Revolving Credit Loan and Security Agreement

EXHIBIT
    10.1
    
       
REVOLVING
      CREDIT

    LOAN
      AND SECURITY AGREEMENT

    


    THIS
      REVOLVING CREDIT LOAN AND SECURITY AGREEMENT (the "Loan Agreement") is made
      as
      of this ______ day of April, 2007, among FIFTH
      THIRD BANK,
      a
      Michigan banking corporation, having a mailing address of 201 East Kennedy
      Blvd., Suite 1800, Tampa, Florida 33602 (the "Bank"), DEER
      VALLEY CORPORATION,
      a
      Florida corporation (the
      "Borrower"), having its principal place of business at 4902 Eisenhower
      Boulevard, Suite 185, Tampa, Florida 33634, DEER
      VALLEY HOMEBUILDERS, INC.,
      an
      Alabama corporation authorized to do business in the State of Florida, and
      ___________________, having a mailing address of 205 Carriage Street, Guin,
      Alabama 35563 (collectively the
      "Guarantor").

    


    RECITALS:

    


    WHEREAS,
      Borrower has applied to Bank for a revolving line of credit not to exceed TWO
      MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($2,500,000.00) (the "Loan")
      to
      be evidenced by a revolving credit note (the "Note") and secured by accounts
      receivable, inventory, equipment and all other tangible and intangible personal
      property of Borrower. Guarantor has guaranteed Borrower's payment and
      performance of the Loan and the Bank has agreed to make the Loan providing
      certain conditions herein outlined are fully complied with.

    


    NOW,
      THEREFORE, in consideration of the premises and covenants hereinafter contained,
      the parties hereto agree as follows:

    


    SECTION
      I. RECITALS;
      DEFINITIONS

    


    1.1 Recitals.
      The
      foregoing recitals are true and correct and incorporated herein by
      reference.

    


    1.2 Defined
      Terms.
      As used
      in this Loan Agreement, the following terms shall have the following
      meanings:

    


    "Accounts
      Receivable" shall mean all accounts receivable, book debts, notes, drafts,
      acceptances and other forms of obligations, now or hereafter owing to the
      Borrower, whether arising from the sale of goods or rendition of services
      (including, without limitation, any such obligation that might be characterized
      as an account, contract right, or general intangible under the Uniform
      Commercial Code as, from time to time, in effect in the State of Florida),
      all
      of the Borrower's rights in, to and under all purchase orders, now or hereafter
      received by the Borrower for goods or services, and all monies due or to become
      due to the Borrower under all contracts for the sale of goods or the performance
      of services (whether or not yet earned by performance) or in connection with
      any
      other transaction (including, without limitation, the right to receive the
      proceeds of said purchase orders and contracts), and all collateral security
      and
      guarantees of any kind given by any obligor with respect to any of the
      foregoing.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    "Advance"
      shall mean the amount advanced by the Bank to Borrower under the terms of this
      Loan Agreement and the Note.

    


    "Affiliate"
      shall mean any person, corporation, association or other business entity which
      directly or indirectly controls, or is controlled by, or is under common control
      with the Borrower.

    


    "Borrowing
      Base" shall mean, at any date of determination thereof (which date and
      determination shall be in the Bank's sole discretion) an amount equal to the
      sum
      of (i) 80% of Eligible Accounts Receivable, plus (ii) 50% of Eligible Inventory
      (based upon the lower of actual cost or market value with a maximum Inventory
      Borrowing Base of $1,250,000.00). The Bank has bargained for and Borrower agrees
      and acknowledges that the Collateral not included in the Borrowing Base is
      a
      cushion of collateral value in excess of the secured advances under the
      Loan.

    


    "Borrowing
      Base Certificate" shall mean a certificate prepared by Borrower in substantially
      the form attached hereto as Exhibit
      "A".

    


    "Collateral"
      shall have the meaning provided for such term in Section 2.1(h)
      hereof.

    


    "Default
      Rate" shall mean five percent (5%) per annum above the contract rate as set
      forth in the Note, but not exceeding 18% per annum.

    


    "Eligible
      Accounts Receivable" shall mean, at any date of determination thereof, all
      Accounts Receivable of Borrower: (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 Borrower, 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 60 days (or are 30 days past due) shall
      have
      elapsed from the original date of the relevant invoice; (e) those account
      debtors that do not have more than 25% of their respective Accounts Receivable
      aged more than 60 days; (f) Accounts Receivable with respect to a single account
      debtor whose total obligations owing does not exceed 25% of all Eligible
      Accounts Receivable; (g) as to which the account debtors are (i) solvent, going
      concerns unaffiliated with the Borrower or any Guarantor, and (ii) 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 Borrower to the
      contrary).

    


    "Eligible
      Inventory" shall mean, at any date of determination thereof (which date shall
      be
      in the Bank's sole discretion), all Inventory and proceeds therefrom,
      owned


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    by
      Borrower, excluding all work-in-process, but including (a) goods-in-transit,
      (b)
      Inventory used for display or demonstration purposes and obsolete Inventory
      and
      (c) Inventory in the possession of service persons or technicians performing
      service for customers of the Borrower, whether or not such service technicians
      are employees or independent contractors of the Borrower. The eligibility of
      Inventory shall be determined by the Bank in its reasonable commercial
      discretion.

    


    "Equipment"
      shall mean all of the equipment of Borrower (within the meaning of the Uniform
      Commercial Code, as from time to time in effect in the State of Florida), now
      or
      hereafter owned or acquired, and wheresoever located, as well as all parts,
      accessions, and additions thereto, proceeds therefrom, and substitutions and
      replacements therefor.

    


    "Events
      of Default" shall have the meaning ascribed to such term in Section 8
      hereof.

    


    "Generally
      Accepted Accounting Principles" shall mean generally accepted accounting
      principles, in effect from time to time, applied on a consistent
      basis.

    


    "General
      Intangibles" shall mean all of Borrower’s right, title and interest with respect
      to general intangibles (including payment intangibles, contract rights, rights
      to payment, rights arising under common law, statutes or regulations, choses
      or
      things in action, goodwill, patents, trade names, trademarks, service marks,
      copyrights, blueprints, drawings, purchase orders, customer lists, monies due
      or
      recoverable from pension funds, route lists, rights to payment and other rights
      under any royalty or licensing agreements, infringement claims, computer
      programs, information contained on computer disks or tapes, software,
      literature, reports, catalogs, money, deposit accounts, insurance premium
      rebates, tax refunds and tax refund claims), and any and all supporting
      obligations in respect thereof, and any other personal property other than
      goods, Accounts Receivable, investment property, negotiable collateral and
      chattel paper (within the meaning of the Uniform Commercial Code, as from time
      to time in effect in the State of Florida).

    


    "Guarantee"
      shall mean a guarantee issued by each Guarantor of the loan obligations
      hereunder.

    


    "Inventory"
      shall mean all of the inventory of Borrower (within the meaning of the Uniform
      Commercial Code, as from time to time in effect in the State of Florida), now
      or
      hereafter owned or acquired, and wheresoever located, including, without
      limitation, all finished goods held for sale or lease or to be furnished under
      a
      contract of service, goods that are leased by Borrower as lessor, goods that
      are
      furnished by Borrower under a contract of service, and raw materials,
      work-in-process, or materials used or consumed in Borrower’s business including
      all accessions, additions, attachments, improvements, substitutions and
      replacements thereto and therefore.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    "Investment
      Property" shall mean all of the investment property of Borrower (within the
      meaning of the Uniform Commercial Code, as from time to time in effect in the
      State of Florida). 

    


    "Letter
      of Credit" shall mean any standby, documentary or trade Letter of Credit issued
      by Bank hereunder as requested by Borrower for the account or to secure
      obligations of Borrower in accordance with the terms of Section
      2.2(a).

    


    "Letter
      of Credit Fees" has the meaning set forth in Section 2.2(h).

    


    “Letter
      of Credit Commitment” shall mean the commitment of Bank to issue, in accordance
      with the terms hereof, and to honor payment obligations under any Letters of
      Credit. 

