8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 25, 2008

Action Products International, Inc.

(Exact name of registrant as specified in its charter)

Florida	000-13118	59-2095427
(State of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1101 N. Keller Road, Suite E

Orlando, Florida 32810

(Address of principal executive office, including zip code)

(407) 481-8007

(Telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement

On June 25, 2008, Action Products International, Inc. (the “Company”) and Presidential Financial Corporation (the “Lender”) entered into a Loan Agreement and Security Agreement dated as of June 25, 2008 (the “Loan Agreement”). The Loan Agreement provides the Company the ability to borrow up to $2 million at any time during the term of the Loan Agreement. The amount that the Company may have outstanding under the Loan Agreement at any time is the sum of 85% of the Company’s receivables approved by the Lender plus 50% of the Company’s inventory. The maximum amount of the inventory loan the Company may have outstanding against its inventory is the lesser of $600,000, or $700,000 from July 1 through September 30, and the loan amount outstanding against the Company’s receivables.

Borrowings under the Loan Agreement will bear interest at a rate equal to 1% over the prime rate as quoted in the Wall Street Journal adjusted upon each change in such prime rate. The Company shall also pay the Lender a monthly service charge of 0.6% of the average daily outstanding balance during the month. The Company shall also pay an annual facility fee equal to 1% of the $2 million maximum loan amount. The Lender may audit the Company’s records at the Company’s expense of $550 per day, up to a maximum amount of $8,000 per year.

The Loan Agreement renews annually each twelve months, unless the Company notifies the Lender of its intention to terminate at least 60 days before the end of such anniversary. If the Company pays the loan or otherwise terminates the Loan Agreement prior to each such anniversary date, whether voluntarily or by default, then the Company shall pay the Lender 1% of the $2 million maximum loan amount.

The loan is secured by substantially all of the Company’s assets, including a first priority $1.5 million mortgage on the Company’s warehouse in Ocala, Florida.

On June 30, 2008, the Company drew down $1,290,745 of the loan, the proceeds of which were used to pay in full the balance due Regions Bank (formally AmSouth) under the Loan and Security Agreement, as modified, between the Company and Regions Bank in the amount of $1,520,450.

The outstanding balance under the loan is evidenced by a Demand Secured Promissory Note and is due upon demand by the Lender. The Loan Agreement contains non-financial covenants including restrictions on the Company’s ability to obtain loans, incur liens, dispose of assets and merge with other entities. In addition, the Loan Agreement requires the Company provide the Lender with certain periodic financial information as well as access to the Company’s records.

The Loan Agreement, the Demand Secured Promissory Note, the Addendum to the Loan Agreement and the Demand Secured Promissory Note, and the Mortgage and Security Agreement are annexed hereto as Exhibits 10.1 through 10.4, inclusive, and are incorporated herein by reference.

Item 1.02 Termination of a Material Definitive Agreement

See Item 1.01 above for a description of the repayment of the Loan and Security Agreement, as modified, by and between the Company and Regions Bank.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

See Item 1.01 above for a description of the Loan Agreement and Security Agreement and related agreements by and between the Company and the Lender.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits:

Exhibit No.	Description
10.1	Loan Agreement and Security Agreement by and between Action Products International, Inc. and Presidential Financial Corporation dated as of June 25, 2008.
10.2	Demand Secured Promissory Note of Action Products International, Inc. to Presidential Financial Corporation dated as of June 25, 2008.
10.3	Addendum to Loan and Security Agreement dated as of June 25, 2008 and Demand Secured Promissory Note dated June 25, 2008 by and between Action Products International, Inc. and Presidential Financial Corporation dated as of June 25, 2008.
10.4	Mortgage and Security Agreement by and between Action Products International, Inc. and Presidential Financial Corporation dated as of June 25, 2008.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.

