Document:

Exhibit
      10.27.5

    [First
      South Farm Credit Letterhead]

    

    March
      27,
      2008

    

    Mr.
      Darrell Dubroc, President

    Vanguard
      Synfuels, L.L.C.

    429
      Murray Street Suite 700

    Alexandria,
      Louisiana 71301

    

    Dear
      Mr.
      Dubroc:

    

    As
      you
      are aware, a Loan Agreement governs the lending relationship between First
      South
      Farm Credit and Vanguard Synfuels, LLC. During our review of the financial
      statements for Vanguard

    Synfuels,
      LLC for the period ending 12/31/07, we discovered that the company is not in
      compliance with the Working Capital Covenant of the financial covenants
      contained in the Loan Agreement. This letter is intended to act as a waiver
      of
      the non-compliance as specifically set forth below.

    

    The
      undersigned hereby waives the Company’s current non-compliance with the Working
      Capital covenant of the Loan Agreement, which specifically stated that the
      Company shall have at the end of FYE l2/31/07 Working Capital of not less than
      $500,000. At l2/31/2007, the Company reported a Working Capital position of
      $418,217. If you foresee that the Company may not be able to comply with this
      requirement, please contact me so we can discuss possible options.

    

    Vanguard
      represents to First South that, after giving effect to the waiver provided
      above, no other Event of Default shall have occurred and be continuing on the
      date hereof, nor shall result from the consummation of the transactions
      contemplated herein. In addition, the Loan Agreement, as amended, and each
      of
      the other Loan Documents shall otherwise remain in full force and effect in
      accordance with their respective terms. Except as specifically set forth herein,
      this non-compliance letter shall not constitute or be deemed or construed as
      a
      cure of any other existing defaults under the Loan Agreement.

    

    Sincerely,

    

    /s/
      Timothy C. Dupuy

    

    Timothy
      C. Dupuy

    Division
      Vice PresidentEXHIBIT
      10.10

    

    REVOLVING
      LINE OF CREDIT LOAN AND SECURITY AGREEMENT

    

    This
      Revolving Line of Credit Loan and Security Agreement (the “Security Agreement”)
      is made and entered into as of the 6th day of September, 2005, by and between
      ACTION
      PRODUCTS INTERNATIONAL, INC.,
      a
      Florida corporation (the “Borrower”), whose mailing address for purpose of
      notice is 1101 North Keller Road, Suite E, Orlando, Florida, 32810, and
AMSOUTH
      BANK,
      a bank
      organized under the laws of the State of Alabama (the “Lender”), whose mailing
      address for purpose of notice is 111 North Orange Avenue, Suite 1585, Orlando,
      Florida, 32801.

    

    W
      I T N E S S E T H :

    

    WHEREAS,
      the
      Borrower desires to borrow and obtain from the Lender a line of credit loan,
      the
      maximum amount of which shall be limited to the lesser of Three Million and
      00/100 Dollars ($3,000,000.00) or the maximum advance allowed per the borrowing
      base agreement defined in Section 5(b) of this Security Agreement (the “Loan”),
      subject to Section 3(c) below; and 

     

    WHEREAS,
      the
      Lender is willing to make the Loan to the Borrower so long as the Borrower
      grants the Lender a security interest in certain Collateral described herein;
      and

    

    WHEREAS,
      the
      Lender is willing to grant such Loan upon the terms and conditions set forth
      in
      this Security Agreement.

    

    NOW,
      THEREFORE,
      Borrower
      agrees with the Lender as follows:

    

    1. COLLATERAL.
      As used
      in this Security Agreement, the term “Collateral” shall mean and include any and
      all of the business assets of the Borrower, including but not limited to,
      accounts receivables, inventory, general intangibles, machinery, equipment
      and
      other personal property, whether now owned or hereafter acquired, subject to
      Section 4(ab).

     

    2. GRANT
      OF SECURITY INTEREST.
      To
      secure the payment of the amounts set forth in the Loan, the Borrower does
      hereby grant to the Lender a first-priority, perfected security interest in
      each
      and all of the Collateral. The Borrower also agrees to execute an agreement
      not
      to further encumber the real property located in Ocala, Florida.

    

    3. GENERAL
      TERMS.
      

    

    (a) Loan
      Documents. All
      documents referred to in this Security Agreement or which are otherwise executed
      in connection with the Loan (the “Loan Documents”), which must in form, detail
      and substance be satisfactory to the Lender, evidence the agreements of the
      Borrower and the Lender with respect to the Loan. The Borrower shall comply
      with
      all Loan Documents. 

    

    (b) Authority.
      As a
      condition to closing, the Lender shall receive and approve evidence satisfactory
      to the Lender and its counsel that Borrower has the power and authority to
      execute the Loan Documents. Such evidence shall include an opinion of the
      Borrower’s counsel.

    

    (c) Limitation
      of Loan. The
      Loan
      will initially be limited to the lesser of Two Million Five Hundred Thousand
      and
      00/100 Dollars ($2,500,000.00) or the maximum advance allowed pursuant to the
      borrowing base agreement defined in Section 5(b) until the Borrower posts two
      (2) consecutive, profitable quarters, at which time the full $3,000,000.00
      will
      be available, subject to the borrowing base agreement.  