    


    "Letter
      of Credit Documents" shall mean, with respect to any Letter of Credit, such
      Letter of Credit, any amendments thereto, any documents delivered in connection
      therewith, any application therefor, and any agreements, instruments, guarantees
      or other documents (whether general in application or applicable only to such
      Letter of Credit) governing or providing for (a) the rights and obligations
      of
      the parties concerned or at risk or (b) any collateral security for such
      obligations.

    


    "Letter
      of Credit Obligations" shall mean, at any time, the sum of (a) the maximum
      amount that is, or at any time thereafter may become, issued by Bank and
      available to be drawn under Letters of Credit then outstanding, assuming
      compliance with all requirements for drawings referred to in such Letters of
      Credit plus (b) the aggregate amount of all drawings under Letters of Credit
      honored by Bank but not theretofore reimbursed.

    


    "Maturity
      Date" shall mean, unless sooner demanded by Bank after the occurrence of an
      Event of Default hereunder, 12 months from the date hereof.

    


    "Permitted
      Liens" means: (a) Liens consisting of deposits or pledges made in the ordinary
      course of business in connection with, or to secure payment of utility payments,
      bids, tenders, contracts (other than contracts for payment of money),
      obligations under workers' compensation, unemployment insurance or similar
      legislation or under surety or performance bonds, in each case arising in the
      ordinary course of business; (b) Liens arising out of or resulting from any
      judgment or awarded, the time for the appeal or petition for rehearing of which
      shall not have expired, or in respect of which the Borrower is fully protected
      by insurance or in respect of which Borrower shall at any time in good faith
      be
      prosecuting an appeal or proceeding for a review and in respect of which a
      stay
      of execution pending such appeal or proceeding for review shall have been
      secured, and as to which appropriate reserves have been established on the
      books
      of Borrower.

    


    "Notice
      of Request for Letter of Credit" shall mean a notice of request for issuance
      of
      a Letter of Credit in form and substance satisfactory to Bank.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    SECTION
      2. THE
      LOAN AND LETTERS OF CREDIT

    


    2.1 Revolving
      Loan.

    


    (a) Advances.
      Subject
      to the Borrowing Base limitations and subject to Bank’s receipt of a completed
      Borrowing Base Certificate, Bank may, in its discretion, make Advances to
      Borrower in accordance with the terms and conditions of this Loan Agreement,
      at
      any time and from time to time, on or after the date hereof until the Maturity
      Date, or until the occurrence of an event which with the giving of notice or
      the
      passage of time, or both, shall constitute an Event of Default. Such Advances
      may be borrowed, re-paid and re-borrowed, provided, however, the aggregate
      outstanding principal amount of all Advances, together with the aggregate face
      value of all issued and outstanding Letters of Credit as of such date, shall
      not
      exceed $2,500,000.00.

    


    (b) Interest.
      The
      Bank shall make appropriate debits and credits to the loan account of Borrower
      corresponding to each Advance to reflect the Advances to, prepayments, payments
      by and other disbursements for the account of Borrower. Each such entry shall
      be
      prima facie evidence of the principal amount of Advances hereunder at any time
      outstanding. Each Advance shall bear interest from the date such Advance is
      made
      on the aggregate unpaid principal amount thereof until such principal amount
      is
      paid or shall become due and payable (whether at the stated maturity or by
      acceleration) pursuant to the terms of and at a rate per annum as set in the
      Note.

    


    (c) Calculation.
      Interest on principal outstanding from time to time shall be paid monthly,
      and
      shall be calculated on the basis of a 360-day year for the actual days
      elapsed.

    


    (d) Requests
      for Advances.
      Borrower shall request Advances under the Loan by (i) giving oral notice thereof
      to the Bank at above address, and (ii) confirming such oral notice in writing,
      in form and substance satisfactory to the Bank, within two business days
      thereafter and delivering such written confirmation to the Bank, together with
      any supporting information it may reasonably request, at the above
      address.

    


    (e) Commitment.
      The
      giving of oral notice as aforesaid shall irrevocably commit Borrower to accept
      the requested Advances under the Loan. In the event of any discrepancy between
      any oral notice and written confirmation, the oral notice shall govern as to
      any
      action taken by the Bank prior to receipt of written confirmation.

    


    (f) Unused
      Line Fee.
      On the
      15th day following the end of each calendar quarter during the term of the
      Loan,
      Borrower shall pay to Bank an unused line fee equal to 25 basis points (0.25%)
      per annum times the result of: (1) the amount of the Loan, less (2) the average
      daily balance of the Loan outstanding during the immediately preceding calendar
      quarter.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    (g) Limitation.
      In no
      event shall any interest charge, collected or reserved hereunder exceed the
      maximum rate then permitted by applicable law.

    


    (h) Collateral.
      From
      the date hereof as security for the payment and the performance of the Loan,
      (1)
      Borrower extends, sells, assigns, conveys, mortgages, pledges, transfers,
      grants, and re-grants to the Bank a continuing, first priority security interest
      in and to all of its respective rights, title and interest in, to and under
      all
      (A) Accounts Receivable; (B) Equipment; (C) Inventory; (E) General Intangibles;
      (F) books and records; (G) deposit accounts; (H) cash and cash equivalents;
      (I)
      to the extent not included in the foregoing, all other tangible and intangible
      personal property of Borrower (within the meaning of the Uniform Commercial
      Code, as from time to time in effect in the State of Florida or Alabama); (J)
      Investment Property; and (K) all other property and money of the Borrower now
      or
      hereafter in the possession, custody or control of the Bank; and as to each
      of
      the foregoing, the products and proceeds thereof, replacements and accessions
      thereto; (2) each Guarantor shall contemporaneously herewith execute and deliver
      to the Bank its Guarantee; all of which shall constitute the "Collateral".
      

    


    2.2 Letters
      of Credit.
      

    


    (a) Issuance.
      From
      the date hereof until the Maturity Date, subject to the terms and conditions
      hereof and of the Letter of Credit Documents, and upon such other terms and
      conditions which Bank may reasonably require, Bank may issue Letters of Credit
      as Borrower may from time to time request for the benefit of Borrower. No Letter
      of Credit shall have an expiration date later than the earlier of: (1) the
      Maturity Date, or (2) one year after the date of issuance thereof; provided,
      however, that Borrower may request issuance or renewal of a Letter of Credit
      with a later expiration if, at the time of such issuance or renewal, Borrower
      deposits an amount equal to the face amount of such Letter of Credit with Bank
      as cash collateral for such Letter of Credit. Each Letter of Credit shall
      require that all draws thereon must be presented to Bank by the expiration
      date
      therefor, regardless of whether presented prior to such date to any other
      institution. Each Letter of Credit shall comply with the related Letter of
      Credit Documents. The issuance date of each Letter of Credit shall be a business
      day. 

    


    (b) Notice
      and Reports.
      The
      request for the issuance of a Letter of Credit shall be submitted by Borrower
      to
      Bank at least ten (10) business days prior to the requested date of issuance
      (or
      such shorter period as may be agreed by Bank) pursuant to a Notice of Request
      for Letter of Credit, accompanied by such applications and other related
      documents as may be required by Bank. If the Notice of Request for Letter of
      Credit, related applications and the requested form of such Letter of Credit
      is
      acceptable to Bank, Bank will, upon fulfillment of the applicable conditions
      set
      forth herein, make such Letter of Credit available to Borrower. 

    


    (c) Reimbursement.
      In the
      event of any drawing under any Letter of Credit, Bank will promptly notify
      Borrower, and Borrower shall request, or be deemed to have requested, an Advance
      in the amount of such drawing, the proceeds of which will be used to satisfy
      the
      related reimbursement obligations. Upon the making of any such Advance, Borrower
      shall be required to immediately reimburse Bank for application to the
      respective Letter of Credit Obligations. Borrower’s reimbursement obligations
      hereunder shall be absolute and unconditional under all circumstances
      irrespective of any rights of setoff, counterclaim or defense to payment
      Borrower may claim or have against Bank or the beneficiary of the Letter of
      Credit drawn upon or any other person, including without limitation any defense
      based on any failure of Borrower to receive consideration or the legality,
      validity, regularity or unenforceability of the Letter of
      Credit.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    


    (d) Borrower
      as Account Party.
      Notwithstanding anything to the contrary set forth in this Loan Agreement,
      in
      the event that Bank permits a Letter of Credit issued hereunder to statement
      to
      the effect that such Letter of Credit is issued for the account, or to secure
      obligations, of an Affiliate or subsidiary of Borrower, notwithstanding such
      statement, Borrower shall be the actual account party for all purposes of this
      Loan Agreement for such Letter of Credit. Such statement shall not affect
      Borrower’s reimbursement obligations hereunder with respect to such Letter of
      Credit.

