants of recognized standing reasonably acceptable to the Bank, and upon filing, all filings required in accordance with SEC regulations, if
any. 
 (b) Within forty-five (45) days after the end of each fiscal quarter-end, deliver to the Bank the following
financial statements certified by the President or Vice President of each of the Borrowers as accurate to the best of their knowledge upon due inquiry and investigation: (1) a Compliance Certificate executed by an authorized officer for each of
the Borrowers certifying that to the best of their knowledge, no Event of Default hereunder, nor any event which with notice or lapse of time, or both, would constitute such an Event of Default, has occurred or, if such Event of Default or event has
occurred, specifying the nature and extent thereof; and (2) internally prepared, consolidated, interim financial statements for each of the Borrowers; in such form and context as Bank may require. 

(c) Within fifteen (15) days of the end of each month, deliver to the Bank the following financial statements certified by the
President or Vice President for each of the Borrowers as accurate to the best of their knowledge upon due inquiry and investigation: (1) a Borrowing Base Certificate for DVHI; (2) a Consolidated Borrowing Base Certificate for DVHI and
DVFC; and (3) an accounts receivable aging report by customer reflecting the past due status of each invoice for DVHI; all in such form and context as Bank may require. 

  
 2 








 (d) Promptly, from time to time, such other information regarding the operation, business,
affairs and financial condition of any of the Borrowers as the Bank may reasonably request.” 
 7. Financial
Covenant. The Financial Covenant set forth in Section 6.10 (a) of the Loan Agreement is deleted in its entirety and the following Section 6.10 (b) is hereby substituted in its place and stead: 

“(a) Minimum Fixed Charge Coverage Ratio. Maintain a global Minimum Fixed Charge Coverage Ratio of not less than 1.20
to 1.00, measured on a rolling 4-quarter basis, commencing December 31, 2011. As used herein “Minimum Fixed Charge Coverage Ratio” shall be defined as the ratio of: (a) Borrowers EBITDA plus rent and operating lease payments,
less cash taxes paid, distributions, dividends and capital expenditures (other than Capital Expenditures financed with the proceeds of purchase money Indebtedness or Capital Leases to the extent permitted hereunder) and other extraordinary income
for the twelve month period then ending, to: (b) the consolidated sum of: (i) Borrowers interest expense; and (ii) all principal payments with respect to Indebtedness (but excluding principal that is payable at maturity), including
capital leases and subordinated debt, that were paid or were due and payable by Borrowers during the period, plus rent and operating lease expense incurred in the same such period.” 

8. Notices. Section 10 of the Loan Agreement for Notices is amended to provide that all notices to the Bank shall be
sent to: 
  

			
	If to the Bank:	  	FIFTH THIRD BANK
		  	Attention: Julio C. Ramirez, Jr., Senior Vice President
		  	201 East Kennedy Blvd., Suite 1800
		  	Tampa, Florida 33602

 9. Consent and Waiver. Borrowers hereby consent to the foregoing and agrees that the
execution of this Second Amendment shall in no manner or way whatsoever impair or otherwise adversely affect Borrowers’ liability to the Lender under the Loan Documents or any other instrument set forth in the Recitals or herein, all as
modified by this Second Amendment. 
 10. Cross Document Default. Any default under the terms and conditions of
this Second Amendment or of any instrument set forth herein or contemplated by this Second Amendment shall be and is a default under every other instrument set forth herein or contemplated by this Second Amendment. 

11. Ratification. Except as modified by this Second Amendment, Borrowers hereby ratify and confirm the continued validity
and viability of all terms, conditions and obligations set forth in the Loan Documents and all other instruments as modified by this Second Amendment. 

  
 3 








 12. Severability. Whenever possible, each provision of this Second Amendment
shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision hereof shall be prohibited or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or
invalidity only, without invalidating the remainder of such provision or of the remaining provisions of this Second Amendment. 

13. Florida Contract. This Second Amendment shall be deemed a Florida contract and shall be construed according to the laws
of the State of Florida, regardless of whether this Second Amendment is executed by certain of the parties hereto in other states. 
 14. Time. Time is of the essence of this Second Amendment. 
 15.
Binding Effect and Modification. This Second Amendment shall bind the successors and assigns to the parties hereto and constitutes the entire understanding of the parties, which may not be modified except in writing, executed by all
parties hereto in the same form as this Second Amendment. 
 16. Other Terms. Except as specifically modified and
amended by the terms set forth in this Second Amendment, all of the other terms, covenants, obligations and conditions of the Loan Agreement shall remain in full force and effect. 

Entered into as of the day and year first above written. 