ACTION PRODUCTS INTERNATIONAL, INC.
By:	/s/ ROBERT L. BURROWS
	Robert L. Burrows
	Chief Financial Officer
Date:	July 1, 2008

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EX-10.1

Exhibit 10.1

LOAN AGREEMENT AND SECURITY AGREEMENT

Atlanta, Georgia	June 25, 2008
Action Products International, Inc.	59-2095427
Exact Name of Borrower)	(Taxpayer I.D. No.	)

Florida Corporation	F13942
Type & State of Borrower’s formation, e.g., corporation, LLC, partnership, etc.)	(Organization No.)

1101 N. Keller Road, Suite E	Orlando	Orange	FL 32810
(No. and Street Address)	(City)	(County)	(State)

The undersigned debtor (hereinafter referred to as “Borrower”), for good and valuable consideration, and to induce Presidential Financial Corporation (hereinafter referred to as “Lender”) to accept this agreement (“Agreement”) and to make the loans and advances described hereunder, hereby agrees as follows:

1. Request for Loan. From time to time Borrower may request, and Lender in its sole discretion may loan Borrower up to: (a) eighty-five percent (85%) of the amount of Approved Receivables (as hereinafter defined) submitted by Borrower to Lender; or (b) TWO MILLION AND NO/100 DOLLARS ($2,000,000.00), or such greater or lesser amount as Lender may from time to time establish.

Provided, however, that the total principal amount of such loans and advances to Borrower shall not exceed Borrower’s maximum line of credit extended from time to time by Lender and determined in Lender’s sole discretion. All loans and advances made by Lender hereunder shall be evidenced by a demand promissory note (hereinafter the “Note”) executed by Borrower and shall contain such terms as Lender shall require. “Approved Receivables” as used herein shall mean only such accounts, contract rights, chattel paper, instruments or general intangibles belonging to Borrower as from time to time shall be acceptable to Lender, in its sole judgment and discretion, in terms of quality and current status. “Value” as used herein shall mean the lower cost or market value of Inventory.

2. Grant of Security Interest. To secure the indebtedness evidenced by the Note together with any extensions or renewals thereof, in whole or in part, as well as all other indebtedness, obligations and liabilities of Borrower to Lender, now existing or hereafter incurred or arising whether direct, indirect or by way of assignment, whether joint or several, absolute or contingent, due or to become due and whether as principal, maker, endorser, surety, guarantor or otherwise, or which Lender may now or hereafter have, own or hold (the foregoing being hereinafter sometimes referred to collectively as the “Obligations”), Borrower does hereby grant to Lender a security interest in and security title to the following described property, whether now owned or existing or hereafter acquired or arising and wherever located:

(a) Receivables. All of Borrower’s accounts, accounts receivable, notes receivable, contract rights, drafts, general intangibles (including but not limited to, software and payment intangibles), instruments and chattel paper, whether tangible or electronic (all of the foregoing being hereinafter collectively referred to as the “Receivables”);

(b) Accounts and Securities. All of Borrower’s money, deposit accounts, letters of credit, letter of credit rights and investment property;

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(c) Supporting Obligations. All supporting obligations relating to any of the foregoing;

(d) Inventory. All of Borrower’s finished goods and inventory, packing and shipping supplies, all goods intended to be sold or used by Borrower or to be furnished by Borrower under contracts of service, including all raw materials, goods in process, finished goods, materials and supplies of every kind and nature, used or usable in connection with the manufacture, shipping, advertising, selling, leasing or furnishing of such goods, all documents evidencing or representing the same and all documents of title, all negotiable and non-negotiable warehouse receipts representing the same and all products, accounts and proceeds resulting from the sale or other disposition of the foregoing, that may be rejected, returned repossessed or stopped in transit and all other items, customarily classified as inventory (all of the foregoing being hereinafter collectively referred to as the “Inventory”);

(e) Furniture, Fixtures and Equipment. All of Borrower’s presently owned and hereafter acquired machinery, furniture, fixtures and equipment wherever located (all of the foregoing being hereinafter collectively referred to as the “FF&E”);

(f) Other Property. Any and all other property of any nature whatsoever of Borrower now or hereafter in the possession of, assigned to or hypothecated to Lender for any purpose, including, but not limited to balances, credits, deposits, accounts, items and monies of Borrower now or hereafter with Lender and all dividends and distributions on or rights in connection with any such property and all rights of Borrower earned or to be earned under contracts to sell goods or render services.