    


    (e) International
      Standby Practices.
      The
      Bank may issue Letters of Credit subject to Rules on International Standby
      Practices (ISP98), as adopted as of the date of issue by the International
      Chamber of Commerce (the "ISP"), in which case the ISP may be incorporated
      therein and deemed in all respects to be a part thereof.

    


    (f) Letter
      of Credit Obligations Absolute.
      With
      regard to each Letter of Credit, the obligations of Borrower to the Bank under
      this Loan Agreement, any Letter of Credit Document and any other agreement
      or
      instrument relating to any Letter of Credit shall be unconditional and
      irrevocable, and shall be paid strictly in accordance with the terms of this
      Loan Agreement, such Letter of Credit Document and such other agreement or
      instrument under all circumstances, including without limitation the following
      circumstances:

    


    (1) any
      lack
      of validity or enforceability of this Loan Agreement, any Letter of Credit
      Document, any Letter of Credit or any other agreement or instrument relating
      thereto (this Loan Agreement and all of the other foregoing being, collectively,
      the "L/C Related Documents");

    


    (2) any
      change in the time, manner or place of payment of, or in any other term of,
      all
      or any of the obligations of Borrower in respect of any L/C Related Document
      or
      any other amendment or waiver of or any consent to departure from all or any
      of
      the L/C Related Documents;

    


    (3) the
      existence of any claim, set-off, defense or other right that Borrower may have
      at any time against any beneficiary or any transferee of a Letter of Credit
      (or
      any Persons for whom any such beneficiary or any such transferee may be acting),
      Bank or any other person, whether in connection with the transactions
      contemplated thereby or any other unrelated transaction;


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    (4) any
      statement or any other document presented under a Letter of Credit proving
      to be
      forged, fraudulent, invalid or insufficient in any respect or any statement
      therein being untrue or inaccurate in any respect;

    


    (5) payment
      by Bank under a Letter of Credit against presentation of a draft or certificate
      that does not strictly comply with the terms of such Letter of Credit;


    


    (6) any
      exchange, release or non-perfection of any Collateral, or any release or
      amendment or waiver of or consent to departure from any loan document;
      or

    


    (7) any
      other
      circumstance or happening whatsoever, whether or not similar to any of the
      foregoing, including without limitation any other circumstance that might
      otherwise constitute a defense available to, or a discharge of, Borrower or
      any
      Guarantor.

    


    (g) Conflict
      with Letter of Credit Documents.
      In the
      event of any conflict between this Loan Agreement and any Letter of Credit
      Document (including any letter of credit application), the Letter of Credit
      Documents shall control.

     

    (h) Letter
      of Credit Fees.
      For
      each Letter of Credit issued by Bank hereunder, Borrower shall pay to Bank,
      upon
      issuance, a fee equal to 100 basis points (1.00%) multiplied by the face amount
      of such Letter of Credit, together with Bank’s standard fees in effect during
      the issuance term of such Letter of Credit (including, without limitation,
      any
      renewal or drawing fees).

    


    SECTION
      3. REPRESENTATIONS
      AND WARRANTIES.

    


    From
      the
      date hereof, each of the Borrower and the Guarantor represent and warrant to
      the
      Bank as follows:

    


    3.1 Organization,
      Standing, Corporate Powers.

    


    (a) Duly
      Organized.
      In
      respect of the Borrower, it (1) is a corporation duly incorporated, validly
      existing and in good standing under the laws of the State of Florida; (2) has
      all requisite power and authority, corporate or otherwise, to conduct its
      business as now being conducted and to own its properties and assets; and (3)
      is
      duly qualified to do business in every jurisdiction wherein the failure to
      so
      qualify would have a material adverse effect.

    


    (b) Powers.
      It has
      all requisite power and authority, corporate or otherwise, to execute, deliver,
      and to perform all of its obligations under this Loan Agreement and under other
      documents or agreements relating to the transactions contemplated herein to
      which it is a party.

    


    (c) Binding
      Obligation.
      This
      Loan Agreement and all corporate notes, guarantees, assignments, security
      agreements and all other loan and security


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    agreements
      executed in connection therewith are legal, valid and binding obligations of
      the
      Borrower and enforceable in accordance with their respective terms, subject
      to
      the enforcement of remedies to bankruptcy, insolvency and other laws affecting
      creditors' rights generally and to moratorium laws, from time to time in effect,
      and to general equitable principles which may limit the right to obtain the
      remedy of specific performance.

    


    3.2 Authorization
      of Borrowing.
      The
      execution, delivery and performance of this Loan Agreement and the borrowings
      hereunder: (a) have been duly authorized by all requisite corporate action;
      (b)
      will not violate any provision of applicable law, any govern-mental rule or
      regulation, any order of any court or other agency of government to which either
      of such parties is subject or the articles of incorporation or by-laws of the
      Borrower; or (c) do not violate any provision of any indenture, agreement or
      other instrument to which Borrower is a party or by which Borrower or its
      properties or assets are bound and which is material to the conduct or operation
      of Borrower’s business and financial affairs, or conflict with, result in a
      breach of or constitute (with due notice or lapse of time or both) a default
      under any provision of such indenture, agreement or other instruments, or result
      in the creation or imposition of any lien, charge or encumbrance of any nature
      whatsoever upon the property or assets of the Borrower or the Guarantor, other
      than as provided herein.

    


    3.3 Financial
      Statements.
      Borrower and each Guarantor have heretofore furnished to the Bank the financial
      statements which fairly present the financial condition and the results of
      operations of the Borrower and the Guarantor as of the date and for the period
      indicated, show all known material liabilities, direct or contingent, as of
      the
      respective dates thereof, and were prepared in accordance with Generally
      Accepted Accounting Principles applied on a consistent basis.

    


    3.4 Adverse
      Change, etc.
      There
      has been no material adverse change in the business, properties or condition
      (financial or otherwise) of Borrower or any Guarantor since the date of the
      most
      recent of the financial statements delivered to the Bank.

    


    3.5 Litigation.
      There
      are no actions, suits or proceedings pending or, to the knowledge of Borrower
      or
      any Guarantor, overtly threatened against or affecting any of them, at law
      or in
      equity, or before or by any Federal, state, municipal or other governmental
      court, tribunal, department, commission, board, bureau, agency or
      instrumentality, domestic or foreign, which involve any of the transactions
      herein contemplated or the possibility of any judgment or liability which would
      result in any material adverse change in the business, operations, properties
      or
      assets or in the financial condition of any of them, or materially and adversely
      affect the ability of any of them to perform hereunder. Neither Borrower nor
      any
      Guarantor is in default with respect to (a) any judgment, order, writ,
      injunction or decree; or (b) any rule or regulation of any court or Federal,
      state, municipal or other governmental court, tribunal, department, commission,
      board, bureau, agency or instrumentality, domestic or foreign which
      would have a material adverse effect on its business, properties or condition
      (financial or otherwise).


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    3.6 Payments
      of Taxes.
      Borrower and each Guarantor have filed or caused to be filed all Federal, state
      and local tax returns that are required to be filed and has paid or caused
      to be
      paid all taxes as shown on such returns or on any assessment received by it,
      to
      the extent that such taxes have become due, except taxes the validity of which
      is being contested in good faith by appropriate proceedings and for which,
      in
      the exercise of reasonable business judgment, there have been set aside adequate
      reserves with respect to any such tax or assessment so contested the tax or
      assessment so contested shall not materially affect its ability to perform
      hereunder.