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    4. REPRESENTATIONS,
      WARRANTIES AND COVENANTS.
      The
      Borrower does hereby represent and warrant to and covenant with the Lender
      as
      follows:

    

    (a) Use
      of Loan Proceeds.
      The
      proceeds loaned to Borrower in connection with the Loan shall be used
      exclusively by Borrower for working capital requirements.

    

    (b) Payment
      of Origination Fee.
      Borrower
      will pay to Lender an Origination Fee which is equal to .25% of the maximum
      principal amount of the Loan.

    

    (c) Fees
      and Expenses.
      The
      Borrower shall pay all costs and expenses incurred in connection with this
      Loan,
      including without limitation, appraisal fees, inspection fees, mortgage taxes,
      transfer taxes, surveys, legal and professional fees and expenses (including
      the
      fees and expenses of the Lender’s counsel), recording costs, title insurance and
      other insurance premiums.

    

    (d) Record
      Keeping in Accordance with GAAP. Borrower
      shall maintain its books and records in accordance with generally accepted
      accounting principles applied on a consistent basis.

    

    (e) Compliance
      with Laws and Regulatory Requirements. Borrower
      will observe, confirm and comply in every material respect with all laws,
      decisions, judgments, rules, regulations and orders of all governmental
      authorities relative to the construction and operation of the Improvements
      and
      the conduct of its business.

    

    (f) Cross-Default.
      All
      loans
      made by the Lender to the Borrower shall be cross-defaulted so that a default
      by
      the Borrower on any Loan shall constitute a default by the Borrower under this
      Loan and a default by the Borrower under this Loan shall constitute a default
      by
      Borrower under all loans from the Lender to the Borrower.

    

    (g) Other
      Debt/Contingencies.
      Borrower will not acquire/incur other debt (i.e., loans, purchase money loans,
      capital leases, etc.) or contingent liabilities without the Lender’s prior
      written consent, which may be withheld in its sole and absolute discretion,
      in
      excess of $100,000.00.

    

    (h) Limited
      Investments.
      The
      Borrower shall not have any investment in, or make any loans to acquire any
      interest in any other person, except for those investments or loans made within
      the normal course of business.

    

    (i) Insurance.
      The
      Borrower shall maintain casualty and business interruption insurance in such
      amounts and under such terms as the Lender determines in its sole and absolute
      discretion.

    

     (j)
      Basic
      Business.
      The
      Borrower shall not change its basic business.

    

    (k) No
      Change in Executive Management.
      No
      change in the executive management of the Borrower shall be permitted without
      the prior written consent of the Lender.

    

    (l) No
      Change in Ownership.
      Intentionally deleted.

    

    (m) Subordinated
      Debt.
      The
      Borrower shall not change or prepay any subordinated debt without the Lender’s
      prior written consent, which may be withheld in its sole and absolute
      discretion.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    (n) No
      Disposition of Assets.
      The
      Borrower shall not dispose of its assets other than in the ordinary course
      of
      business without the Lender’s prior written consent, which may be withheld in
      the Lender’s sole and absolute discretion.

    

    (o) No
      Loans or Advances.
      The
      Borrower shall not make any loans or advances to any parties without the
      Lender’s prior written consent, which may be withheld in the Lender’s sole and
      absolute discretion.

    

    (p) No
      Merger or Consolidation.
      No
      merger or consolidation of the Borrower or by the Borrower shall be permitted
      without the prior written consent of the Lender.

    

    (q) No
      Pledge of Assets.
      The
      Borrower shall not pledge any of its assets as security for any other loan
      without the Lender’s prior written consent, which may be withheld in the
      Lender’s sole and absolute discretion.

    

    (r) Title
      to Collateral.
      That
      the Borrower is the absolute owner of the Collateral free and clear of all
      liens
      and security interests whatsoever except for (i) the security interest granted
      the Lender by this Security Agreement; and (ii) the security interests disclosed
      to and approved by the Lender in writing.

     

    (s) Location
      of Collateral.
      That
      the records identifying the Collateral will be kept at the address for the
      Borrower as set forth in the Loan Documents evidencing the Loan, and the
      Borrower shall not remove the records from said location without the prior
      written consent of the Lender.

    

    (t) Inspection
      of Collateral.
      

     

    
      	 	 	 	
              (i)

            	
              That
                the Lender shall have the right at all times to inspect and examine
                the
                Collateral and to make schedules and listings
                thereof.

            

    

    

    
      	 	 	 	
              (ii)

            	
              That
                the Lender shall have the right at all times to inspect and examine
                the
                records of the Borrower and to make schedules and listings of the
                Collateral.

            

    

    

    (u) Sale
      or Encumbrances of Receivables.
      That the
      Borrower will not sell, assign or discount, or grant or permit any lien on
      any
      of its accounts or notes receivable that the Lender will loan against pursuant
      to Section 5(b), other than the discount of such notes in the ordinary course
      of
      business for collection purposes.