(g) Proceeds. All substitutions, improvements, accessions, additions, renewals and replacements of or to any of the foregoing (including, but not limited to, returned or unearned premiums from any insurance written in connection with this Agreement) and all proceeds of any of the foregoing, including, but not limited to, any and all proceeds in the form of Receivables and Inventory; and

The foregoing shall hereinafter be collectively referred to as the “Collateral”. The security interest is granted pursuant to the Uniform Commercial Code of the State of Georgia, as amended from time to time (the “Code”).

If at any time the Collateral pledged as security for any of the Obligations shall be or become unsatisfactory to Lender or should Lender deem itself insecure as to the adequacy or sufficiency of such Collateral, Borrower will immediately furnish such further property as additional Collateral to be held by Lender as if originally, pledged as Collateral hereunder or make such payment on account as will be satisfactory to Lender.

3. Certain Lender Rights. Whether an event of default shall exist hereunder or not, Lender shall have, but shall not be limited to the following rights, each of which may be exercised at any time and from time to time: (i) to transfer the Note and the Collateral, and any transferee shall have all the rights of Lender hereunder and Lender shall be thereafter relieved from any liability with respect to any Collateral so transferred; (ii) to transfer the whole or any part of the Collateral in the name of itself or its nominees; (iii) to vote any investment securities forming a part of the Collateral; (iv) to notify the obligors on any Collateral to make payment directly to Lender of any amounts due thereon; (v) to execute at any time in the name of any party hereto and to file, without Borrower’s signature, financing statements covering any of the Collateral or which describe the Collateral as “all assets” or “all property” of Borrower; (vi) to receive or take control of any income or other proceeds of any of the Collateral; and (vii) to request and receive current financial information from any party liable for all or any part of the Obligations.

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4. Lender Rights as to Receivables. In addition to any other provision herein, as to Borrower’s Receivables which are pledged as part of the Collateral, Lender shall have the following rights and privileges:

(a) Account Collections. Lender will handle the cash collection of the Receivables; however, Borrower will, at its own expense, endeavor to collect all amounts due under the Receivables, including the taking of such action with respect to such collection including, but not limited to, litigation, as Lender requests or, in the absence of such request, as Borrower may deem necessary or advisable. Borrower may in the ordinary course of business grant to any party obligated on Receivables any rebate or adjustment to which such party may be lawfully entitled, and, may accept, in connection therewith, the return of goods, the sale or lease of which have given rise to such Receivables. Borrower shall promptly notify Lender of and shall settle all customer disputes; however, if Lender elects, it shall have the right at all times to settle, compromise, adjust or litigate all customer disputes directly with the customer or other complainant upon such terms and conditions as Lender deems advisable including but not limited to the right to surrender, release or exchange all or any part of any Receivable owed by a customer to Borrower, and to compromise or extend or renew for any period any such Receivable, all without incurring liability to Borrower for its performance of any such acts and Lender hereby shall have the right to stop goods in transit or to replevy or to reclaim such goods. All returned, replevied and reclaimed goods (unless released by Lender) coming into Borrower’s possession shall be held by Borrower in trust for Lender. Borrower shall notify Lender promptly of all such returned goods and shall promptly pay to Lender the gross amount of the unpaid Receivables with respect thereto.

