Document:

ex10-07.htm

    Exhibit
      10.07

     

    

     

    THIS
      WARRANT OR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
      HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
      STATE SECURITIES LAWS.  NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
      (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF
      COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
      REGISTRATION IS NOT REQUIRED, (iii) RECEIPT OF A NO-ACTION LETTER(S) FROM THE
      APPROPRIATE GOVERNMENTAL AUTHORITY(IES), OR (iv) OTHERWISE COMPLYING WITH THE
      PROVISIONS OF SECTION 7 OF THIS WARRANT.

     

    

    SERIES
      F
      WARRANT TO PURCHASE  SHARES

    OF
      COMMON
      STOCK

     

    Warrant
      No.:  F-

     

    Deer
      Valley Corporation, a Florida corporation (the “Company”),
      hereby certifies that, for value received, _________ (the
“Holder”), or registered assigns, is the registered
      holder of a
      warrant (the “Warrant”) to subscribe for and purchase
      250,000 shares of the fully paid and nonassessable Common Stock (as
      adjusted pursuant to Section 4 hereof, the “Warrant
      Shares”) of the Company, at a price per share equal to two dollars and
      twenty five cents ($2.25)(the “Warrant Price,” as adjusted
      pursuant to Section 4 hereof), subject to the provisions and upon the
      terms and conditions hereinafter set forth.

     

    As
      used herein, (a) the term
“Common Stock” shall mean the Company’s presently authorized
      Common Stock, par value $0.001 per share, and any stock into or for which such
      Common Stock may hereafter be converted or exchanged, (b) the term “Date
      of Grant” shall mean the date on the signature page of this Warrant,
      and (c) the term “Other Warrants” shall mean any warrant
      issued upon transfer or partial exercise of this Warrant.  The term
“Warrant” as used herein shall be deemed to include Other
      Warrants unless the context hereof or thereof clearly requires
      otherwise.

     

    1.            Term.  The
      purchase right represented by this Warrant is exercisable, in whole or in part,
      at any time after the Date of Grant (the “Initial Exercise
      Date”) and from time to time thereafter through and including the close
      of business on the date five (5) years from the Initial Exercise Date (the
      “Expiration Date”); provided,
however, that in the event that
      any portion of this Warrant is
      unexercised as of the Expiration Date, the terms of Section 2(b), below,
      shall apply.

     

    2.            Exercise;
      Expiration; Redemption.

     

    a.           Method
      of Exercise; Payment; Issuance of New Warrant.  Subject to
Section 1 hereof, the purchase right represented by this Warrant may be
      exercised by the holder hereof, in whole or in part and from time to time after
      the Initial Exercise Date, by the surrender of this Warrant (with the notice
      of
      exercise form attached hereto as Exhibit A duly executed) at the
      principal office of the Company and by the payment to the Company of an amount
      equal to the then applicable Warrant Price multiplied by the number of Warrant
      Shares then being purchased.  The person or persons in whose name(s)
      any certificate(s) representing shares of Common Stock shall be issuable upon
      exercise of this Warrant shall be deemed to have become the holder(s) of record
      of, and shall be treated for all purposes as the record holder(s) of, the shares
      represented thereby (and such shares shall be deemed to have been issued)
      immediately prior to the close of business on the date or dates upon which
      this
      Warrant is exercised.  In the event of any exercise of the rights
      represented by this Warrant, certificates for the shares of stock so purchased
      shall be delivered to the holder hereof as soon as possible and in any event
      within thirty (30) days after such exercise and, unless this Warrant has been
      fully exercised, a new Warrant representing the portion of the Warrant Shares,
      if any, with respect to which this Warrant shall not then have been exercised
      shall also be issued to the holder hereof as soon as possible and in any event
      within such thirty (30)-day period.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    b.             Expiration.  In
      the event that any portion of this Warrant is unexercised as of the Expiration
      Date, such portion of this Warrant shall automatically expire, and the Holder
      shall have no rights with respect to such unexercised portion of this
      Warrant.

    