     

    (v) Third
      Party Claims Against Collateral.
      

    

    
      	 	 	
              (i)

            	
              That
                the Borrower will defend the Collateral against the claims and demands
                of
                all persons at any time claiming the same or any interest
                therein.

            

    

    

    
      	 	
              (ii)

            	
              That
                the Borrower will not permit any of the Collateral to be levied upon
                under
                legal process, permit anything to be done that may impair the value
                of any
                of the Collateral or the security intended to be afforded by this
                Security
                Agreement.

            

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (w) Security
      Interest in Collateral.
      

    

    
      	 	
              (i)

            	
              That
                by virtue of this Security Agreement and the perfection of said security
                interest in accordance with the provisions hereof, the Lender has
                a valid,
                enforceable, perfected and first security interest in the
                Collateral.

            

    

    

    
      	 	 	
              (ii)

            	
              That
                there is not now and will not be filed in the future in any jurisdiction
                any financing statement listing any person other than the Lender
                as a
                secured party covering any or all of the
                Collateral.

            

    

    

    (x) No
      Disposition of Collateral.
      That
      the Borrower will not sell, transfer, lease or otherwise dispose of any interest
      in the Collateral that the Lender will loan against, or offer to do so without
      the prior written consent of the Lender; provided, however, that as long as
      the
      Borrower is not in default under this Security Agreement, it may sell its
      inventory in the normal and ordinary course of its business, and replace its
      equipment due to depreciation and obsolescence with new equipment (which new
      equipment will be subject to the security interest granted
      hereunder).

    

    (y) Lender’s
      Option to Make Payments for Borrower.
      That at
      its option, the Lender may discharge taxes, liens, security interests or
      encumbrances at any time levied upon or placed on the Collateral and the
      Property, may pay for insurance on the Collateral and the Property, and may
      pay
      for the maintenance and preservation of the Collateral and the Property
      provided, however, the Lender shall be under no duty or obligation to do so.
      The
      Borrower agrees to immediately reimburse the Lender on demand for any such
      payments made or any expenses incurred by the Lender together with interest
      at
      the highest rate permitted by law.

    

    (z) Place
      of Business.
      That
      the Borrower's principal place of business is the address specified in the
      Loan
      Documents and it will promptly give the Lender written notice of any change
      thereof, provided, however, that said principal place of business may not be
      removed from the County where the Borrower is now located without the prior
      written consent of the Lender. The Borrower further represents and warrants
      that
      all of its business records, including those pertaining to all its accounts,
      shall be kept at the above stated address or at such other address as Borrower
      discloses to Lender. The Lender shall have the right at all times to review,
      examine and make abstracts from said business records.

    

    (aa) No
      Guaranties.
      The
      Borrower shall not guaranty or otherwise in any way become responsible for
      the
      indebtedness or obligations of any other person or entity.

    

    (ab) No
      Liens.
      The
      Borrower shall not sell, assign or discount, or grant or permit any lien on
      the
      Collateral except for:

    

    
      	
            	(i)	
              Liens
                in favor of the Lender;

            

    

    
      	
            	(ii)	
              Existing
                liens identified in the Borrower’s application for the  Loan;

            

    

    
      	
            	(iii)	
              Deposits
                under workmen’s compensation, unemployment  insurance
                and Social Security laws;

            

    

    
      	 	 	
              (iv)

            	
              Liens
                imposed by law, such as carriers’, warehousemen’s or mechanics’ and
                materialmen’s liens, incurred in good faith in the ordinary course of
                business and that are not delinquent or that are subject to Permitted
                Contests, as defined by Lender;

            

    

    
      	 	 	
              (v)

            	
              Any
                lien arising out of any litigation, legal proceeding or judgment
                that is
                subject to a Permitted Contest, and any pledges or deposits to secure,
                or
                in lieu of, any surety, stay or appeal bond with respect to any
                litigation, legal proceeding or
                judgment;

            

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    
      	 	 	
              (vi)

            	
              Liens
                for taxes, assessments or other governmental charges or levies that
                are
                not delinquent or that are subject to Permitted Contests;
                and

            

    

    
      	 	 	
              (vii)

            	
              Notwithstanding
                any restrictions in (iv) - (vi) above, liens created after the Loan
                closing to secure the acquisition cost of fixed assets for use in
                the
                ordinary course of business, provided that (A) any such lien is confined
                to the fixed assets so acquired, and (B) the indebtedness secured
                by such
                lien does not exceed the purchase price or fair market value, whichever
                is
                less, of the fixed assets so acquired at the time of their
                acquisition.

            

    

    

    (ac) Further
      Assurances.
      To the
      end that the agreements of the Borrower set forth herein and in the Loan
      Documents shall be effectively and fully performed and the intent and purpose
      of
      this Security Agreement fulfilled, Borrower agrees to, within a reasonable
      time,
      execute all other and further instruments reasonably required by Lender from
      time to time in order to carry out the provisions of this Security Agreement,
      or
      for the purpose of creating, perfecting, preserving and enforcing Lender’s
      security for the Loan. Borrower hereby irrevocably appoints the Lender as its
      attorney-in-fact to take all such action in the event Borrower fails to do
      so.