 

							
	WITNESSES:	 		 	BORROWERS:
			
		 		 	DEER VALLEY HOMEBUILDERS, INC.,
an Alabama corporation
				
	  
	 		 	By:	 	 s/ Steve Lawler

	Signature of Witness	 		 		 	John Steven Lawler, as its Chief
	  
	 		 		 	Chief Financial Officer and Secretary
	Print or type name of Witness	 		 		 	
	  
	 		 		 	 (CORPORATE SEAL)

	Signature of Witness	 		 		 	
	  
	 		 		 	
	Print or type name of Witness	 		 		 	

 [SIGNATURES CONTINUED ON FOLLOWING PAGE] 

  
 4 









							
		 		 	DEER VALLEY CORPORATION, a Florida
corporation
				
	  
	 		 	By:	 	 s/ Steve Lawler

	Signature of Witness	 		 		 	John Steven Lawler, as its Chief Financial
	  
	 		 		 	Officer and Secretary
	Print or type name of Witness	 		 		 	
	  
	 		 		 	 (CORPORATE SEAL)

	Signature of Witness	 		 		 	
	  
	 		 		 	
	Print or type name of Witness	 		 		 	
			
		 		 	DEER VALLEY FINANCIAL CORP., a Florida
corporation
				
	  
	 		 	By:	 	 s/ Steve Lawler

	Signature of Witness	 		 		 	John Steven Lawler, as its Chief Financial
	  
	 		 		 	Officer and Secretary
	Print or type name of Witness	 		 		 	
	  
	 		 		 	 (CORPORATE SEAL)

	Signature of Witness	 		 		 	
	  
	 		 		 	
	Print or type name of Witness	 		 		 	

 STATE OF ALABAMA 

COUNTY OF
                             
 The foregoing instrument was acknowledged before me this          day of October, 2011, by John Steven Lawler, as Chief Financial Officer and Secretary of DEER
VALLEY HOMEBUILDERS, INC., an Alabama corporation, on behalf of the corporation. 
  

									
	          
	 	Personally known	 	  

	  
	 	Driver’s License (St:        )	 	Notary Public
	  
	 	Other Identification Produced	 	
		 		 	  
	 		 	  

		 		 	  
	 		 	Print or type name of Notary
					
		 		 		 		 	 (SEAL)



  
 5 








 STATE OF
                             
 COUNTY OF                          

The foregoing instrument was acknowledged before me this          day of October, 2011, by John
Steven Lawler, as Chief Financial Officer and Secretary of DEER VALLEY CORPORATION, a Florida corporation, on behalf of the corporation. 
  

									
	          
	 	Personally known	 	  

	  
	 	Driver’s License (St:        )	 	Notary Public
	  
	 	Other Identification Produced	 	
		 		 	  
	 		 	  

		 		 	  
	 		 	Print or type name of Notary
					
		 		 		 		 	 (SEAL)


 STATE OF
                             
 COUNTY OF                          

The foregoing instrument was acknowledged before me this          day of October 2011, by John
Steven Lawler, as Chief Financial Officer and Secretary of DEER VALLEY FINANCIAL CORP., a Florida corporation, a Florida corporation, on behalf of the corporation. 
  

									
	          
	 	Personally known	 	  

	  
	 	Driver’s License (St:        )	 	Notary Public
	  
	 	Other Identification Produced	 	
		 		 	  
	 		 	  

		 		 	  
	 		 	Print or type name of Notary
					
		 		 		 		 	 (SEAL)


  

							
		 		 	BANK:
			
		 		 	 FIFTH THIRD BANK,

an Ohio banking corporation

				
	  
	 		 	By:	 	 s/ Julio C. Ramirez, Jr.

	Signature of Witness	 		 		 	Julio C. Ramirez, Jr.,
	  
	 		 		 	as its Senior Vice President
	Print or type name of Witness	 		 		 	
	  
	 		 		 	
	Signature of Witness	 		 		 	 (CORPORATE SEAL)

	  
	 		 		 	
	Print or type name of Witness	 		 		 	


  
 6 








 STATE OF FLORIDA 
 COUNTY OF                              

The foregoing instrument was acknowledged before me this          day of October, 2011, by Julio
C. Ramirez, Jr., as Senior Vice President of FIFTH THIRD BANK, an Ohio banking corporation, on behalf of the Bank. 
  

									
	          
	 	Personally known	 	  

	  
	 	Florida Driver’s License	 	Notary Public
	  
	 	Other Identification Produced	 	
		 		 	  
	 		 	  

		 		 	  
	 		 	Print or type name of Notary
					
		 		 		 		 	 (SEAL)


 ATTACHMENTS: 
 Exhibit “A” - Revised Borrowing Base Certificate 

  
 7 








 EXHIBIT “A” 

BORROWING BASE CERTIFICATE 
 $3,000,000.00 RLOC 
 FIFTH THIRD BANK 

201 East Kennedy Blvd., Suite 1800 
 Tampa,
Florida 33602 
 Pursuant to the Loan and Security Agreement as amended, Borrower hereby certifies, as of the above date, the following:

  

											
				
	(A)	  	 Current Value of DVHI Inventory
	  				  	$	                    	  
		  		  				  	  
	  
	 