    c.             Exercise
      Limitation.  The Company shall not effect any exercise of this
      Warrant, and the Holder shall not have the right to exercise any portion of
      this
      Warrant, pursuant to Section 2 or otherwise, to the extent that after giving
      effect to such issuance after exercise as set forth on the applicable notice
      of
      exercise, such Holder (together with such Holder’s Affiliates, and any other
      person or entity acting as a group together with such Holder or any of such
      Holder’s Affiliates), as set forth on the applicable notice of exercise, would
      beneficially own in excess of the Beneficial Ownership Limitation (as defined
      below).  For purposes of the foregoing sentence, the number of shares of
      Common Stock beneficially owned by such Holder and its Affiliates shall include
      the number of shares of Common Stock issuable upon exercise of this Warrant
      with
      respect to which such determination is being made, but shall exclude the number
      of shares of Common Stock which would be issuable upon (A) exercise of the
      remaining, nonexercised portion of this Warrant beneficially owned by such
      Holder or any of its Affiliates and (B) exercise or conversion of the
      unexercised or nonconverted portion of any other securities of the Company
      subject to a limitation on conversion or exercise analogous to the limitation
      contained herein beneficially owned by such Holder or any of its
      affiliates.  Except as set forth in the preceding sentence, for purposes of
      this Section 2, beneficial ownership shall be calculated in accordance with
      Section 13(d) of the Exchange Act and the rules and regulations promulgated
      thereunder, it being acknowledged by a Holder that the Company is not
      representing to such Holder that such calculation is in compliance with Section
      13(d) of the Exchange Act and such Holder is solely responsible for any
      schedules required to be filed in accordance therewith.   To the
      extent that the limitation contained in this Section 2 applies, the
      determination of whether this Warrant is exercisable (in relation to other
      securities owned by such Holder together with any Affiliates) and of which
      a
      portion of this Warrant is exercisable shall be in the sole discretion of a
      Holder, and the submission of a Notice of Exercise shall be deemed to be each
      Holder’s determination of whether this Warrant is exercisable (in relation to
      other securities owned by such Holder together with any Affiliates) and of
      which
      portion of this Warrant is exercisable, in each case subject to such aggregate
      percentage limitation, and the Company shall have no obligation to verify or
      confirm the accuracy of such determination.   In addition, a
      determination as to any group status as contemplated above shall be determined
      in accordance with Section 13(d) of the Exchange Act and the rules and
      regulations promulgated thereunder.  The
      “Beneficial Ownership Limitation” shall be 4.99% of the number
      of shares of the Common Stock outstanding immediately after giving effect to
      the
      issuance of shares of Common Stock issuable upon exercise of this
      Warrant.  The Beneficial Ownership Limitation provisions of this
      Section 2 may be waived by such Holder, at the election of such Holder, upon
      not
      less than 61 days’ prior notice to the Company to change the Beneficial
      Ownership Limitation to 9.99% of the number of shares of the Common Stock
      outstanding immediately after giving effect to the issuance of shares of Common
      Stock upon exercise of this Warrant, and the provisions of this Section 2(c)
      shall continue to apply.  Upon such a change by a Holder of the
      Beneficial Ownership Limitation from such 4.99% limitation to such 9.99%
      limitation, the Beneficial Ownership Limitation may not be further waived by
      such Holder.  The provisions of this paragraph shall be construed and
      implemented in a manner otherwise than in strict conformity with the terms
      of
      this Section 2(c) to correct this paragraph (or any portion hereof) which may
      be
      defective or inconsistent with the intended Beneficial Ownership Limitation
      herein contained or to make changes or supplements necessary or desirable to
      properly give effect to such limitation. The limitations contained in this
      paragraph shall apply to a successor holder of this
      Warrant.  “Affiliate” means any Person that, directly
      or indirectly through one or more intermediaries, controls or is controlled
      by
      or is under common control with a person, as such terms are used in and
      construed under Rule 144 under the Securities Act.  With respect to a
      Holder, any investment fund or managed account that is managed on a
      discretionary basis by the same investment manager as such purchaser will be
      deemed to be an Affiliate of such Holder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    3.            Stock
      Fully Paid; Reservation of Shares.  All Warrant Shares that may be
      issued upon the exercise of the rights represented by this Warrant will, upon
      issuance pursuant to the terms and conditions herein, be fully paid and
      nonassessable, and free from all taxes (other than any taxes determined with
      respect to, or based upon, the income of the person to whom such shares are
      issued), liens and charges (other than liens or charges created by actions
      of
      the holder of this Warrant or the person to whom such shares are issued), and
      pre-emptive rights with respect to the issue thereof.  During the
      period within which the rights represented by this Warrant may be exercised,
      the
      Company will at all times have authorized, and reserved for the purpose of
      the
      issue upon exercise of the purchase rights evidenced by this Warrant, a
      sufficient number of shares of its Common Stock to provide for the exercise
      of
      the rights represented by this Warrant.

     

    4.            Adjustment
      of Warrant Price and Number of Shares.  The number and kind of
      securities purchasable upon the exercise of this Warrant and the Warrant Price
      shall be subject to adjustment from time to time upon the occurrence of certain
      events, as follows:

     

    a.           Reclassification
      or Merger.  In case of any reclassification, change or conversion
      of securities of the class issuable upon exercise of this Warrant (other than
      a
      change in par value, or from par value to no par value, or from no par value
      to
      par value, or as a result of a subdivision or combination), or in case of any
      merger of the Company with or into another corporation (other than a merger
      with
      another corporation in which the Company is the acquiring and the surviving
      corporation and which does not result in any reclassification or change of
      outstanding securities issuable upon exercise of this Warrant), or in case
      of
      any sale of all or substantially all of the assets of the Company, the Company,
      or such successor or purchasing corporation, as the case may be, shall duly
      execute and deliver to the holder of this Warrant a new Warrant (in form and
      substance satisfactory to the holder of this Warrant), so that the holder
of
      this
      Warrant shall have the right to receive, at a total purchase price not to exceed
      that payable upon the exercise of the unexercised portion of this Warrant,
      and
      in lieu of the shares of Common Stock theretofore issuable upon exercise of
      this
      Warrant, the kind and amount of shares of stock, other securities, money and
      property receivable upon such reclassification, change or merger by a holder
      of
      the number of shares of Common Stock then purchasable under this
      Warrant.  Such new Warrant shall provide for adjustments that shall be
      as nearly equivalent as may be practicable to the adjustments provided for
      in
      this Section 4.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    b.           Subdivision
      or Combination of Shares.  If at any time while this Warrant
      remains outstanding and unexpired the Company shall subdivide or combine its
      outstanding shares of Common Stock, the Warrant Price shall be proportionately
      decreased in the case of a subdivision or increased in the case of a
      combination, effective at the close of business on the date the subdivision
      or
      combination becomes effective.