    

    (ad) Notice
      of Default. Borrower
      will deliver immediate written notice to Lender of any: (i) default under any
      of
      the Loan Documents; (ii) default under any agreement to which Borrower is a
      party; (iii) any event which has caused or may cause representations, warranties
      or other information delivered to Lender by Borrower in connection with the
      Loan
      to be or become untrue; and (iv) any material adverse change in Borrower’s
      business or financial condition.

    

    (ae) Payment
      of Indebtedness, Taxes, Etc.
      Borrower
      will (i) pay all of its material obligations; and (ii) pay and discharge or
      cause to be paid and discharged, promptly, all taxes, assessments and
      governmental charges or levies imposed upon Borrower or upon any of Borrower’s
      property, real, personal or mixed, or upon any part thereof, before the same
      shall become in default.

    

    (af) No
      Sale/Lease Back.
      The
      Borrower will not sell any of its property and lease it back for the same
      purpose without the Lender’s prior written consent, which may be withheld in its
      sole and absolute discretion.

    

    (ag) Banking
      Obligations.
      The
      Borrower shall maintain its primary deposit accounts with Lender during the
      term
      of the Loan, including any extensions and renewals.

    

    All
      of
      the foregoing representations, warranties and covenants shall be true and
      correct throughout the term of this Security Agreement and shall be fulfilled
      and maintained by the Borrower throughout the term hereof.

    

    5. FINANCIAL
      OBLIGATIONS. 

    

    
      	 	
              (a)

            	
              Financial
                Covenants.
                Borrower shall comply with the following financial obligations during
                the
                term of the Loan:

            

    

    

    (ii) Leverage
      Ratio. Borrower
      shall not permit its ratio of Total Liabilities to Tangible Net Worth to be
      greater than 1.50 to 1.00.

    

    (iii) Debt
      Service Coverage Ratio. Borrower
      shall not permit its ratio of Net Income Available for Debt Service for any
      fiscal year to Interest Expense and Principal Maturities for such fiscal year
      to
      be less than 1.25 to 1.00.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    For
      the
      purposes set forth in this Security Agreement, the financial terms used herein
      shall have the meanings and shall be calculated in the manner set forth on
      Exhibit “A” attached hereto and by this reference made a part
      hereof.

    

    
      	 	
              (b)

            	
              Borrowing
                Base Requirements.
                The amount available to be borrowed under the Note and this Security
                Agreement shall be limited based on the following requirements:
                

            

    

    

    Accounts
      Receivable.
      The
      total amount available to be borrowed under the Note and this Security Agreement
      against the accounts receivable of the Borrower shall not exceed eighty five
      percent (85%) of eligible accounts receivable. For purposes of this calculation,
      eligible accounts receivable does
      not include any
      amounts withheld as retainage or any
      accounts receivable that are (i) in excess of ninety (90) days from the date
      due, (ii) international, or (iii) that are subject to the cross-aging and
      concentration rules set forth below. A twenty five percent (25%) cross-aging
      rule applies for purposes of calculating the amount that can be loaned to
      Borrower against certain accounts receivable. Specifically, if twenty five
      (25%)
      of the accounts receivable due from one customer are outstanding for more than
      ninety (90) days, then the entire accounts receivable due from that customer
      will be declared ineligible. A twenty percent (20%) concentration rule also
      applies for purposes of calculating the amount that can be loaned to Borrower
      against certain accounts receivable due from any one customer of Borrower.
      Specifically, if more than twenty (20%) of the Borrower’s outstanding accounts
      receivable are due from any one customer of the Borrower, the accounts
      receivable due from that customer that are in excess of twenty percent (20%)
      of
      Borrower’s total accounts receivable will be declared ineligible. 

    

    Inventory.
      The
      total amount available to be borrowed under the Note and this Security Agreement
      against the inventory of the Borrower shall not exceed fifty percent (50%)
      of
      the cost of Borrower’s eligible finished good inventory less the obsolescence
      reserve. Additionally, Inventory in Transit, as defined by the Lender, will
      be
      eligible for borrowing base calculations.

    

    
      	 	
              (c)

            	
              Financial
                Reporting Requirements. The
                following financial items must be submitted to the Lender which relate
                to
                the Borrower:

            

    

    

    (i) Quarterly
      Financial Statements reviewed by an accounting firm acceptable to the
      Lender.

    

    (ii) Annual
      financial statements audited by an accounting firm acceptable to the
      Lender.

    

    (iii) The
      Borrower shall submit to the Lender on a monthly basis the following items
      in
      support of its borrowing requirements:

    

    
      	
            	(a)	
              a
                Borrowing Base Agreement;

            

    

    

    
      	 	 	 	
              (b)

            	
              an
                Accounts Receivable Aging Report;
                and

            

    

    

    
      	 	 	 	
              (c)

            	
              Inventory
                report.