    


    3.7 Priority
      of Security Interest.
      Subject
      (a) to filing and recordation of the appropriate instruments in the appropriate
      offices of the proper jurisdiction or possession by the Bank or its agent where
      perfection is based upon possession; (b) to the enforcement of remedies to
      bankruptcy, insolvency, and other laws affecting creditors' rights generally
      and
      to moratorium laws, from time to time in effect; and (c) to general equitable
      principles which may limit the right to obtain the remedy of specific
      performance, each of the security interests granted to the Bank as identified
      under Section 2 of this Loan Agreement constitutes a valid first priority
      security interest or lien in and to the property covered thereby, granting
      all
      rights and remedies to a secured party under the Uniform Commercial Code, as
      in
      effect in the State of Florida and Alabama, as the same may be modified or
      amended from time to time, except as otherwise permitted hereunder.

    


    3.8 Eligible
      Accounts Receivable and Eligible Inventory.
      All
      Eligible Inventory included in the Borrowing Base meet the criteria for Eligible
      Inventory and all Eligible Accounts Receivable included in the Borrowing Base
      meet the criteria for Eligible Accounts Receivable.

    


    3.9 Location
      of Collateral.
      All of
      the Collateral is used or held for use by Borrower at the following location:
      4902 Eisenhower Boulevard, Suite 185, Tampa, Florida 33634.

    


    SECTION
      4. CONDITIONS
      OF LENDING AND

    ISSUANCE
      OF LETTERS OF CREDIT.

    


    The
      obligation of the Bank to extend credit and issue Letters of Credit hereunder
      is
      subject to the following conditions:

    


    4.1 Representations
      and Warranties.
      At the
      date of each Advance or issuance of any Letter of Credit, the representations
      and warranties set forth in Section 3 hereof shall be true and correct on and
      as
      of such date, with the same effect as though such representations and warranties
      had been made on and as of such date, except to the extent that such
      representations and warranties relate solely to an earlier
      date.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    4.2 Certificates.
      On or
      before the date hereof, the Bank shall have received: (a) from the Borrower:
      (1)
      a copy of its certificate of corporate status and Articles of Incorporation
      with
      all amendments, certified by the Secretary of State of Florida, dated as of
      a
      recent date; (2) the certificate of its secretary or assistant secretary, dated
      the date hereof and certifying that attached thereto is a true and complete
      copy
      of its Bylaws prior to the adoption of the resolutions by its Board of Directors
      authorizing the execution, delivery and performance of this Loan Agreement;
      and
      certification that its articles of incorporation have not been amended since
      the
      date of the last amendment thereof, if any, indicated on the certificate of
      the
      Secretary of State; and (b) such other documents as the Bank may reasonably
      request.

    


    4.3 No
      Default.
      At the
      date of each Advance or issuance of any Letter of Credit, no Event of Default,
      or event which with the giving of notice or of the passage of time, or both,
      would constitute an Event of Default, shall have occurred and be continuing,
      and
      the representations and warranties of the Borrower and each Guarantor contained
      herein shall remain true and correct as of such date, except to the extent
      that
      such representations and warranties relate to an earlier date. Each request
      for
      an Advance shall constitute the confirmation by Borrower and each Guarantor
      that
      at the date thereof the condi-tions contained in this Section 4.3 shall have
      been satisfied.

    


    SECTION
      5. CROSS-DEFAULT
      AND CROSS-COLLATERALIZATION.

    


    Any
      Event
      of Default under the terms of the Loan shall constitute and hereby is declared
      to be an immediate and absolute default under the terms of all loans between
      Bank and Borrower. Should an event of default occur under the terms of any
      of
      said loans, which event is subject to notice and cure periods, if any, failure
      to cure such event of default within such curative period shall constitute
      an
      immediate default under this Loan and all such other loans owed by Borrower
      to
      Bank. Each of the foregoing loans between Bank and Borrower shall also be
      cross-collateralized, whether such loans are now existing or hereafter entered
      into between Bank and Borrower at any time.

    


    SECTION
      6. AFFIRMATIVE
      COVENANTS

    


    From
      the
      date hereof and so long as the Loan shall be unpaid or unperformed, the Borrower
      and, as specified hereinbelow, the Guarantor, as the case may be,
      will:

    


    6.1 Existence
      and Properties.
      To the
      extent that the same are necessary for the proper and advantageous conduct
      of
      its business, do or cause to be done all things necessary to preserve, renew
      and
      keep in full force and effect its corporate existence, rights, licenses and
      permits and comply with all laws and regulations applicable to it and conduct
      and operate its business in substantially the manner in which it is presently
      conducted and operated.

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    6.2 Insurance.

    


    (a) Cause
      to
      be maintained at all times during the term of the Loan, general liability
      insurance with limits reasonably satisfactory to or as reasonably required
      by,
      Bank. 

    


    (b) Cause
      the
      Collateral to be adequately insured at all times, by financially sound and
      reputable insurers, in an amount not less than the value thereof.

    


    (c) Cause
      the
      Bank to be a named insured to the extent of its interest in respect the policies
      of insurance required by Section 6.2(a) and (b) hereinabove.

    


    6.3 Obligations,
      Taxes and Laws.
      Pay or
      cause to be paid all indebtedness and obligations promptly and in accordance
      with their respective terms, including, without limitation, sales, use and
      personal property taxes as the same may be imposed upon the Borrower from time
      to time, and pay and discharge or cause to be paid and discharged promptly
      all
      taxes, assessments, and governmental charges or levies imposed upon it or in
      respect of its property before the same shall become in default, as well as
      all
      lawful claims for labor, materials, and supplies or otherwise which, if unpaid,
      might become a lien or charge upon such property or any part thereof, and timely
      comply with all applicable laws and governmental rules and regulations;
      provided, however, that the Borrower shall not be required to pay or discharge
      or cause to be paid or discharged any such tax, assessment, charge, lien or
      claim, or timely comply with the laws and governmental rules so long as the
      validity thereof shall be contested by appropriate legal proceedings timely
      initiated and conducted in good faith, and (a) in the case of an unpaid tax,
      assessment, governmental charge or levy, lien, encumbrance, charge or claim,
      such proceedings shall be effective to suspend the collection thereof from
      the
      Borrower and its property; (b) neither such property nor any part thereof,
      nor
      any interest therein would be in any danger of being sold, forfeited or lost;
      (c) in the case of a law and governmental rule or regulation, neither the
      Borrower nor the Bank would be in any danger of criminal liability for failure
      to comply therewith; (d) there shall have been established such reserve or
      other
      appropriate provision, if any, with respect thereto on the books of the entity
      involved, as shall be required by Generally Accepted Accounting Principles
      with
      respect to any such tax, assessment, charge, lien, claim, encumbrance, law,
      rule
      or regulation, so contested.

    


    6.4 Financial
      Statements and Reports.
      Borrower
      and each Guarantor shall maintain systems of accounting established and
      administered in accordance with Generally Accepted Accounting Principles. The
      Borrower and the Guarantor, as appropriate, will furnish to the
      Bank:

    


    (a) Within
      120 days after the end of each fiscal year, the Borrower shall deliver to the
      Bank audited financial statements and, upon filing, all filings required in
      accordance with SEC regulations, if any.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    (b) Within
      30
      days of filing, the Borrower shall provide the Bank with annual corporate tax
      returns.

    


    (c) Within
      120 days after the end of each fiscal year, the Guarantor 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 Guarantor, 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, together with copies of federal
      corporate tax returns within thirty (30) days of the filing thereof and upon
      filing, all filings required in accordance with SEC regulations, if
      any.

    


    (b) Within
      30 days
      after the end of each month, deliver to the Bank the following financial
      statements certified by the President or Vice-President of the Guarantor as
      accurate to the best of his knowledge upon due inquiry and investigation: (1)
      the Borrowing Base Certificate; (2) an accounts receivable aging report by
      customer reflecting the past due status of each invoice; (3) an inventory
      certification reflecting current value of Inventory; and (4) consolidated,
      interim financial statements for the Guarantor; in such form and context as
      Bank
      may require.

    


    (c) Concurrently
      with the statements furnished pursuant to paragraphs (a) and (b) of this Section
      6.4, a certificate of an authorized officer of the Guarantor certifying that
      to
      the best of his 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.

    


    (d) Quarterly
      covenant compliance certificates signed by an authorized officer of Guarantor
      within 30 days after the end of each quarter.