    

    c.           Stock
      Dividends.  If at any time while this Warrant is outstanding and
      unexpired the Company shall pay a dividend with respect to Common Stock payable
      in Common Stock, then the Warrant Price shall be adjusted, from and after the
      date of determination of stockholders entitled to receive such dividend or
      distribution, to that price determined by multiplying the Warrant Price in
      effect immediately prior to such date of determination by a fraction (i) the
      numerator of which shall be the total number of shares of Common Stock
      outstanding immediately prior to such dividend, and (ii) the denominator of
      which shall be the total number of shares of Common Stock outstanding
      immediately after such dividend.

    

    d.           Adjustment
      of Number of Shares.  Upon each adjustment in the Warrant Price,
      the number of Warrant Shares purchasable hereunder shall be adjusted, to the
      nearest whole share, to the product obtained by multiplying the number of
      Warrant Shares purchasable immediately prior to such adjustment in the Warrant
      Price by a fraction, the numerator of which shall be the Warrant Price
      immediately prior to such adjustment and the denominator of which shall be
      the
      Warrant Price immediately thereafter.

    

    5.            Notice
      of Adjustments.  Whenever the Warrant Price or the number of
      Warrant Shares purchasable hereunder shall be adjusted pursuant to Section
      4 hereof, the Company shall deliver to the holder of this Warrant a
      certificate signed by its chief financial officer setting forth, in reasonable
      detail, the event requiring the adjustment, the amount of the adjustment, the
      method by which such adjustment was calculated, and the Warrant Price and the
      number of Warrant Shares purchasable hereunder after giving effect to such
      adjustment.

     

    6.            Fractional
      Shares.  No fractional shares of Common Stock will be issued in
      connection with any exercise hereunder, but in lieu of such fractional shares
      the Company shall make a cash payment therefor based on the fair market value
      of
      a share of Common Stock on the date of exercise, or round up to the next whole
      number of shares, at the Company’s option.

     

    7.            Compliance
      with Securities Act and Investor Rights Agreement; Disposition ofWarrant
      or Warrant Shares.

     

    a.           Compliance
      with Securities Act.  The holder of this Warrant, by acceptance
      hereof, agrees that this Warrant and the shares of Common Stock to be issued
      upon exercise hereof are being acquired for investment and that such holder
      will
      not offer, sell or otherwise
      dispose of this Warrant, or any shares of Common Stock to be issued upon
      exercise hereof except under circumstances which will not result in a violation
      of the Securities Act.  Upon exercise of this Warrant, the holder
      hereof shall confirm in writing that the shares of Common Stock so purchased
      are
      being acquired for investment and not with a view toward distribution or
      resale.  This Warrant and all shares of Common Stock issued upon
      exercise of this Warrant (unless registered under the Securities Act) shall
      be
      stamped or imprinted with a legend in substantially the following
      form:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    “THE
      SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
      OF
      1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.  NO SALE OR
      DISPOSITION MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT
      RELATED THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY
      SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED, (iii)
      RECEIPT OF A NO-ACTION LETTER(S) FROM THE APPROPRIATE GOVERNMENTAL
      AUTHORITY(IES), OR (iv) OTHERWISE COMPLYING WITH THE PROVISIONS OF SECTION
      7 OF THE WARRANT UNDER WHICH THESE SECURITIES WERE ISSUED DIRECTLY OR
      INDIRECTLY.”

     

    In
      addition, in connection with the issuance of this Warrant, the holder
      specifically represents to the Company by acceptance of this Warrant as
      follows:

     

    (1)           The
      holder is aware of the Company’s business affairs and financial condition, and
      has acquired information about the Company sufficient to reach an informed
      and
      knowledgeable decision to acquire this Warrant.  The holder is
      acquiring this Warrant for its own account for investment purposes only and
      not
      with a view to, or for the resale in connection with, any “distribution” thereof
      for purposes of the Securities Act.

     

    (2)           The
      holder understands that this Warrant and the Warrant Shares have not been
      registered under the Securities Act in reliance upon a specific exemption
      therefrom, which exemption depends upon, among other things, the bona fide
      nature of the holder’s investment intent as expressed herein.  In this
      connection, the holder understands that, in the view of the SEC, the statutory
      basis for such exemption may be unavailable if the holder’s representation was
      predicated solely upon a present intention to hold the Warrant and the Warrant
      Shares for the minimum capital gains period specified under applicable tax
      laws,
      for a deferred sale, for or until an increase or decrease in the market price
      of
      the Warrant and the Warrant Shares, or for a period of one (1) year or any
      other
      fixed period in the future.