            

    

    

    The
      Borrower shall also provide to the Lender such other documents as may be
      determined by Lender to be necessary to support the validity of these documents.
      Loan disbursements under the Note shall be based on the calculations contained
      in the Borrowing Base Agreement submitted to Lender.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (iv) Any
      other
      information, reports, or statements Lender may request, periodically, in order
      to assess the current financial condition of the Borrower.

    

    All
      such
      financial information must be provided in a form acceptable to Lender and be
      certified in favor of Lender if so requested. Financial statements on
      individuals must be on the Lender approved financial statement form and be
      accompanied by a properly executed Lender attestation form.

    

    6. DEFAULT.
      The
      occurrence of one or more of the following events shall constitute a default
      in
      this Security Agreement:

    

    (a) The
      failure or omission of the Borrower to pay, within fifteen (15) days of the
      due
      date, any amount under the Loan, including not limited to, the failure to pay
      any payment of interest and/or principal of the note evidencing the
      Loan.

    

    (b) The
      failure of the Borrower to keep, observe or perform any term or condition of
      the
      Loan Documents, including this Security Agreement, required thereunder to be
      kept, observed or performed by the Borrower, if such failure to perform
      continues
      for a
      period of ten (10) days after written notice thereof from Lender to
      Borrower.

    

    (c) The
      making or furnishing by the Borrower to the Lender of any representation,
      warranty or covenant in connection with this Security Agreement which is
      false.

    

    (d)
      The
      Borrower defaults under this Security Agreement.

    

    (e) If
      Borrower shall commence a new case, proceeding or other action under any
      existing or future law of any jurisdiction, domestic or foreign, relating to
      bankruptcy, insolvency or relief from debtors, seeking to have an order for
      relief entered with respect to it, or seeking to adjudicate it a bankrupt or
      insolvent entity, or seeking reorganization, adjustment, liquidation,
      dissolution or other relief with respect to it or its debts, or seeking
      appointment of a receiver, trustee, custodian or other similar official for
      it
      or for all or any substantial part of its assets, Borrower shall make a general
      assignment to the benefit of creditors or there shall be commenced against
      Borrower any case, proceeding or other action of a nature referred to
      above.

    

    A
      default
      under this Security Agreement shall be and constitute a default under the terms
      and conditions of all promissory notes then existing and executed by the
      Borrower in favor of the Lender and shall also be and constitute a default
      under
      all promissory notes and other agreements then existing and which evidence
      in
      any way any Liability to the Lender including, but not limited to, any other
      loan documents or loan agreement between the Borrower and the
      Lender.

     

    7. RIGHTS
      UPON DEFAULT.
      Upon the
      occurrence of any default under this Security Agreement, the Lender shall have
      and may exercise any or all of the following rights:

    

    (a) To
      declare the Loan, or any of them (notwithstanding any provision thereof),
      immediately due and payable without demand or notice of any kind and the same
      thereupon shall immediately become due and payable without demand or notice,
      and
      from and after the date of default the amount due on the Loan shall from and
      thereafter bear interest at the maximum rate of interest permitted from time
      to
      time under Florida law.

     

    (b) To
      exercise from time to time any and all rights and remedies of a secured party
      under the Uniform Commercial Code and any and all rights and remedies available
      to it under any other applicable law.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (c) To
      request the Borrower to assemble at its expense the Collateral and make it
      available to the Lender at a convenient place acceptable to the Lender and,
      upon
      making of said request, the Borrower shall promptly comply with said
      request.

    

    (d) To
      seize
      and take possession of the Collateral and dispose of same under the UCC and,
      in
      such case, if any notice is required under applicable law the giving of five
      (5)
      days written notice to the Borrower at its address set forth herein shall
      constitute reasonable notice to the Borrower provided, however, the Lender
      shall
      not by virtue of this Security Agreement be obligated to give any such notice
      to
      the Borrower. If the Borrower wishes to change its address at which said notice
      is to be given, the burden shall be upon the Borrower to so notify the Lender
      in
      writing and unless and until said notice is given, all notices sent to the
      Borrower at the address set forth herein shall be effective and valid notice
      to
      the Borrower. In the event of default, the Borrower expressly authorizes the
      Lender to enter upon all property owned by the Borrower for the purpose of
      taking into custody and seizing any and all of the Collateral. In the event
      of
      repossession of any or all of the Collateral, the Borrower authorizes the Lender
      to take into his possession any personal property found in or on the Collateral
      and to hold the same until claimed by the Borrower and in the event such
      personal property is not claimed within a reasonable time (not greater than
      ten
      (10) days) by the Borrower, the Lender may dispose of such other personal
      property in the same manner as the Collateral is disposed of and to apply the
      proceeds resulting therefrom to the Loan.

    

    (e) To
      immediately offset against the Loan all other monies due or to become due the
      Borrower from the Lender, whether said monies are due or are to become due
      under
      this Security Agreement, or any other relationship whatsoever between the
      Borrower and the Lender.