				
	(B)	  	 Less: Ineligibles
	  				  	$	 	  
		  		  				  	  
	  
	 
				
	(C)	  	 Net Amount of DVHI Inventory (A) Less (B)
	  				  	$	 	  
		  		  				  	  
	  
	 
				
	(D)	  	 50% of (C) Not To Exceed $1,500,000.00
	  				  	$	 	  
		  		  				  	  
	  
	 
				
	(E)	  	 Aggregate Amount of DVHI and DVFC Accounts Receivable
	  				  	$	 	  
		  		  				  	  
	  
	 
				
	(F)	  	 Less: Ineligibles
	  				  			
				
		  	 Accounts over 90 days (30 days past due)
	  	$	                    	  	  			
		  		  	  
	  
	 	  			
		  	 Accounts with Account Debtors (other than government agencies) having in excess of 20% of total Eligible A/R (only enter
amounts over 20% of total A/R threshold)
	  	$	 	  	  			
		  		  	  
	  
	 	  			
		  	 Other (if applicable)
	  	$	 	  	  			
		  		  	  
	  
	 	  			
		  	 Total Ineligible
	  	$	 	  	  			
		  		  	  
	  
	 	  			
				
	(G)	  	 Net Amount of Eligible Accounts Receivable (E) Less (F)
	  				  	$	 	  
		  		  				  	  
	  
	 
				
	(H)	  	 80% of (G)
	  				  	$	 	  
		  		  				  	  
	  
	 
				
	(I)	  	 CURRENT BORROWING BASE:
	  				  	$	 	  
		  		  				  	  
	  
	 
		  	 (D) Plus (H)
	  				  			
				
	(J)	  	 The aggregate unpaid principal owed to Bank is:
	  				  	$	 	  
		  		  				  	  
	  
	 
		  	 Not to exceed maximum loan limit or (I) above
	  				  			
				
	(K)	  	 Availability (I) Less (J), Less all issued and outstanding Letters of Credit:
	  				  	$	 	  
		  		  				  	  
	  
	 
		  	 Not to exceed the maximum loan limit of $3,000,000.00
	  				  			


  
 8 








 The undersigned hereby certifies, represents, and warrants to FIFTH THIRD BANK (the “Bank”) as
follows: 
 1. All the representations and warranties contained in the Loan and Security Agreement or in any other related loan document are
true and correct on the date hereof. 
 2. No event of default has occurred, or would result from the advance made in connection herewith, that
constitutes an Event of Default under the Loan and Security Agreement or any other related document. 
 3. The description of Eligible Inventory
and Eligible Accounts and the values assigned thereto are true and correct in all material respects (see attached inventory declaration and accounts receivable aging). DVHI is legal owner of the inventory and the accounts receivable as identified
above. We further certify that the inventory is in good condition and that storage conditions are safe and satisfactory for this type of inventory. 
 4. The aggregate unpaid principal balance of the Loan does not exceed the lesser of the $3,000,000.00 (after taking into account issued and outstanding Letters of Credit) Commitment or Borrowing Base.

 This shall also certify that, for the month ending
                    , 20    , the Borrower was in compliance with the following covenants contained in the Loan and
Security Agreement between Bank and Borrower dated                     , 2009. 

 

							
	  	 	 COVENANT
	  	ACTUAL	  	COMPLIANCE
				
	 1.      
	 	Minimum Fixed Charge Coverage Ratio of not less than 1.20 to 1.00	  		  	
		 		  	  
	  	  


 “Minimum Fixed Charge Coverage Ratio” is defined as Borrowers EBITDA plus rent and operating
lease payments, less cash taxes paid, distributions, dividends and capital expenditures (other than Capital Expenditures financed with the proceeds of purchase money Indebtedness or Capital Leases to the extent permitted hereunder) and other
extraordinary income for the twelve month period then ending, to: (b) the consolidated sum of: (i) Borrowers interest expense; and, (ii) all principal payments with respect to Indebtedness, including capital leases and subordinated
debt, that were paid or were due and payable by Borrowers during the period, plus rent and operating lease expense incurred in the same such period. 
  

			000000		000000		000000
	 2.      
	 	 Maintain a Debt to Tangible Net Worth Ratio of Not More than 3.00 to 1.00
	  		  	
		 		  	  
	  	  



  
 9 








 “Debt to Tangible Net Worth Ratio” is defined as (1) (A) Total
Liabilities of Borrower, minus (B) Subordinated Debt, divided by (2) (A) Net Worth, plus (B) Subordinated Debt, plus (C) Intangibles, minus (D) Related Party Receivables. 

 

							
	 3.      
	 	Maintained minimum, unencumbered Liquidity of $2,500,000.	  		  	
		 		  	  
	  	  


  

									
	By:	 	  
	 		 	By:	 	  

					
	Its:	 	  
	 		 	Its:	 	  

					
	Date:	 	                            ,
20    	 		 	Date:	 	                            ,
20    


  
 10