First Amendment To Earnout Agreement

FIRST AMENDMENT TO EARNOUT AGREEMENT







This First Amendment dated November 19, 2007 (the " Amendment "), amends the Earnout Agreement dated as of January 18, 2006, by and between Joel Stephen Logan, II, Charles L. Murphree, Jr., John Steven Lawler, James David Shaw, William Joseph Aycock, Jr., Jerry Ray Cooper, Jr., Timothy Wayne Gann, and Jimmy Ray Hawkins (individually, a " Seller " and collectively, the " Sellers "), Deer Valley Homebuilders, Inc., an Alabama corporation (" DVHB "), and Deer Valley Corporation, a Florida corporation (" Deer Valley "), as successor to DeerValley Acquisitions Corp., a Florida corporation (the " Earnout Agreement ").



RECITALS



A. Pursuant to the Common Stock Purchase Agreement dated November 1, 2005 (the " Purchase Agreement "), Sellers sold 100% of the issued and outstanding capital stock of DVHB to Deer Valley.



B. The Purchase Agreement provided that a portion of the Purchase Price (as defined in the Purchase Agreement) was to be calculated and paid as an earnout based upon the net income before taxes of DVHB.



C. Pursuant to the Earnout Agreement, the Sellers earned for the fourth quarter of 2005 and for the twelve month period ending December 31, 2006 an aggregate Annual Price Adjustment of $2,464,550, of which $1,232,275 was distributed to the Sellers in accordance with the terms of the Earnout Agreement, and $1,232,275 was recorded as a liability to the PATA and remains undistributed to the Sellers (the " 2006 Undistributed PATA Accrual ").



D. Pursuant to the Earnout Agreement, Sellers, DVHB, and Parent Company anticipate that the Annual Price Adjustment for the Earnout Year ending December 31, 2007 will equal approximately $1,535,450 (the " 2007 Estimated PATA Accrual "), of which $767,725 will be available for distribution to the Sellers pursuant to the terms of the Earnout Agreement, and $767,725 will be recorded as an additional liability, increasing the PATA, and will remain undistributed to the Sellers.



E. Sellers, DVHB, and Deer Valley wish to amend the Earnout Agreement to, among other matters, (a) provide for early release of $2,767,725, comprised of the 2006 Undistributed PATA Accrual and the 2007 Estimated PATA Accrual, in exchange for (b) the Sellers agreeing to accept, in lieu of cash, common stock of Deer Valley (" Common Stock ") for any remaining Annual Price Adjustments accrued after the Earnout Year ending December 31, 2007, subject to the price guarantee described in Section 1.5 below and restrictions provided for in Sections 1.3, 1.4 and 1.6 below.



F. All capitalized terms not otherwise defined herein have the meaning ascribed to them in the Earnout Agreement.



NOW, THEREFORE, in consideration of the premises and of the respective covenants and provisions herein contained, each Seller, DVHB, and Deer Valley agree as follows:









1. Restated Article I . Article I of the Earnout Agreement is hereby deleted in its entirety and replaced with the following:



ARTICLE I.

PRICE ADJUSTMENT



1.1 Release of Deferred Earnout Payments . No later than December 31, 2007, Deer Valley shall make a $2,767,725 cash payment to the Sellers, comprised of the 2007 Estimated PATA Accrual and the 2006 Undistributed PATA Accrual.



1.2 S hares Deposits . No later than December 10, 2007, Deer Valley shall issue to the Sellers, for deposit into escrow with Bush Ross, P.A. (the " Escrow Agent "), 2,000,000 shares of Common Stock to be held and released pursuant to Sections 1.4 and 1.6 below (the " Escrowed Shares "). Contemporaneous with entering into this Amendment, the parties shall enter into an Escrow Agreement with the Escrow Agent. Prior to vesting pursuant to Section 1.3 below, the Escrowed Shares may be voted by a majority of the Board of Directors. Once Escrowed Shares vest, the Sellers may vote such Vested Shares.



1.3 Annual Price Adjustment . For each Earnout Year ending after December 31, 2007, the Sellers shall be entitled to a price adjus ...