    

    All
      proceeds resulting from the disposition of any of the Collateral or the exercise
      by the Lender of any of its rights under this Security Agreement shall be
      applied without any marshaling of assets (i) first to the expenses of retaking
      and preparing the Collateral for sale including expenses of sale, (ii) next
      to
      other costs and attorneys' fees incurred by the Lender in exercising its rights
      under this Security Agreement, (iii) next to the payment of interest and/or
      principal due on the Loan, as the Lender may determine, and (iv) finally to
      any
      other moneys due the Lender from the Borrower. Should any deficiency result
      after disposition of the Collateral, the obligors under the Loan shall remain
      liable for any deficiency.

    

    8. PERFECTION.
      In order
      to perfect the security interest in the Collateral granted to the Lender by
      the
      Borrower hereunder, the Borrower agrees to execute and deliver to the Lender
      any
      and all documents which are, in the opinion of the Lender or its counsel,
      necessary so as to perfect said security interest including, but not limited
      to,
      execution of appropriate UCC-1 or UCC-3 financing statements to be filed with
      the Florida Secretary of State and with the appropriate filing officer in such
      other jurisdictions where any of the Collateral is or may be
      located.

    

    The
      Borrower further authorizes the Lender to file, in jurisdictions where this
      authorization will be given effect, financing statements signed only by the
      Lender describing the Collateral in the same manner as it is described herein,
      and, from time to time, at the request of the Lender, the Borrower will execute
      one or more financing statements and such other documents (and pay the cost
      of
      filing and recording same in all public offices deemed necessary or desirable
      by
      the Lender) and do such other acts and things, all as the Lender may request
      to
      establish and maintain a valid, enforceable and perfected security interest
      in
      the Collateral (free of all other liens and claims whatsoever to secure payment
      of the Loan including, without limitation, the deposit with the Lender of any
      certificate of title applicable to any of the Collateral and notation thereon
      of
      the security interest hereunder along with any necessary documents including
      notices of liens. At the request of the Lender, this Security Agreement executed
      by the Borrower, or a photocopy thereof, shall be deemed to be a financing
      statement authorized to be filed in such jurisdictions where such filing will
      be
      given effect.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    The
      Borrower shall pay all costs of filing any financing statement and all other
      costs of perfecting the security interest granted hereunder.

    

    9. OTHER DOCUMENTS.
      During
      the term of this Security Agreement, the Borrower agrees to execute any and
      all
      other documents which are, in the opinion of the Lender or its counsel,
      necessary to carry out the terms and conditions of this Security Agreement
      including the granting of a perfected, valid and enforceable security interest
      in the Collateral to the Lender.

    

    10. NOTICE.
      All
      notices under this Security Agreement shall be in writing and along with all
      other documents permitted or required to be given under this Security Agreement
      shall be deemed to have been given, (i) in the case of delivery, when delivered
      to the address set forth in the loan documents and addressed to the party
      involved, (ii) in the case of mailing, on the fifth (5th) business day after
      said document has been deposited in the United States Mails, postage prepaid,
      and sent by certified or registered mail and addressed to the other party at
      the
      address as set forth in the preamble to this Security Agreement, and (iii)
      in
      all other cases when the same has been actually received by the other party.
      Either party hereto may change the address at which said notices are to be
      sent
      by the giving of notice of such change to the other party as set forth herein.
      In the event the Lender is a corporation, all notices sent to the Lender shall
      not be deemed to have been given unless they are given or sent to the attention
      of the loan officer in charge of the account of the Borrower and in the event
      there is no such loan officer then to the President of the Lender. Notices
      hereunder may be sent by overnight mail in which event clause (iii) above will
      apply.

    

    11. TERM.
      This
      Security Agreement and the rights and privileges granted hereunder to the Lender
      shall continue and remain in full force and effect until (i) the Loan has been
      paid in full to the Lender, (ii) the Borrower has no further right to obtain
      any
      advances or other disbursements from the Lender, (iii) all other obligations
      to
      the Lender from the Borrower have been paid, and (iv) this Security Agreement
      has been marked “Cancelled” and returned to the Borrower. At such time as all of
      the foregoing conditions have been met, the Lender shall execute a termination
      statement in regard to any financing statement that solely relates to the
      Collateral. Until all the conditions set forth above regarding the term of
      this
      Security Agreement have been met, this Security Agreement shall continue to
      secure all Liabilities and, at its option, the Lender may retain this Security
      Agreement and maintain the validity of any security interest granted hereunder
      and financing statements relating thereto for a period not to exceed one hundred
      twenty (120) days after all Loan have been paid in full and, in such event,
      if
      no obligor has filed and there has not been filed against any obligor any
      bankruptcy proceeding under the Bankruptcy Code during said period, the Lender
      shall then cancel this Security Agreement and terminate any financing statements
      asset forth herein.

    

    12. TIME.
      Time is
      of the essence of this Security Agreement.

    

    13. WAIVER.
      No
      waiver by the Lender of any default shall operate as a waiver of any other
      default or of the same default on a future occasion. No delay or omission on
      the
      part of the Lender in exercising any right or remedy shall operate as a waiver
      thereof, and no single or partial exercise by the Lender of any right or remedy
      shall include any other or further exercise thereof or the exercise of any
      other
      right or remedy. The Borrower further waives all notices whatsoever that the
      Borrower may be entitled to under any contract or statute including presentment,
      notice of dishonor, protest or notice of protest.