     

    (3)           The
      holder further understands that this Warrant and the Warrant Shares must be
      held
      indefinitely unless subsequently registered under the Securities Act and any
      applicable state securities laws, or unless exemptions from registration are
      otherwise available.

     

    (4)           The
      holder is aware of the provisions of Rule 144 and 144A, promulgated under the
      Securities Act, which, in substance, permit limited public resale of “restricted
      securities” acquired, directly or indirectly, from the issuer thereof (or from
      an Affiliate of such issuer), in a non-public offering subject to the
      satisfaction of certain conditions, if applicable, including, among other
      things:  the availability of certain public information about the
      Company, the resale occurring not less than one (1) year after the party has
      purchased and paid for the securities to be sold; the sale being made through
      a
      broker in an unsolicited “broker’s
      transaction” or in transactions directly with a market maker (as said term is
      defined under the Securities Exchange Act of 1934, as amended) and the amount
      of
      securities being sold during any three (3) month period not exceeding the
      specified limitations stated therein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (5)           The
      holder further understands that at the time it wishes to sell this Warrant
      and
      the Warrant Shares there may be no public market upon which to make such a
      sale,
      and that, even if such a public market then exists, the Company may not be
      satisfying the current public information requirements of Rule 144 and 144A,
      and
      that, in such event, the holder may be precluded from selling this Warrant
      and
      the Warrant Shares under Rule 144 and 144A even if the one (1)-year minimum
      holding period has been satisfied.

     

    (6)           The
      holder further understands that, in the event that all of the requirements
      of
      Rule 144 and 144A are not satisfied, registration under the Securities Act,
      compliance with Regulation A, or some other registration exemption will be
      required; and that, notwithstanding the fact that Rule 144 and 144A are not
      exclusive, the staff of the SEC has expressed its opinion that persons proposing
      to sell private placement securities other than in a registered offering and
      otherwise than pursuant to Rule 144 and 144A will have a substantial burden
      of
      proof in establishing that an exemption from registration is available for
      such
      offers or sales, and that such persons and their respective brokers who
      participate in such transactions do so at their own risk.

     

    b.           Exchange.  This
      Warrant may be exchanged, without payment of any service charge, for one (1)
      or
      more new Warrants of like tenor exercisable for the same aggregate number of
      shares of Common Stock upon surrender to the Company by the registered holder
      hereof in person or by legal representative or by attorney duly authorized
      in
      writing and, upon issuance of the new Warrant or Warrants, the surrendered
      Warrant shall be cancelled and disposed of by the Company.

    

    c.           Disposition
      of Warrant or Warrant Shares.  With respect to any offer, sale or
      other disposition of this Warrant, or any Warrant Shares acquired pursuant
      to
      the exercise of this Warrant prior to registration of such Warrant or Warrant
      Shares, the holder hereof and each subsequent holder of this Warrant agrees
      to
      give written notice to the Company prior thereto, describing briefly the manner
      thereof, together with a written opinion of such holder’s counsel, if reasonably
      requested by the Company, to the effect that such offer, sale or other
      disposition may be effected without registration or qualification (under the
      Securities Act as then in effect or any federal or state law then in effect)
      of
      this Warrant or such Warrant Shares and indicating whether or not under the
      Securities Act certificates for this Warrant or such Warrant Shares to be sold
      or otherwise disposed of require any restrictive legend as to applicable
      restrictions on transferability in order to ensure compliance with applicable
      laws.  Promptly upon receiving such written notice and reasonably
      satisfactory opinion, if so requested, the Company, as promptly as practicable,
      shall notify such holder that such holder may sell or otherwise dispose of
      this
      Warrant or such Warrant Shares, all in accordance with the terms of the notice
      delivered to the Company.  If a determination has been made pursuant
      to this Section 7(c) that the opinion of counsel for the holder is not
      reasonably satisfactory to the Company, the Company shall so notify the holder
      promptly after such determination has been made and neither this Warrant nor
      any
      Warrant Shares shall be sold or otherwise disposed of until such disagreement
      has been resolved.  The foregoing notwithstanding, this Warrant or
      such Warrant Shares may (i) as to such federal laws, be
      offered, sold or otherwise disposed of in accordance with Rule 144 and 144A
      under the Securities Act, provided that the Company shall have been furnished
      with such information as the Company may reasonably request to provide a
      reasonable assurance that the provisions of Rule 144 and 144A have been
      satisfied and (ii) be offered, sold, distributed or otherwise transferred to
      Affiliates of the Holder without regard to this Section 7(c), but only if
      the Company is in receipt of an opinion of counsel as to the permissibility
      of
      such transfer under federal and state securities laws and an investor
      representation letter from the transferee, in form and substance reasonably
      satisfactory to the Company.  Each certificate representing this
      Warrant or the Warrant Shares thus transferred (except a transfer pursuant
      to
      Rule 144) shall bear a legend as to the applicable restrictions on
      transferability in order to ensure compliance with such laws, unless, in the
      aforesaid opinion of counsel for the holder, such legend is not required in
      order to ensure compliance with such laws.  The Company may issue stop
      transfer instructions to its transfer agent or, if acting as its own transfer
      agent, the Company may stop transfer on its corporate books, in connection
      with
      such restrictions.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    8.            Rights
      as Stockholders; Information.  No holder of this Warrant, as such,
      shall be entitled to vote or be deemed the holder of Common Stock or any other
      securities of the Company which may at any time be issuable on the exercise
      hereof for any purpose, nor shall anything contained herein be construed to
      confer upon the holder of this Warrant, as such, any of the rights of a
      stockholder of the Company or any right to vote for the election of the
      directors or upon any matter submitted to stockholders at any meeting thereof,
      or to receive notice of meetings, until this Warrant shall have been exercised
      and the Warrant Shares purchasable upon the exercise hereof shall have become
      deliverable, as provided herein.  The foregoing notwithstanding, the
      Company will transmit to the holder of this Warrant such information, documents
      and reports as are generally distributed to the holders of any class or series
      of the securities of the Company concurrently with the distribution thereof
      to
      the stockholders.