If any Receivable is not paid within (a) ninety-one (91) days from the date of the invoice (for invoices due within sixty (60) days or less from date of the invoice) or (b) the lesser of one hundred-fifty one (151) days from invoice date or thirty (30) days past due date (for invoices due more than sixty (60) days from date of the invoice), or if any customer raises any claim of non-conformity of goods, total or partial failure of delivery, set off, counterclaim, or breach of warranty or any other claim inconsistent with Borrower’s warranties as made below, Borrower will upon demand pay Lender the gross amount of the Receivable so affected or unpaid, together with any damages or loss sustained by Lender and any accrued but unpaid interest, fees, or other charges due Lender; provided, however, such payment may not be deemed a release of Lender’s security interest therein nor a release thereof and security title thereto and to the goods represented thereby shall remain in Lender until and unless Lender executes a release. Lender may, at any time and from time to time, notify any parties obligated on any of the Receivables to make payment directly to Lender of any amount due or to become due thereunder, and enforce collection of any of the Receivables by suit or otherwise, as hereinbefore provided. Upon request of Lender, Borrower will, at its own expense, notify any parties obligated on any of the Receivables to make payment directly to Lender of any amounts due or to become due thereunder.

Borrower hereby appoints and constitutes Lender as Borrower’s attorney-in-fact to receive, open, and, in Lender’s sole discretion, dispose of all mail addressed to Borrower in order to fully protect Lender’s interest in the Collateral; to notify the postal authorities to change the address and delivery of mail addressed to Borrower to such address as Lender may designate; to endorse Borrower’s name upon any notes, acceptances, checks, drafts, money orders and other evidences of payment of Collateral that may come into Lender’s possession and to deposit or otherwise collect the same; to sign Borrower’s name on any bill of lading relating to any

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Collateral, on drafts against customers, listings of Receivables, and notices to customers; to prepare and mail invoices to Borrower’s customers; to send verification of accounts to customers; to execute in Borrower’s name any affidavits and notices with regard to any and all lien rights, and to do all other acts and things necessary or helpful to carry out this Agreement or to deal with the Collateral or proceeds thereof in its own name or in the name of Borrower. All acts of said attorney-in-fact are hereby ratified. This power, being coupled with an interest, is irrevocable while Borrower is indebted to Lender under any of the Obligations.

(b) Remittance by Borrower. Unless Lender shall otherwise consent in writing, Borrower will forthwith upon receipt, transfer and deliver to Lender in the form received, all cash, checks, chattel paper, drafts, items or other instruments for the payment of money (properly endorsed where required, so that such items may be collected by Lender) which may be received by Borrower at any time in full or partial payment or otherwise as proceeds of any Collateral. Unless Lender shall otherwise consent in writing, any such items which may be thus received by Borrower shall not be commingled with any other of Borrower’s funds or property, but will be held separate and apart from its own funds or property and upon express trust for Lender until delivery is made to Lender. Borrower shall comply with the terms and conditions of any consent given by Lender pursuant to the provisions of this paragraph. Checks, drafts, wire and other electronic transfers, and any other non-cash instrument for the payment of money shall be credited to the Note on the second business day after the day of receipt by Lender, if a business day, or if not a business day, on the first business day following receipt. The excess of amounts actually collected by Lender from the proceeds of the Collateral over the amounts under the Note currently owing to Lender for loans, advances, interest and fees thereunder and hereunder, shall be paid by Lender from time to time to Borrower in such order of application as Lender may elect, periodically, but in no event less frequently than monthly. Lender shall deliver to Borrower a statement of account and such statement shall be binding and conclusive upon Borrower unless Borrower notifies Lender to the contrary within ten (10) business days after the date of each statement is rendered.

(c) Billing Customers of Borrower. Billing on invoices by whomever done shall be conclusive evidence of assignment and transfer hereunder to Lender of the Collateral represented thereby whether or not Borrower executes any document of transfer in regard thereto.

(d) Additional Representations and Warranties. Borrower hereby represents and warrants to Lender that the Receivables will be, at the time of their creation, bona fide and existing obligations of Borrower’s customers arising out of the sale of goods and/or rendition of services by Borrower and are owned by and owed to Borrower without defense, offset, or counterclaim; that with regard to each Receivable as it arises Borrower will have made delivery of the goods or will have rendered the services ordered, and the customer will have accepted the goods and/or services.