    

    14. MISCELLANEOUS.
      The
      provisions of this Security Agreement are cumulative and are in addition to
      the
      provisions of any note secured by this Security Agreement and the Lender shall
      have all the benefits, rights and remedies on any note secured hereby. If more
      than one party shall execute this Security Agreement, the term “Borrower” will
      mean all parties signing this Security Agreement and each of them, and all
      such
      parties shall be jointly and severally obligated and liable hereunder. The
      singular pronoun, when used herein, shall include masculine and feminine. All
      rights of Lender hereunder shall inure to the benefits of its successors and
      assigns and all duties of benefits of its successors and assigns and all duties
      of obligations of the Borrower hereunder shall bind the heirs, executors,
      administrators, successors and assigns of each Borrower.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    15. ANNUAL
      FEE.
      N/A.

    

    16. LETTERS
      OF CREDIT AND RELATED FEES.
      N/A.

    

    17. GOVERNING LAW.
      This
      Security Agreement has been delivered in the State of Florida and shall be
      construed in accordance with and governed by the laws of Florida, without giving
      effect to any conflicts of laws principles. 

    

    18. SEVERABILITY.
      Whenever
      possible, each provision of this Security Agreement shall be interpreted in
      such
      a manner as to be effective and valid under applicable law, but if any provision
      of this Security Agreement shall be prohibited by or invalid under applicable
      law, such provision shall be ineffective to the extent of such prohibition
      or
      invalidity, without invalidating the remainder of such provision or the
      remaining provisions of this Security Agreement provided, however, if such
      invalidity adversely affects the substantial rights of the Lender under this
      Security Agreement, all the Liability shall immediately become due and payable
      in full.

    

    19. DOCUMENTARY STAMPS.
      The
      Borrower shall pay all documentary stamps, intangible tax, as well as all other
      taxes and penalties due on any notes evidencing any of the Liabilities and
      the
      Borrower further agrees to indemnify and hold Lender harmless from and against
      any and all such documentary stamps, intangible taxes and
      penalties.

    

    20. NO THIRD PARTY BENEFICIARIES.
      It is
      the intent and understanding of the Borrower and the Lender that this Security
      Agreement is solely between them and for their benefit and, accordingly, no
      party other than the Borrower and the Lender shall have any rights or privileges
      under this Security Agreement either as third party beneficiaries or
      otherwise.

    

    21. COSTS AND ATTORNEYS FEES.
      In the
      event of any default under this Security Agreement or the exercise by the Lender
      of any of its rights hereunder, the Borrower shall promptly pay to the Lender
      all such costs and expenses, including attorneys fees incurred by the Lender.
      All such costs and expenses, including attorneys’ fees, shall further be deemed
      to be within the term “Liability” and secured by the Collateral. As used in this
      Security Agreement, costs and attorneys fees, shall mean costs and attorneys
      fees incurred in any suit, including any appeal therefrom in any bankruptcy
      proceeding. Thus, any said expenses incurred by the Lender in asserting or
      protecting any of its rights under this Security Agreement or any other Loan
      Document shall be within the term “Loan” and secured by the
      Collateral.

    

    22. CONSTRUCTION OF SECURITY AGREEMENT.
      In the
      event it becomes necessary to interpret or construe the terms and conditions
      of
      this Security Agreement, no preference or weight shall be given to who prepared
      or drafted this Security Agreement, as it is the understanding of the parties
      hereto that both parties had a full right to negotiate and discuss the
      preparation and drafting of this Security Agreement.

    

    23. COMPLETE AGREEMENT.
      This
      Security Agreement constitutes the complete agreement between the parties in
      regard to the matters set forth herein and this Security Agreement may not
      be
      altered, amended or otherwise modified except by a writing signed by the person
      to be charged by said alteration, amendment or modification. This requirement
      that this Security Agreement may not be altered, amended or modified except
      by a
      writing, may not itself be waived except by a writing.

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    24.
      WAIVER
      OF JURY TRIAL.
      THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, AFTER CAREFUL
      CONSIDERATION AND AN OPPORTUNITY TO SEEK LEGAL ADVICE, WAIVES ITS RIGHT TO
      HAVE
      A TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF OR IN ANY WAY
      CONNECTED WITH ANY OF THE PROVISIONS OF THIS SECURITY AGREEMENT, THE NOTE,
      OR
      ANY OTHER DOCUMENTS EXECUTED IN CONJUNCTION WITH THE LOAN SECURED BY THIS
      SECURITY AGREEMENT.

    

    25. ARBITRATION.
      Any
      controversy or claim between or among the parties hereto including but not
      limited to those arising out of or relating to this Security Agreement, the
      Note, or any related instruments, agreements or documents including any claim
      based on or arising from an alleged tort, shall be determined by binding
      arbitration in accordance with the Federal Arbitration Act (or if not
      applicable, the applicable state law), and the rules of practice and procedure
      for the arbitration of commercial disputes of Judicial Arbitration and Mediation
      Services, Inc. (J.A.M.S.) as supplemented by any special rules set forth in
      any
      of the Agreements. Judgment upon any arbitration award may be entered in any
      court having jurisdiction. Any party to this Security Agreement may bring an
      action, including a summary or expedited proceeding, to compel arbitration
      of
      any controversy or claim to which this Security Agreement applies in any court
      having jurisdiction over such action. The Payee may elect to foreclose the
      Security Agreement or any other collateral in a judicial proceeding and elect
      to
      have any other disputes between the Borrower and the Payee resolved by binding
      arbitration including any counterclaims of the Borrower.