     

    9.            Additional
      Rights.  In the event that the Company undertakes to (i) sell,
      lease, exchange, convey or otherwise dispose of all or substantially all of
      its
      property or business; or (ii) merge into or consolidate with any other
      corporation (other than a wholly-owned subsidiary), or effect any transaction
      (including a merger or other reorganization) or series of related transactions,
      in which more than fifty percent (50%) of the voting power of the Company is
      disposed of, the Company will use its best efforts to provide at least
      thirty (30) days notice to the holder of the terms and conditions of the
      proposed transaction.  The Company shall cooperate with the holder in
      consummating the sale of this Warrant in connection with any such
      transaction.

     

    10.            Modification
      and Waiver.  This Warrant and any provision hereof may be changed,
      waived, discharged or terminated only by an instrument in writing signed by
      the
      party against which enforcement of the same is sought.

     

    11.            Notices.  Unless
      otherwise specifically provided herein, all communications under this Warrant
      shall be in writing and shall be deemed to have been duly given (i) on the
      date
      of service if served personally on the party to whom notice is to be given;
      (ii)
      on the day of transmission if sent by facsimile transmission to the
      number  shown on the books of the Company, and telephonic confirmation
      of receipt is obtained promptly after completion of transmission; (iii) on
      the
      day after delivery to Federal Express or similar overnight courier; or (iv)
      on
      the fifth day after mailing, if mailed to the party to whom notice is to be
      given, by first class
      mail, registered or certified, postage prepaid, and properly addressed, return
      receipt requested, to each such holder at its address as shown on the books
      of
      the Company or to the Company at the address indicated therefor on the signature
      page of this Warrant.  Any party hereto may change its address for
      purposes of this Section 11 by giving the other party written notice of
      the new address in the manner set forth herein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    12.            Binding
      Effect on Successors.  This Warrant shall be binding upon any
      corporation succeeding the Company by merger, consolidation or acquisition
      of
      all or substantially all of the Company’s assets, and all of the obligations of
      the Company relating to the Common Stock issuable upon the exercise or
      conversion of this Warrant shall survive the exercise, conversion and
      termination of this Warrant and all of the covenants and agreements of the
      Company shall inure to the benefit of the successors and assigns of the holder
      hereof.  The Company will, at the time of the exercise or conversion
      of this Warrant, in whole or in part, upon request of the holder hereof but
      at
      the Company’s expense, acknowledge in writing its continuing obligation to the
      holder hereof in respect of any rights to which the holder hereof shall continue
      to be entitled after such exercise or conversion in accordance with this
      Warrant; provided, however, that the failure of the holder hereof
      to make any such request shall not affect the continuing obligation of the
      Company to the holder hereof in respect of such rights.

     

    13.            Lost
      Warrants or Stock Certificates.  The Company covenants to the
      holder hereof that, upon receipt of evidence reasonably satisfactory to the
      Company of the loss, theft, destruction or mutilation of this Warrant or any
      stock certificate and, in the case of any loss, theft or destruction, upon
      receipt of an executed lost securities bond or indemnity reasonably satisfactory
      to the Company, or in the case of any such mutilation upon surrender and
      cancellation of such Warrant or stock certificate, the Company will make and
      deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost,
      stolen, destroyed or mutilated Warrant or stock certificate.

     

    14.            Descriptive
      Headings.  The descriptive headings of the several paragraphs of
      this Warrant are inserted for convenience only and do not constitute a part
      of
      this Warrant.

     

    15.            Governing
      Law.  This Warrant shall be construed and enforced in accordance
      with, and the rights of the parties shall be governed by, the laws of the State
      of Florida.

     

    16.            Remedies.  In
      case any one (1) or more of the covenants and agreements contained in this
      Warrant shall have been breached, the holders hereof (in the case of a breach
      by
      the Company), or the Company (in the case of a breach by a holder), may proceed
      to protect and enforce their or its rights either by suit in equity and/or
      by
      action at law, including, but not limited to, an action for damages as a result
      of any such breach and/or an action for specific performance of any such
      covenant or agreement contained in this Warrant.

     

    17.            Acceptance.  Receipt
      of this Warrant by the holder hereof shall constitute acceptance of and
      agreement to the foregoing terms and conditions.