    


    (e) Promptly,
      from time to time, such other information regarding the operation, business,
      affairs and financial condition of the Borrower and the Guarantor as the Bank
      may reasonably request.

    


    6.5 Litigation
      Notice.
      Give
      the Bank prompt written notice of any action, suit or proceeding at law or
      in
      equity or by or before any governmental instrumentality or other agency, the
      outcome of which might materially adversely affect the operations or financial
      condition of the Borrower or the Guarantor. The Bank has been given notice
      by
      Guarantor of the currently pending litigation described in Exhibit
      "B"
      attached
      hereto.

    


    6.6 Notice
      of Default.
      Borrower and each Guarantor, as the case may be, shall give the Bank prompt
      written notice of any Event of Default hereunder, or any event which, with
      the
      passage of time or the giving of notice or both, would become such an Event
      of
      Default hereunder.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    6.7 Access
      to Premises and Inspections.
      At all
      reasonable times and as often as the Bank may reasonably request, permit or
      arrange for any authorized representative designed by the Bank to visit and
      inspect the principal office and operations of the Borrower, any of the other
      offices or properties of the Borrower, including, without limitation, the
      Collateral, and its books, and to make extracts from such books and to discuss
      the affairs, finances and accounts of the Borrower with its chief financial
      officer or such other person as may be designated by the chief executive or
      chief operating officer of the Borrower.

    


    6.8 Continued
      Assistance.
      Promptly, from time to time as the Bank may reasonably request, Borrower and
      each Guarantor shall perform such acts and execute, acknowledge, deliver, file,
      register, deposit or record any and all further instruments, agreements and
      documents whether to continue, preserve, renew, record or perfect the Bank's
      interests in the Collateral, as well as the priority thereof.

    


    6.9 Title
      to Collateral.
      The
      Borrower shall own all of the property constituting the security for the Loan.
      All such property shall be and remain free and clear of all mortgages, pledges,
      liens, charges and other encumbrances of any nature whatsoever, except as
      granted to the Bank hereby or otherwise permitted herein.

    


    6.10 Financial
      Covenants.
      Until
      the Loan has been fully repaid to the Bank, Borrower and Guarantor
      shall:

    


    (a) Consolidated
      Debt Service Coverage Ratio.
      Maintain a Debt Service Coverage Ratio of not less than 1.25 to 1.00, measured
      on a rolling 4-quarter basis. As used herein "Debt Service Coverage Ratio"
      shall
      be defined as (1) (A) Net Income of Borrower, plus (B) Interest Expense, plus
      (C) Depreciation & Amortization, minus (D) Distributions (other than stock
      dividends), minus (E) Extraordinary Income/Non-Recurring Income, divided by
      (2)
      (A) Current Portion of Long Term Debt Payments, plus (2) Interest
      Expense.

    


    (b) Consolidated
      Debt to Tangible Net Worth Ratio.
      Maintain a Debt to Tangible Net Worth Ratio of not more than 2.00 to 1.00
[need
      to revise ratio].
      As used
      herein "Debt to Tangible Net Worth Ratio" shall be defined as (1) (A) Total
      Liabilities of Borrower, minus (B) Subordinated Debt, divided by (2) (A) Net
      Worth, plus (B) Subordinated Debt, minus (C) Intangibles, minus (D) Related
      Party Receivables.

    


    6.11 Deposit
      Accounts.
      Borrower shall place on deposit with Bank all of its corporate deposit accounts
      (except for payroll accounts) making the Bank its primary depository
      relationship.

    


    


    SECTION
      7. NEGATIVE
      COVENANTS

    


    From
      the
      date hereof and so long as any of the Obligations shall be unpaid, the Borrower
      and each Guarantor, as the case may be, will not:


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    7.1 Negative
      Pledge.
      Either
      directly or indirectly, incur, create, assume or permit to exist any Liens
      with
      respect to any property securing the Loan or be bound by or subject to any
      assessments and other similar governmental charges or claims except as provided
      in Section 6.3 of this Loan Agreement or Permitted Liens.

    


    7.2 Sale
      or Disposition of Collateral.
      Sell,
      discount or otherwise dispose of any of the property securing the Loan or any
      part thereof except in the ordinary course of business, or incur additional
      material borrowings or enter into material leases without the prior written
      consent of the Bank upon terms and conditions satisfactory to the
      Bank.

    


    7.3 Organic
      Changes.
      Either
      directly or indirectly, (a) merge or consolidate the Borrower, with or into
      any
      other corporation; (b) sell (in bulk), lease or otherwise dispose of all or
      substantially all of the property of the Borrower, unless the transferee or
      the
      lessee shall be acceptable to the Bank, which acceptance must in writing and
      issued by the Bank prior to any such sale, lease or other disposition, and
      such
      transferee shall have assumed the Loan; or (c) without prior written consent
      of
      the Bank, sell, transfer, assign, or otherwise dispose, or permit the sale,
      transfer, assignment or disposition of the shares of the Borrower, directly
      or
      indirectly, or take any action whatsoever, the result of which is that the
      interest of the Guarantor in the Borrower, is changed to the extent that such
      shareholders fail to retain their current ownership interest as existing as
      of
      the date of this Loan Agreement.

    


    7.4 Distributions.
      Make
      any distributions to shareholders, whether dividends, debt repayment, stock
      re-purchase, advances or otherwise, whether directly or indirectly, without
      the
      prior written consent of the Bank other than stock dividends and distributions
      made pursuant to the Earnout Agreement dated January 18, 2006, pursuant to
      which, payments may be paid to the former owners of the Guarantor, as an
      earnout, based upon the net income before taxes of the Borrower.

    


    7.5 Changes
      in Management.
      Suffer
      or permit any change in the management of Borrower as in effect on the date
      hereof, without the prior written consent of the Bank, which consent shall
      not
      be unreasonably withheld.

    


    7.6 Additional
      Indebtedness.
      Incur,
      create, assume or permit to exist any additional indebtedness in excess of
      $100,000.00 in the aggregate, or indebtedness secured by the Collateral pledged
      to secure the Loan, other than the indebtedness to the Bank and other
      indebtedness incurred in the normal course of business, without the prior
      written consent of Bank, except as may be permitted hereunder.

    


    7.7 Settlements.
      Enter
      into any transaction that materially and adversely affects the collateral
      referenced herein or the Borrower's ability to repay the Loan other than in
      the
      normal course of business.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    SECTION
      8. EVENTS
      OF DEFAULT

    


    8.1 Events
      of Default.
      The
      occurrence of any of the following events shall constitute an event of default
      (an "Event of Default") hereunder:

    


    (a) Any
      representation or warranty made in this Loan Agreement or in any report,
      certificate, financial statement or other instrument furnished in connection
      herewith at any time shall prove to be false or misleading in any material
      respect as of the time when made;

    


    (b) In
      the
      event any payment of principal, interest or other monetary obligation is not
      made within ten (10) days after the date when due under the Loan; 

    


    (c) Default
      with respect to any material obligation for borrowed money or otherwise of
      the
      Borrower if the effect of such default is to accelerate the maturity of such
      indebtedness or to permit the holder or obligee thereof (or a trustee on behalf
      of such holder or obligee) to cause such indebtedness to become due prior to
      its
      stated maturity, or such material indebtedness shall not be paid as and when
      due
      and payable (in each case, giving effect to any applicable grace
      periods);

    


    (d) Default
      in the due observance or performance of any covenant, condition or agreement
      contained in Sections 6 and 7 of this Loan Agreement; and such default shall
      not
      be cured within 15 days after the earlier of knowledge thereof by an officer
      of
      the Borrower, or after written notice of the default is delivered by the Bank,
      but if the default is subject to cure and the cure is being diligently pursued
      by appropriate means at the end of such 15 days, then Borrower shall have an
      additional 15 days thereafter to complete the cure;

    


    (e) Default
      in the due observance or performance of any covenant, condition or agreement
      to
      be observed or performed pursuant to the terms of this Loan Agreement, and
      such
      default shall not be cured within 15 days after the earlier of knowledge there
      of by an officer of the Borrower, or after written notice of the default is
      delivered by the Bank, but if the default is subject to cure and the cure is
      being diligently pursued by appropriate means at the end of such 15 days, then
      Borrower shall have an additional 15 days thereafter to complete the cure;
      