    

    26. INDEMNIFICATION.
      The
      Borrower agrees to indemnify and hold the Lender harmless from and against
      any
      damages, claims, actions, causes of action, lawsuits, costs, expenses,
      liability, penalties and interest (including attorneys’ fees and expenses)
      directly or indirectly resulting from, occurring in connection with or arising
      out of (a) any inaccurate representation or warranty made by or on behalf of
      the
      Borrower to the Lender hereunder or in any of the Loan Documents; (b) any breach
      by the Borrower of any of its obligations hereunder or otherwise in connection
      with the Loan, or (c) the Loan and the transactions contemplated
      hereby.

     

    (EXECUTION
      PAGE FOLLOWS)

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    IN WITNESS WHEREOF,
      the
      Borrower has executed this Security Agreement as of the date and year first
      above written.

    

    
      	
              Signed,
                sealed and delivered 

            	 	
              ACTION
                PRODUCTS INTERNATIONAL,

            
	
              in
                the presence of:

            	 	
              a
                Florida corporation

            
	 	 	 	 
	
              /s/
                Doug Prevett

            	 	
              By:

            	
              /s/
                John R. Oliver

            
	
              (Signature
                of Witness)

            	 	 John
              R. Oliver, as its Chief Financial Officer
	 	 	 	 
	
              /s/
                Mary E. Ramos

            	 	 As
              to the “Borrower”
	
              (Signature
                of Witness)

            	 	 	 
	 	 	 	 
	 	 	
              AMSOUTH
                BANK

            
	 	 	 	 
	
              /s/
                John R. Oliver

            	 	
              By:

            	
              /s/
                Douglas A. Prevett

            
	
              (Signature
                of Witness)

            	 	 	
              Douglas
                A. Prevett, as its Vice President

            
	 	 	 	 
	
              /s/
                Mary E. Ramos

            	 	 As
              to the “Lender”
	
              (Signature
                of Witness)

            	 	 	 

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
        “A”

      

      SPECIAL
        FINANCIAL TERMS

      

      Financial
        terms consistent with Generally Accepted Accounting Principles will prevail
        in
        all cases.

      

      (a) Debt
        of any
        person means (1) all indebtedness, whether or not represented by bonds,
        debentures, notes or other securities, for the repayment of borrowed money,
        (2) all deferred indebtedness for the payment of the purchase price of
        property or assets purchased, (3) all capitalized lease obligations,
        (4) all indebtedness secured by any Lien on any property of such person,
        whether or not indebtedness secured thereby has been assumed, (5) all
        obligations with respect to any conditional sale contract or title retention
        agreement, (6) all indebtedness and obligations arising under acceptance
        facilities or in connection with surety or similar bonds, and the outstanding
        amount of all letters of credit issued for the account of such person, and
        (7) all obligations with respect to interest rate swap
        agreements.

      

      (b) Interest
        Expense
        means
        interest payable on Debt during the period in question.

      

      (c) Liabilities
        means
        all Debt and all other items (including taxes accrued as estimated) that,
        in
        accordance with generally accepted accounting principles, would be included
        in
        determining total liabilities as shown on the liabilities side of a balance
        sheet.

      

      (d) Net
        Income Available for Debt Service
        for any
        period means net income (or the net deficit, if expenses and charges exceed
        revenues and other proper income credits) for such period, plus amounts that
        have been deducted for (1) depreciation, (2) amortization, 3) other
        non-cash charges and (4) Interest Expense in determining net income for
        such period.

      

      (e) Principal
        Maturities
        means
        principal maturing or coming due on Debt during the period in
        question.

      

      (f) Tangible
        Net Worth
        means
        the sum of the amounts set forth on the balance sheet as shareholders' equity
        (including the par or stated value of all outstanding capital stock, retained
        earnings, additional paid-in capital, capital surplus and earned surplus),
        less
        the sum of (1) any amount of any write-up of assets, (2) goodwill,
        (3) patents, trademarks, copyrights, leasehold improvements not recoverable
        at the expiration of a lease, and deferred charges (including unamortized
        debt,
        discount and expense, organization expenses, experimental and developmental
        expenses, but excluding prepaid expenses), (4) any amounts at which shares
        of capital stock of such person appear on the asset side of the balance sheet
        and (5) any amounts due from or owed by any shareholder or
        Affiliate.

      

      (g) Total
        Liabilities
        means
        all Debt and all other items (including taxes accrued as estimated) that,
        in
        accordance with generally accepted accounting principles, would be included
        in
        determining total liabilities as shown on the liabilities side of a balance
        sheet.

       

      
        
          
          

        

        
          13

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