5. Lender Rights as to Inventory. In addition to any other provisions herein, as to Borrower’s Inventory which is pledged as a part of the Collateral, Lender shall have the following rights and privileges:

(a) Pay down on Sale. Borrower shall pay to Lender concurrently with each sale of Inventory an amount equivalent to the Value of Inventory (as defined herein) sold, or shall substitute other Inventory (acceptable as security to Lender) designated in written statements signed and delivered to Lender by Borrower, of a Value that, in the opinion of Lender, equals at least the Value of such sold Inventory. If at any time the aggregate amount of outstanding loans under this Agreement exceeds the Value of Inventory then acceptable to Lender, Borrower will, immediately upon demand, repay sufficient of the loans made to it by Lender hereunder so that said ratio of loan to Value is re-established or give to Lender a security interest in other Inventory acceptable to Lender of a sufficient Value to accomplish that result.

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(b) Additional Representations and Warranties. Borrower represents and warrants to and covenants and agrees with Lender that (except as otherwise specified in the Agreement): (i) Inventory shall be kept only at the following locations): 1101 North Keller Road, Suite E, Orlando, FL 32810 and 344 Cypress Road, Ocala, FL 34472 and 491 Oak Rd., Ocala, FL 34472. Borrower will promptly notify Lender in writing of any change in location of any place of business or of the Inventory, or the establishment of any new place of business; (ii) immediately upon each demand by Lender therefor, Borrower shall execute and deliver to Lender designations of Inventory specifying Borrower’s cost of inventory, the market value thereof and such other matters and information relating to Inventory as Lender may from time to time request; (iii) Borrower now keeps and shall keep correct and accurate records itemizing and describing the kind, type, quality and quantity of Inventory, Borrower’s cost therefor and the selling price thereof, the daily withdrawals therefrom and the additions thereto; (iv) all Inventory is and shall be new Inventory of goods and shall be of merchantable quality, free from defects; (v) Inventory is not and shall not be stored with a bailee, warehouseman or similar party without Lender’s prior written consent and in such event, Borrower will, concurrently with delivery to such party, cause any such party to issue and deliver to Lender, in form acceptable to Lender, warehouse receipts in Lender’s name evidencing the storage of such Inventory; (vi) Lender and its agents and representatives may, upon demand, during Borrower’s usual business hours: (1) inspect and examine Inventory and check and test the same as to quality, quantity, value and condition; and (2) inspect, audit, check and make extracts from the books, records, journals, orders, receipts, correspondence and other data relating to Borrower’s Inventory or to any other transaction between the parties hereto; and (vii) that Borrower’s Inventory shall not be subject to any security interest, lien or encumbrance except in favor of Lender hereunder.

(c) Revisions. Borrower agrees that the percentage of Value advanced, the acceptability and Value of Inventory and the period during which such advances are to remain outstanding are and shall be entirely in Lender’s sole discretion and that Lender shall have the right at any time to revise any limit placed by Lender upon the amount of such advances or upon the valuation of Inventory or Lender may, in its sole discretion, refuse to make further advances. If Inventory remains in stock for a period of time which Lender in its sole judgment deems excessive, such Inventory may, at Lender’s option, be considered to be of no Value for the purposes of loans or advances although the same remains in stock and Lender retains its lien thereon according to the terms and provisions of this Agreement.

(d) Sale of Inventory. Until a default by Borrower, Borrower may, subject to the provisions of this Agreement, and not in a manner inconsistent therewith or unlawful, sell finished Inventory, but only in the ordinary course of Borrower’s business; however, in no event shall Borrower make any sale of Inventory which would cause a breach of Borrower’s warranties, representations and covenants under Section 5(b) of this Agreement. A sale of Inventory in the ordinary course of Borrower’s business does not include a transfer in partial or total satisfaction of a debt owing by Borrower. Borrower shall report the receipt or creation of all sales or other dispositions of Inventory to Lender and promptly deliver such proceeds to Lender. Borrower shall execute and deliver to Lender, in form satisfactory to Lender, a formal assignment or schedule of accounts receivable or other proceeds resulting from the sale or other disposition of Inventory but in the absence of such assignment or schedule this Agreement shall constitute such assignment or schedule and the grant of a security interest therein. Lender’s security interest hereunder shall attach to all proceeds (whether represented by cash, checks, drafts, notes, chattel paper, open accounts or otherwise) of all sales or other dispositions of Borrower’s Inventory.