    


    (f) The
      termination of its guarantee by the Guarantor or any other guarantor of Loan;
      provided, however, any such termination shall not affect the rights of the
      Bank
      and obligations of the Guarantor existing at the time of the Bank's receipt
      of
      written notice of the termination of guaranty;

    


    (g) The
      Borrower or Guarantor shall (1) make an assignment for the benefit of creditors,
      file a petition in bankruptcy, petition or apply to any tribunal for the
      appointment of a custodian, receiver or any trustee or shall commence any
      proceeding under any bankruptcy, reorganization, arrangement, readjustment
      of
      debt, dissolution or


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    liquidation
      law or statute of any jurisdiction, whether now or hereafter in effect; or
      if
      there shall have been filed any such petition or application, or any such
      proceeding shall have been commenced against any of them in which an order
      for
      relief is entered or which remains undismissed for a period thirty (30) days
      or
      more; the Borrower or Guarantor, by any act or omission, shall indicate consent
      to, approval of or fail to timely object to, any such petition, application
      or
      proceeding or order for relief or for the appointment of a custodian, receiver
      or any trustee or shall suffer any such custodianship, receivership or
      trusteeship to continue undischarged for a period of thirty (30) days or more;
      (2) generally not pay its debts as such debts become due or admit in writing
      its
      inability to pay its debts as they mature; or (3) have concealed, removed,
      or
      permitted to be concealed or removed, any part of its properties or assets,
      with
      intent to hinder, delay or defraud its creditors or any of them, or made or
      suffered a transfer of any of its property which may be fraudulent under any
      bankruptcy, fraudulent conveyance or similar law, or shall have made any
      transfer of its property to or for the benefit of a creditor at a time when
      other creditors similarly situated have not been paid; or shall have suffered
      or
      permitted, while solvent, any creditor to obtain a lien upon any Collateral,
      through legal proceedings or distraint, which is not vacated or "bonded off"
      within ten (10) days from the date thereof; or (4) be "insolvent" as such term
      is defined in the Bankruptcy Code, 11 U.S.C. §101(31).

    


    8.2 Default
      Rate.
      From
      and after the occurrence of an Event of Default, the Loan shall accrue interest
      at the Default Rate.

    


    SECTION
      9. REMEDIES

    


    From
      and
      after the occurrence of an Event of Default:

    


    9.1 Termination
      of Advances
      and Acceleration.
      Bank
      may, at its sole option cease making Advances under this Loan Agreement and/or
      declare the principal of and interest on the Loan and all other obligations
      due
      by Borrower hereunder to be immediately due and payable without presentment,
      demand, protest or notice of any kind, all of which are hereby expressly waived,
      anything in this Loan Agreement to the contrary notwithstanding, and all amounts
      hereunder shall then be immediately due and payable.

    


    9.2 Collateral.
      With
      respect to the Collateral, Bank may:

    


    (a) Sell
      the
      Collateral at either a public or private sale, or both, by way of one or more
      contracts or transactions, for cash or on terms, in such manner and at such
      places (including Borrower’s premises) as Bank determines is commercially
      reasonable. It is not necessary that the Collateral be present at any such
      sale.
      Bank shall give notice of the disposition of the Collateral as
      follows:

    


    (1) Bank
      shall give Borrower notice in writing of the time and place of public sale,
      or,
      if the sale is a private sale or some other disposition other than a public
      sale
      is to be made of the Collateral, the time on or after which the private sale
      or
      other disposition is to be made; and


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    (2) The
      notice shall be personally delivered or mailed, postage prepaid, to Borrower
      as
      provided in Section 10 below, at least ten (10) days before the earliest time
      of
      disposition set forth in the notice; no notice needs to be given prior to the
      disposition of any portion of the Collateral that is perishable or threatens
      to
      decline speedily in value or that is of a type customarily sold on a recognized
      market; provided,
      however,
      that
      Bank may credit bid and purchase the Collateral at any public sale.

    


    (b) Bank
      may
      seek the appointment of a receiver or keeper to take possession and operate,
      as
      applicable all or any portion of the Collateral, and to the maximum extent
      permitted by law, may seek the appointment of such a receiver without the
      requirement of prior notice or a hearing;

    


    (c) Bank
      shall have all other rights and remedies available to it at law or in equity
      pursuant to any other loan documents execution in connection herewith. The
      rights and remedies of Bank hereunder shall be cumulative, and not exclusive.
      The exercise of one or more such remedies shall not preclude or prevent Bank
      from, at the same time, or at any other time, resorting to or exercising the
      same or other rights, powers, privileges or remedies herein granted to it or
      to
      which it might otherwise legally resort.

    


    9.3 Application
      of Proceeds Upon Disposition of Collateral.
      Apply,
      at Bank’s option, the proceeds of any sale of the Collateral as well as all sums
      received or collected by Bank from or on account of such Collateral and/or
      additional or substitute collateral to (a) the payment of reasonable expenses
      incurred or paid by Bank in connection with any sale, transfer or delivery
      of
      the Collateral and/or such additional or substitute collateral, and (b) the
      payment of the obligations or any part thereof, all in such order or manner
      as
      Bank in its sole discretion may determine, irrespective of the date of maturity.
      All acts done or to be done by Bank in conformity with the powers herein granted
      are hereby ratified and confirmed by Borrower. Borrower agrees to pay to Bank
      any deficiency in the event the proceeds of any foreclosure sale of the
      Collateral are insufficient to satisfy the Loan obligations in full and Bank
      shall have the right to sue Borrower for such deficiency.

    


    9.4 Right
      to Income.
      Unless
      such Event of Default is waived in writing by Bank, Bank may, at its sole
      discretion, collect, receive and receipt for all income, interest, earnings
      or
      profits (including any dividends) now or hereafter payable upon or on account
      of
      the Collateral without any responsibility however for its failure to do so.
      The
      sums or property so collected or received by Bank on account of the Collateral,
      and pursuant to this Section 9.4, shall be held and retained by Bank as further
      security for the Obligations and shall be deemed automatically to be Collateral
      under this Loan Agreement.

    


    9.5
      Right
      to Setoff.
      In
      addition to any rights now or hereafter granted under applicable law and not
      by
      way of limitation of any such rights, Bank is hereby authorized


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    by
      Borrower at any time or from time to time, after the occurrence of an Event
      of
      Default, without notice to Borrower, or to any other person, any such notice
      being hereby expressly waived, to set off and to appropriate and to apply any
      and all deposits (general or special, time or demand, including, but not limited
      to, indebtedness evidenced by certificates of deposit, in each case whether
      matured or unmatured) and any other Indebtedness at any time held or owing
      by
      Bank, its branches, subsidiaries or affiliates, for the credit or the account
      of
      Borrower against and on account of the obligations and liabilities of Borrower
      to Bank under this Loan Agreement and any other loan document, including, but
      not limited to, all claims of any nature or description arising out of or
      connected with this Loan Agreement or any other loan document, irrespective
      of
      whether or not: (a) Bank shall have made any demand hereunder; or (b) Bank
      shall
      have declared the principal of and interest on the Loan and the Loan Agreement
      and other amounts due hereunder to be due and payable.

    


    9.6 Bank’s
      Liability for Collateral.
      Borrower hereby agrees that so long as Bank complies with its obligations,
      if
      any, under the Uniform Commercial Code as in effect from time to time in the
      State of Florida, Bank shall not in any way or manner be liable or responsible
      for: (a) the safekeeping of the Collateral, (b) any loss or damage thereto
      occurring or arising in any manner or fashion from any cause, (c) any diminution
      in the value thereof, (d) any act or default of any carrier, warehouseman,
      bailee, forwarding agency, or other persons, and all risk of loss, damage,
      or
      destruction of the Collateral shall be borne by Borrower.