     

    18.            No
      Impairment of Rights.  The Company will not, by amendment of its
      Certificate of Incorporation or through any other means, avoid or seek to avoid
      the observance or performance of any of the terms of this Warrant, but will
      at
      all times in good faith assist in the carrying out of all such terms and in
      the
      taking of all such action as may be necessary or appropriate in order to protect
      the rights of the holder of this Warrant against impairment.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be executed on its
      behalf by one of its officers thereunto duly authorized.

     

    
      	 	
              DEER
                VALLEY CORPORATION

            
	 	
              ___________________________________

            
	 	
              Charles
                G. Masters, Chief Executive Officer

            
	
              Dated:
                May ___, 2007

            	 
	 	
              Address:
                4902 Eisenhower Blvd.,

              Suite
                185, Tampa, FL 33634

            

    

    

     

    NOTICE
      TO FLORIDA RESIDENTS:

    ____________________________________________________________

    WHERE
      SALES ARE MADE TO FIVE OR MORE PERSONS IN FLORIDA (EXCLUDING CERTAIN
      INSTITUTIONAL PURCHASERS DESCRIBED IN SECTION 517.061(7) OF THE FLORIDA
      SECURITIES AND INVESTOR PROTECTION ACT) (THE “ACT”), ANY SUCH SALE MADE PURSUANT
      TO SECTION 517.061(11) OF THE ACT SHALL BE VOIDABLE BY THE PURCHASER EITHER
      WITHIN THREE DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH
      PURCHASER TO THE ISSUER, OR AN AGENT OF THE ISSUER, OR AN ESCROW AGENT OR WITHIN
      THREE DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH
      PURCHASER, WHICHEVER OCCURS LATER.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

    NOTICE
      OF
      EXERCISE

     

    To:

     

    1.           The
      undersigned hereby elects to
      purchase          shares
      of Common Stock of Deer Valley Corporation (the “Company”) pursuant to the terms
      of the attached Series F Common Stock Purchase Warrant (no. F-2), and tenders
      herewith payment of the purchase price of such shares in full.

     

    2.           Please
      issue a certificate or certificates representing said shares in the name of
      the
      undersigned or in such other name or names as are specified below:

     

    _______________________________

    (Name)

     

    _______________________________

    _______________________________

    (Address)

    

    3.           The
      undersigned represents that the aforesaid shares are being acquired for the
      account of the undersigned for investment and not with a view to, or for resale
      in connection with, the distribution thereof and that the undersigned has no
      present intention of distributing or reselling such shares.  In
      support thereof, the undersigned will execute an Investment Representation
      Statement upon request of the Company, in form reasonably satisfactory to the
      Company.

     

    
      	 	
              __________________________________

            
	 	
              (Signature)

            

    

    _____________________

          (Date)ex10-08.htm

    Exhibit
      10.08

    

    REVOLVING
      BRIDGE LOAN AND SECURITY AGREEMENT

    

    THIS
      REVOLVING BRIDGE LOAN AND SECURITY
      AGREEMENT (this "Loan Agreement") is made as of this ______ day of August,
      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 HOMEBUILDERS, INC., an Alabama
      corporation authorized to do business in the State of Florida (the "Borrower"),
      having its principal place of business at 205 Carriage Street, Guin, Alabama
      35563, and DEER VALLEY CORPORATION, a Florida corporation,
      having a mailing address of 4902 Eisenhower Boulevard, Suite 185, Tampa, Florida
      33634 (the "Guarantor").

    

    RECITALS:

    

    WHEREAS,
      Borrower has applied to Bank
      for a revolving bridge loan not to exceed FIVE MILLION AND NO/100 DOLLARS
      ($5,000,000.00) (the "Loan") to be evidenced by a revolving bridge note (the
      "Note") and secured accounts receivable generated by Borrower in the fulfillment
      of one or more contracts between Borrower and the State of Mississippi Emergency
      Management Agency under the “Mississippi Alternative Housing Pilot Program,”
including all proceeds thereof.  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:

    

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

    

    "Borrowing
      Base" shall mean, as of any
      date of determination (which date and determination shall be in the Bank's
      sole
      discretion) an amount equal to 80% of Eligible Receivables. 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".

    

    “Contract”
shall
      mean, collectively,
      one or more contracts by and between Borrower and the State of Mississippi
      Emergency Management Agency to construct one or more types of housing units
      under the “Mississippi Alternative Housing Pilot Program.”

    

    "Collateral"
      shall mean all now
      existing or hereafter arising accounts receivable owed to Borrower pursuant
      to
      the Contract, together with an assignment of all income and profits in any
      manner arising therefrom, and all proceeds of said accounts
      receivable.

    

    "Default
      Rate" shall mean the “Default
      Interest Rate” as defined in the Note.

    

    "Eligible
      Receivables" shall mean, as
      of any date of determination, all accounts receivable due and owing to Borrower
      pursuant its performance under the Contract that are: (a) bona fide, valid
      and
      legally enforceable obligations; (b) except for the security interest in the
      Collateral granted to the Bank, solely owned by the Borrower, free and clear
      of
      any and all mortgages, liens, security interests, encumbrances, claims or rights
      of others; and (c) not the subject of any dispute, defense, offset, counterclaim
      or claim.