(e) Release. Lender shall not be liable or responsible for and Borrower hereby releases Lender from any and all causes of action or claims which Borrower may now or hereafter have for any loss or damage to it claimed to be caused by or arising from: (i) the safekeeping of Inventory; (ii) any damage thereto occurring or arising in any manner or fashion from any cause; (iii) any diminution in the value of Inventory; or (iv) any act of default of any carrier, warehouseman, bailee or forwarding agency thereof or other person whomsoever. All risk of loss, damage or destruction of Inventory shall be borne by Borrower.

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6. Insurance. Borrower shall keep the Collateral fully insured against fire, theft and other casualty (as well as such other risks as Lender may hereafter request) with loss payable to Lender and shall pay all premiums promptly when same become due. Lender shall have the right to require Borrower to maintain such insurance with such companies and in such amounts as Lender may request. All policies of insurance will specify that such insurance shall not be cancelable by Borrower or the insurer without at least ten (10) days advance written notice to Lender. In the event any or all insurance hereinbefore provided is canceled, any returned premium thereon shall be payable to Lender and may be applied by Lender to any part of the Obligations, whether matured or unmatured. Lender is authorized to receive the proceeds of any insurance loss and at the option of Lender shall apply such proceeds toward either the repair or replacement of the Collateral or the payment of the Obligations secured hereby. If Borrower fails to maintain such insurance, Lender may, at its option, but without obligation, purchase such insurance or pay any premium owing and any such sum paid by Lender shall be payable by Borrower on demand by Lender or at Lender’s option may be added to any of the Obligations.

7. Warranties of Borrower. Borrower hereby represents and warrants to Lender that the Collateral is now and will be kept free and clear of any and all liens, security interests and encumbrances whatsoever, other than the security interest hereunder; that Borrower has and will have the right to convey the Collateral as security for the Obligations; that Borrower will accurately and timely prepare and file any and all payroll, income, sales, franchise and any other applicable tax returns and pay or remit any taxes due therewith; that Borrower will promptly pay or discharge all taxes assessed against the Collateral and all liens which may attach thereto; that any and all information set forth in any writing heretofore or hereafter delivered to Lender by Borrower pertaining to the Collateral or Obligations is and will be true and correct as of the date thereof; that Borrower is solvent; if a registered organization (as defined in the Code) that Borrower is duly formed or organized as the type of organization set forth above and is validly existing under the laws of the State of its formation or incorporation as set forth above, is duly qualified and in good standing in every other state in which it is doing business as a registered organization and its exact name and organization number are as set forth above; that the execution, delivery and performance hereof are within Borrower’s corporate or company powers, have been duly authorized, are not in contravention of law or the terms of Borrower’s charter, bylaws or other incorporation or formation documents, or of any indenture, agreement or undertaking to which Borrower is a party or by which it is bound; that without prior written notice to Lender, Borrower will not obtain any loans, advances or other financial accommodations or arrangements from any party other than Lender and will not encumber any of its assets; that without prior written consent of Lender, Borrower will not change its name, reorganize, merge or consolidate, change its jurisdiction of incorporation or formation; that there is no order, notice, claim, litigation, proceedings or investigation pending or threatened against or affecting Borrower whether or not covered by insurance, that would materially and adversely affect Borrower’s operations, financial condition, property or business; that Borrower will not sell, transfer, lease or otherwise dispose of all or (except in the ordinary course of business) any material part of its assets; that no account arises out of a contract with, or order from, an account debtor that, by its terms, forbids assignment or makes the assignment of that account to Lender void or unenforceable; that the representations and warranties made hereunder by Borrower are true on the date hereof and will be true on the date of each loan advance by Lender hereunder; that Borrower’s address as shown above is the location of Borrower’s principal place of business, that such place of business is Borrower’s only place of business, and that Borrower has not maintained any other place of business or principal place of business or corporate or trade name during the five (5) years immediately preceding the date of the execution of this Agreement, unless having notified Lender in writing of all such previous addresses and names.