    


    SECTION
      10.
      NOTICES

    


    All
      notices, requests, demands or other communications to or from the parties hereto
      shall be deemed to have been duly given and made: (a) in the case of a letter
      sent other than by mail, when the letter is delivered to the party to whom
      it is
      addressed; (b) in the case of a telegram or facsimile document, when the
      telegram or facsimile is sent; (c) in the case of a letter sent by mail, three
      (3) days from the day on which the letter is deposited in a United States post
      office, certified mail, return receipt requested, and addressed as
      follows:

    


    
      	
              If
                to the Borrower:

            	
              DEER
                VALLEY CORPORATION

            
	 	
              Attention:
                Charles G. Masters., President

            
	 	
              4902
                Eisenhower Boulevard, Suite 185

            
	 	
              Tampa,
                Florida 33634

            
	 	 
	
              If
                to Guarantor:

            	
              DEER
                VALLEY HOMEBUILDERS, INC.

            
	 	
              Attention:
                Joel Logan, President

            
	 	
              205
                Carriage Street

            
	 	
              Guin,
                Alabama 35563

            
	 	 
	
              with
                a copy to:

            	
              BUSH
                ROSS, P.A.

            
	 	
              Attention:
                Brent A. Jones

            
	 	
              220
                S. Franklin Street

            
	 	
              Tampa,
                Florida 33602

            
	 	 
	
              If
                to the Bank:

            	
              FIFTH
                THIRD BANK

            
	 	
              Attention:
                Chad Loar, Vice President

            
	 	
              201
                East Kennedy Blvd., Suite 1800

            
	 	
              Tampa,
                Florida 33602

            
	 	 
	
              with
                a copy to:

            	
              FISHER
                & SAULS, P.A.

            
	 	
              Attention:
                Kenneth E. Thornton

            
	 	
              100
                Second Avenue South, Suite 701

            
	 	
              St.
                Petersburg, Florida 33701

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    SECTION
      11. MISCELLANEOUS

    


    11.1 Costs.
      The
      Borrower hereby agrees to pay to the Bank all costs and expenses of every kind
      and description incurred by the Bank in connection with the enforcement and
      protection in any legal or equitable proceeding of the rights of the Bank in
      connection with this Loan Agreement, and in connection with any action or claim
      under this Loan Agreement, or in any wise related thereto, including, without
      limitation, the reasonable fees and disbursements of counsel to the Bank. In
      the
      event of litigation arising out of or related to this agreement, the prevailing
      party shall be entitled to reasonable fees and costs of its
      counsel.

    


    11.2 Severability.
      The
      provisions of this Loan Agreement are severable, and if any provision hereof
      shall be held by any court of competent jurisdiction to be unenforceable, such
      holding shall not affect or impair any other provision hereof.

    


    11.1 GOVERNING
      LAW.
      THIS
      LOAN AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
      INTERNAL LAWS OF THE STATE OF FLORIDA WITHOUT GIVING EFFECT TO PRINCIPLES OF
      CONFLICT OF LAWS.

    


    11.2 Indemnity.
      Borrower agrees to indemnify and hold harmless Bank and each of its affiliates,
      employees, representatives, officers, directors, agents and attorneys (any
      of
      the foregoing shall be an "Indemnitee")
      from
      and against any and all claims, liabilities, losses, damages, actions,
      investigations, proceedings, attorneys’ fees and expenses (as such fees and
      expenses are incurred and irrespective of whether suit is brought) and demands
      by any party, including the costs of investigating and defending such claims,
      actions, investigations or proceedings, and the costs of answering any discovery
      served in connection therewith, whether or not Borrower or the person seeking
      indemnification is the prevailing party and whether or not the person seeking
      indemnification is a party to any such action or proceeding (a) resulting from
      any breach or alleged breach by Borrower of any representations or warranties
      made hereunder, or (b) arising out of (1) the Loan or otherwise under this
      Loan Agreement, including the use of the proceeds of the Loan hereunder in
      any
      fashion by Borrower or the performance of its obligations under the loan
      documents by Borrower, (2) allegations of any participation by Bank in the
      affairs of Borrower, or allegations that Bank has any joint liability with
      Borrower for any reason, or (3) any claims against Bank by any shareholder
      or
      other investor in or lender to Borrower, by any brokers or finders or investment
      advisers or investment bankers retained by Borrower or by any other third party,
      for any reason whatsoever, or (c) in connection with taxes (other than taxes
      imposed on the overall net income of the Bank), fees, and other charges payable
      in connection with the Loan, or the execution, delivery, and enforcement of
      this
      Loan Agreement, the other loan documents, and any subsequent amendments thereto
      or waivers of any of the provisions thereof, unless the person seeking
      indemnification under clause (a), (b) or (c) of this Section 11.2, is determined
      in such case to have acted or failed to act with gross negligence or willful
      misconduct by a non-appealable judicial order.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    11.5 Interpretation.
      To the
      extent not otherwise provided for hereby, the course of dealing by and between
      the Bank and the Borrower shall control in the determination and interpretation
      of the rights of the parties hereto. Further, to the extent not otherwise
      provided for hereby nor by or inconsistent with the course of dealing by and
      between the parties hereto, the usage of trade in transactions substantially
      similar to the transactions contemplated herein shall control in the
      determination and interpretation of the rights of the parties
      hereto.

    


    11.6 Revival
      and Reinstatement of Obligations.
      If the
      incurrence or payment of the obligations by Borrower or the transfer to Bank
      of
      any property should for any reason subsequently be declared to be void or
      voidable under any state or federal law relating to creditors’ rights, including
      provisions of the bankruptcy code relating to fraudulent conveyances,
      preferences, or other voidable or recoverable payments of money or transfers
      of
      property (collectively a "Voidable
      Transfer"),
      and
      if Bank is required to repay or restore, in whole or in part, any such Voidable
      Transfer, or elects to do so upon the reasonable advice of its counsel, then,
      as
      to any such Voidable Transfer, or the amount thereof that Bank is required
      or
      elects to repay or restore, and as to all costs, expenses, and reasonable
      attorneys fees of Bank related thereto, the liability of Borrower automatically
      shall be revived, reinstated, and restored and shall exist as though such
      Voidable Transfer had never been made.

    


    11.7 Attorney-in-fact.
      The
      Borrower hereby constitute any officer of the Bank as attorney-in-fact, with
      power to receive and open all mail addressed to them; to endorse their name
      on
      any notes, acceptances, checks, drafts, money orders or other evidences of
      payment or collateral that may come into the Bank's possession; to sign their
      name on any invoice or bill of lading relating to any Account Receivable, or
      on
      drafts against customers, to send requests for verification of Accounts
      Receivable to any account debtor and, to do all other acts and things necessary
      to carry out this Loan Agreement; provided, however, the Bank agrees that it
      shall not exercise the powers conferred upon in this Section 11.7 until the
      occurrence of an Event of Default, or an event which, with the giving of notice
      or the passage of time, or both, would constitute an Event of Default. All
      acts
      of said attorney or designee are hereby ratified and approved by the Borrower
      and the Guarantor, and said attorney or designee shall not be liable for any
      acts of commission or omission nor for any error of judgment or mistake of
      fact
      or law, unless said attorney or designee is determined in such case to have
      acted or failed to act with gross negligence or willful misconduct by an
      non-appealable judicial order.. This power, being coupled with an interest,
      is
      irrevocable so long as any obligations, monetary or otherwise, remain, due
      to
      the Bank from the Borrower or the Guarantor.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


     

    


    11.8 Headings.
      The
      name of this Loan Agreement, as well as Section headings used herein, are for
      conveniences of reference only and are not to affect the construction of, or
      be
      taken into consideration in interpreting this Loan Agreement.

    


    11.9 Terms.
      Any
      term used herein shall be equally applicable to both the singular and plural
      forms. 

    


    11.10 JURY
      TRIAL.
      BORROWER, GUARANTOR AND THE BANK HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY,
      AND IRREVOCABLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN
      RESPECT TO ANY LITIGATION, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY,
      BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LOAN AGREEMENT
      AND ANY OTHER DOCUMENT OR INSTRUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
      HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
      VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. THIS PROVISION IS A MATERIAL
      INDUCEMENT FOR THE BANK ENTERING INTO THIS LOAN AGREEMENT. FURTHER, BORROWER
      HEREBY CERTIFIES THAT NO REPRE-SENTATIVE OR AGENT OF THE BANK, NOR THE BANK'S
      COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT,
      IN
      THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY
      TRIAL
      PROVISION. NO REPRESENTATIVE OR AGENT OF THE BANK, NOR BANK'S COUNSEL HAS THE
      AUTHORITY TO WAIVE, CONDITION, OR MODIFY THIS PROVISION.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    IN
      WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be
      executed and delivered as of the day and year first above written.