    

    "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.

    

    "Guarantee"
      shall mean a guarantee
      issued by each Guarantor of the loan obligations hereunder.  In the
      event that Borrower or Guarantor form any additional subsidiaries after the
      date
      of the Loan, but prior to full repayment, such subsidiaries shall also issue
      a
“Guarantee” in favor of Bank in form and substance satisfactory to
      Bank.

    

    "Maturity
      Date" shall mean, unless
      sooner demanded by Bank after the occurrence of an Event of Default hereunder,
      6
      months from the date hereof.

    

    "Permitted
      Liens" shall mean liens in
      favor of Lender pursuant to this Agreement.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    SECTION
      2.  THE LOAN

    

    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 from time to
      time.

    

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

    

    (g)           Collateral.  From
      the date hereof as security for the payment and the performance of the Loan,
      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 right, title and interest in the
      Collateral.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    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 Alabama; (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 govern­mental 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 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.

     

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    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.  Except
      as set forth on Exhibit “B”, 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 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 Collateral secured 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.

     

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    3.8           
      Eligible Receivables.  All Eligible
      Receivables included in the Borrowing Base meet the criteria for “Eligible
      Receivables” hereunder.

    

    SECTION
      4.  CONDITIONS OF
      LENDING.

    

    The
      obligation of the Bank to extend
      credit hereunder is subject to the following conditions:

    

    4.1             Representations
      and Warranties.  At the date of each Advance, 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 States of Alabama and
      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 all amendments to 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 (except as provided therein)
      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, 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 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 Guarantor that at the date thereof the conditions contained
      in
      this Section 4.3 shall have been satisfied.

    

    4.4             Other
      Conditions Precedent.  On or before the date hereof,
      there shall have been delivered to the Bank all of the financial statements,
      reports and other documents required by the Loan Commitment dated July 13,
      2007.

    

    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, Guarantor 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 and Guarantor to
      Bank.  Each of the foregoing loans between Bank, Borrower and/or
      Guarantor shall also be cross-collateralized, whether such loans are now
      existing or hereafter entered into between Bank, Borrower and/or Guarantor
      at
      any time.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

    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.

     

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

    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 balance sheets and statements of income, retained earnings and
      changes in financial position for such year, 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 Borrower 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; and
      (3)
      consolidated, interim financial statements for the Borrower; 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 Borrower 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 Borrower
      within 30 days after the end of each quarter.

    

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

    

    (f)           Within
      30 days of filing, the Guarantors shall provide the Bank with consolidated
      annual corporate tax returns.

     

    (g)           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.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

    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 Borrower 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, on a consolidated basis with Guarantor, shall:

    

    (a)           Consolidated
      Debt Service Coverage Ratio.  Maintain a Consolidated
      Debt Service Coverage Ratio of not less than 1.25 to 1.00, measured on a rolling
      4-quarter basis.  As used herein "Consolidated Debt Service Coverage
      Ratio" shall be defined as (1) (A) Net Income, 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 (in each case, measured
      based
      upon the financial results of Borrower and Guarantor).

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    

    (b)           Consolidated
      Debt to Tangible Net Worth Ratio.  Maintain a
      Consolidated Debt to Tangible Net Worth Ratio of not more than 2.75 to
      1.00.  As used herein "Consolidated Debt to Tangible Net Worth Ratio"
      shall be defined as (1) (A) Total Liabilities, minus (B) Subordinated Debt,
      divided by (2) (A) Net Worth, plus (B) Subordinated Debt, minus (C) Intangibles,
      minus (D) Related Party Receivables (in each case, measured based upon the
      financial results of Borrower and Guarantor).

    

    6.11         Deposit
      Accounts.  Borrower and Guarantor shall place on deposit
      with Bank all of their respective corporate deposit accounts (except for payroll
      accounts) making the Bank their respective primary depository
      relationships.

    

    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 Borrower, as an earnout,
      based upon the net income before taxes of the Borrower.

     

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    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;

     

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

    (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.

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    

    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.

     

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    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 or Alabama, 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.

     

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    

    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

            	 
	
               or
                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.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    

    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.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    

    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.

     

     

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    

    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 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

            	 	 
	 	 	 
	 	
              "GUARANTOR"

            	 
	 	 	 
	 	
              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

            	 	 
	 	 	 

    

     

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    
 

    
      	 	 	 
	 	 	 
	 	
              "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 ALABAMA

            	 	 
	
              COUNTY
                OF _________________

            	 	 

    

    

    The
      foregoing instrument was
      acknowledged before me this ____ day of August, 2007, by Joel Logan, as
      President of DEER VALLEY HOMEBUILDERS, INC., an Alabama corporation, on behalf
      of the corporation.

    

    
      	
              ____
                Personally known

            	
              _____________________________________

            
	
              ____
                Driver's License (State______)

            	
              Notary
                Public

            
	
              ____
                Other Identification Produced

            	 
	
              _________________

            	
              _____________________________________

            
	
              _________________

            	
              Print
                or type name of Notary

            
	 	 
	 	
              (SEAL)

            
	
              STATE
                OF FLORIDA

            	 
	
              COUNTY
                OF HILLSBOROUGH

            	 

    

    

    The
      foregoing instrument was
      acknowledged before me this ____ day of August, 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)

            

    

    
 

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    
      	 	 
	 	 
	
              STATE
                OF FLORIDA

            	 
	
              COUNTY
                OF HILLSBOROUGH

            	 

    

    

    The
      foregoing instrument was
      acknowledged before me this ___ day of August, 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)

            

    

    

    

    ATTACHMENTS:

    Exhibit
      "A" - Borrowing Base
      Certificate

    Exhibit
      "B" - Litigation
      Notice

    

    

     

     

     

    
 

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    

    EXHIBIT
      "A"

    BORROWING
      BASE CERTIFICATE

    

    

    

    FIFTH
      THIRD BANK

    201
      East
      Kennedy Blvd., Suite 1800

    Tampa,
      Florida 33602

    

    Pursuant
      to the Revolving Bridge Loan and Security Agreement, Borrower hereby certifies,
      as of the above date, the following:

    

    
      	
              (A)

            	
              Aggregate
                Amount of Accounts Receivable under

            	 	 
	 	
              Contract

            	 	
              $   ___________

            
	 	 	 	 
	
              (B)

            	
              Less:
                Ineligibles

            	 	 
	 	 	 	 
	 	
              Accounts
                Otherwise Encumbered

            	 	 
	 	
              (other
                than by Bank)

            	
              $   ___________

            	 
	 	
              Disputed
                Accounts

            	
              $   ___________

            	 
	 	
              Total
                Ineligible

            	
              $   ___________

            	 
	 	 	 	 
	
              (C)

            	
              Net
                Amount of Eligible Receivables (A) Less (B)

            	 	
              $   ___________

            
	 	 	 	 
	
              (D)

            	
              80%
                of (C) (CURRENT BORROWING BASE)

            	 	
              $   ___________

            
	 	 	 	 
	
              (E)

            	
              Aggregate
                unpaid principal

            	 	
              $   ___________

            
	 	
              Owed
                to Bank is (will not exceed maximum

            	 	 
	 	
              loan
                limit or (D) above)

            	 	 
	 	 	 	 
	
              (F)

            	
              Availability
                (D) Less (E)

            	 	
              $   ___________

            
	 	
              Not
                to exceed the maximum loan limit of $5,000,000.00

            	 	 

    

    

    The
      undersigned hereby certifies, represents, and warrants to FIFTH THIRD BANK
      (the
      "Bank") as follows:

    

    1.           All
      the representations and warranties contained in the Revolving Bridge 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 Revolving
      Bridge Loan and Security Agreement or any other related document.

     

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    3.           The
      description of Eligible Receivables and the values assigned thereto are true
      and
      correct in all material respects (see attached accounts receivable
      aging).  We are legal owners of the accounts receivable as identified
      above.

    

    4.           The
      aggregate unpaid principal balance of the Loan does not exceed the lesser of
      the
      $5,000,000.00 Commitment or the 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 Revolving Bridge
      Loan and Security Agreement between Bank and Borrower dated August ___,
      2007.

    

    
      	 	
              COVENANT

            	
              ACTUAL

            	
              COMPLIANCE

            
	 	 	 	 
	
              1.

            	
              Maintain
                a Consolidated Debt Service

            	
              _____________

            	
              _____________

            
	 	
              Coverage
                Ratio of not less than 1.25 to 1.00

            	 	 
	 	
              "Consolidated
                Debt Service Coverage Ratio" is:

            	 	 
	 	
              (1)
                (A) Net Income of Borrower and Guarantor,

            	 	 
	 	
              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 (in each case, measured

            	 	 
	 	
              based
                upon financials of Borrower and Guarantor)

            	 	 
	 	 	 	 
	 	 	 	 
	
              2.

            	
              Maintain
                a Consolidated Debt to

            	
              _____________

            	
              ________________

            
	 	
              Tangible
                Net Worth Ratio of Not More than

            	 	 
	 	
              2.75
                to 1.00

            	 	 
	 	
              "Consolidated
                Debt to Tangible Net Worth

            	 	 
	 	
              Ratio"
                is:

            	 	 
	 	
               (1)
                (A) Total Liabilities of Borrower and Guarantor,

            	 	 
	 	
              minus
                (B) Subordinated Debt,

            	 	 
	 	
              divided
                by (2) (A) Net Worth,

            	 	 
	 	
              plus
                (B) Subordinated Debt,

            	 	 
	 	
              minus
                (C) Intangibles,

            	 	 
	 	
              minus
                (D) Related Party Receivables

            	 	 
	 	
              (in
                each case, measured based upon

            	 	 
	 	
              financials
                of Borrower and Guarantor)

            	 	 
	 	 	 	 

    

    [execution
      on following page]

     

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    

    
      	
              By:____________________________

            	
              By:
                ___________________________

            
	 	 
	
              Its:    __________________

            	
              Its:    __________________

            
	 	 
	
              Date:________________,
                200___

            	
              Date:________________,
                200___

            

    

    

    

    

    

    

    

    

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    
 

    

    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.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
         

      

      
        24

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}]]