    


    
      	
              WITNESSES:

            	
              "BORROWER"

            	 
	 	 	 
	 	
              DEER
                VALLEY CORPORATION,

            	 
	 	
              a
                Florida corporation

            	 
	 	 	 
	
              _____________________________

            	
              By:___________________________________

            	 
	
              Signature
                of Witness

            	
              Charles
                G. Masters, as its President

            	 
	
              _____________________________ 

            	 	 
	
              Print
                or type Name of Witness

            	 	 
	
              _____________________________

            	
              (CORPORATE
                SEAL)

            	 
	
              Signature
                of Witness

            	 	 
	
              _____________________________

            	 	 
	
              Print
                or type Name of Witness

            	 	 
	 	
              "GUARANTOR"

            	 
	 	 	 
	 	
              DEER
                VALLEY HOMEBUILDERS, INC.,

            	 
	 	
              an
                Alabama corporation

            	 
	 	 	 
	
              _____________________________

            	
              By:___________________________________

            	 
	
              Signature
                of Witness

            	
              Joel
                Logan, as its President

            	 
	
              _____________________________ 

            	 	 
	
              Print
                or type Name of Witness

            	 	 
	
              _____________________________

            	
              (CORPORATE
                SEAL)

            	 
	
              Signature
                of Witness

            	 	 
	
              _____________________________

            	 	 
	
              Print
                or type Name of Witness

            	 	 
	 	 	 
	 	
              "BANK"

            	 
	 	 	 
	 	
              FIFTH
                THIRD BANK, 

            	 
	 	
              a
                Michigan banking corporation

            	 
	 	 	 
	
              _____________________________

            	
              By:___________________________________

            	 
	
              Signature
                of Witness

            	
              Chad
                Loar, as its Vice President

            	 
	
              _____________________________

            	 	 
	
              Print
                or type Name of Witness

            	 	 
	
              _____________________________

            	
              (CORPORATE
                SEAL)

            	 
	
              Signature
                of Witness

            	 	 
	
              _____________________________

            	 	 
	
              Print
                or type Name of Witness

            	 	 
	 	 	 
	
              STATE
                OF _______________

            	 	 
	
              COUNTY
                OF _________________

            	 	 


    

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
      foregoing instrument was acknowledged before me this ____ day of April, 2007,
      by
      Charles G. Masters, as President of DEER VALLEY CORPORATION, a Florida
      corporation, on behalf of the corporation.

    


    
      	
              ____
                Personally known 

            	
              _____________________________________

            
	
              ____
                Florida Driver's License

            	
              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 April, 2007,
      by
      Joel Logan, as President of DEER VALLEY HOMEBUILDERS, INC., an Alabama
      corporation, on behalf of the corporation.

    
      


      
        	
                ____
                  Personally known 

              	
                _____________________________________

              
	
                ____
                  Florida Driver's License

              	
                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 April, 2007,
      by
      Chad Loar, as Vice President of FIFTH THIRD BANK, a Michigan 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)

              
	
                STATE
                  OF _____________

              	 
	
                COUNTY
                  OF _________________

              	 


      

      


    

    ATTACHMENTS:

    Exhibit
      "A" - Borrowing Base Certificate

    Exhibit
      "B" - Litigation Notice


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    


    EXHIBIT
      "A"

    BORROWING
      BASE CERTIFICATE

    


    


    


    FIFTH
      THIRD BANK

    201
      East
      Kennedy Blvd., Suite 1800

    Tampa,
      Florida 33602

    


    Pursuant
      to the Loan and Security Agreement, Borrower and Guarantor hereby certify,
      as of
      the above date, the following:

    


    
      	
              (A)

            	
              Current
                Value of Inventory

            	
              $
                ___________ 

            
	 	 	 
	
              (B)

            	
              Less:
                Ineligibles

            	
              $
                ___________

            
	 	 	 
	
              (C)

            	
              Net
                Amount of Inventory (A) Less (B)

            	
              $
                ___________

            
	 	 	 
	
              (D)

            	
              50%
                of (C) Not To Exceed $1,250,000.00

            	
              $
                ___________

            
	 	 	 
	
              (E)

            	
              Aggregate
                Amount of Accounts Receivable

            	
              $
                ___________

            
	 	 	 
	
              (F)

            	
              Less:
                Ineligibles

            	 


    

    


    
      	
               

            	
              Accounts
                over 90 days

            	
              $
                ___________ 

            
	 	
              Accounts
                with Account Debtors having 

            	 
	 	
              in
                excess of 25% of total Eligible A/R

            	
              $
                ___________

            
	 	
              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 (will not 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 $ 2,500,000.00
                    

                

              

            	
              $
                ___________

            
	
               

            	 	 
	 	
            	 
	 	 	 


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    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). We are legal owners 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
      $2,500,000.00 (after taking into account issued and outstanding Letters of
      Credit) Commitment or Borrowing Base.

    


    This
      shall also certify that, for the month ending  ,
      200___,
      DEER VALLEY HOMEBUILDERS, INC., an Alabama corporation (the "Borrower" or
      "Corporation") was in compliance with the following covenants contained in
      the
      Loan and Security Agreement between Bank and Borrower dated April ___,
      2006.

    


    
      	 	
              COVENANT

            	 	
              ACTUAL

            	 	
              COMPLIANCE

            
	 	 	 	 	 	 
	
              1.

            	
              Maintain
                a Debt Service Coverage

            	 	
              _____________

            	 	
              _____________

            
	 	
              Ratio
                of not less than 1.25 to 1.00

            	 	 	 	 
	 	
              "Debt
                Service Coverage Ratio" is

            	 	 	 	 
	 	
              (1)
                (A) Net Income of Borrower, 

            	 	 	 	 
	 	
              plus
                (B) Interest Expense, 

            	 	 	 	 
	 	
              plus
                (C) Depreciation & Amortization,

            	 	 	 	 
	 	
              minus
                (D) Distributions, 

            	 	 	 	 
	 	
              minus
                (E) Extraordinary Income / 

            	 	 	 	 
	 	
              Non-Recurring
                Income, 

            	 	 	 	 
	 	
              divided
                by (2) (A) Current Portion of 

            	 	 	 	 
	 	
              Long
                Term Debt Payments, 

            	 	 	 	 
	 	
              plus
                (2) Interest Expense

            	 	 	 	 
	 	 	 	 	 	 
	
              2.

            	
              Maintain
                a Debt to Tangible Net

            	 	
              _____________

            	 	
              ________________

            
	 	
              Worth
                Ratio of Not More than 

            	 	 	 	 
	 	
              2.00
                to 1.00 

            	 	 	 	 
	 	
              "Debt
                to Tangible Net Worth Ratio" is:

            	 	 	 	 
	 	
              (1)
                (A) Total Liabilities of Borrower, 

            	 	 	 	 
	 	
              minus
                (B) Subordinated Debt, 

            	 	 	 	 
	 	
              divided
                by (2) (A) Net Worth, 

            	 	 	 	 
	 	
              plus
                (B) Subordinated Debt, 

            	 	 	 	 
	 	
              minus
                (C) Intangibles, 

            	 	 	 	 
	 	
              minus
                (D) Related Party Receivables

            	 	 	 	 


    

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              By:____________________________
                

            	
              By:
                ___________________________

            
	 	 
	
              Its:
                __________________ 

            	
              Its:
                __________________

            
	 	 
	
              Date:________________,
                200___

            	
              Date:________________,
                200___

            


    

    

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      



    EXHIBIT
      "B"

    LITIGATION
      NOTICE

    


    Jason
      Don
      Gann v. Deer Valley Homebuilders, Inc., is a worker’s compensation and
      retaliatory discharge claim filed by an ex-employee. The Company’s worker’s
      compensation insurance is defending the worker’s compensation portion of this
      lawsuit and the retaliatory discharge claim is being defended by the Company.
      That issue should be resolved without any material adverse affect on the
      Company