8. Duties and Further Assurances of Borrower. Borrower covenants and agrees that, so long as any of the Obligations remain outstanding and unpaid, it shall:

(a) Financing Statements - Execute upon request of Lender such financing

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statements and other documents and pay the cost of filing or recording the same, and do such other acts and things as Lender may from time to time request to establish and maintain a valid and perfected security interest of Lender in the Collateral;

(b) Control Agreements - Deliver to Lender such agreements giving Lender “control”, as defined in the Code, of any investment property, deposit accounts, letters of credit or electronic chattel paper as Lender may request, with each such agreement being in form and substance satisfactory to Lender;

(c) Tort Claims - In the event the Borrower obtains a “commercial tort claim” (as defined in the Code), the Borrower shall immediately notify Lender and pledge such commercial tort claim to the Lender pursuant to a supplement to this Agreement, such supplement to be in form and substance satisfactory to the Lender;

(d) Inspection - Permit Lender, its agents and employees, from time to time, to inspect, audit and make copies of and extract from all records and other papers in the possession of Borrower, including but not limited to those pertaining to the Collateral and Borrower’s debtors, and upon request of Lender, all such records and papers, including copies of customer invoices and exclusive evidence of shipment and such other documents and proof of delivery/rendition as Lender may at any time require;

(e) Financial Statements - Furnish to Lender on or before the forty fifth (45th) day after the end of each month, financial statements in form and substance satisfactory to Lender and certified by an appropriate officer or representative of Borrower, and furnish to Lender annually on or before the ninetieth (90th) day after the end of Borrower’s fiscal year, a compiled financial statement in form and substance satisfactory to Lender, with all such reports to be prepared in accordance with Generally Accepted Accounting Principles, consistently applied;

(f) Records Retention - Keep at its address shown herein its records concerning the Collateral, which records shall be of such character as will enable Lender to determine at any time the status of the Collateral;

(g) Information - Furnish such information and documents concerning Borrower, the Collateral and Borrower’s debtors as Lender may from time to time request, and comply with loan procedures and reporting requirements established from time to time by Lender;

(h) Payment of Charges Against Collateral - Borrower shall pay all taxes and other charges against the Collateral promptly when same become due. Should Borrower fail to pay any such taxes or other charges, Lender may, at its option, pay any such amount owing and any such sum paid by Lender shall be payable by Borrower on demand by Lender or, at Lender’s option, may be added to any of the Obligations; and

(i) Closing Costs - Borrower will pay all costs of closing the loan which is the subject of this Agreement and will reimburse Lender during the period of financing hereunder for all out-of-pocket or advanced expenses, including, but not limited to, long distance phone calls and travel expenses.

9. Default and Remedies. Upon the occurrence of any one or more of the following: (i) any failure of any Obligor (which term shall include Borrower, any co-borrower, and each endorser, surety or guarantor of the Note) to pay any of the Obligations when due or to observe or perform

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any agreement, covenant or promise hereunder or in any other agreement, note, instrument or certificate of any Obligor to Lender, now existing or hereafter executed in connection with any of the Obligations, including, but not limited to, a loan agreement, if applicable, and any agreement guaranteeing payment of any of the Obligations; (ii) any default of any Obligor in the payment or performance of any other liabilities, indebtedness or obligations of any Obligor to any other creditor, or any occurrence which would allow or permit any other liabilities, indebtedness or obligations to any other creditor to be accelerated; (iii) any failure of any Obligor to furnish Lender current financial information upon request; (iv) any failure of any Obligor or any pledgor of any security interest in the Collateral (the “Pledgor”) to observe or perform any agreement, covenant or promise contained in any agreement, instrument or certificate executed in connection with the granting of a security interest in any Collateral to secure the Obligations; (v) any warranty, representation or statement made or furnished to Lender by or on behalf of any Obligor in connection with the extension of credit evidenced by the Note proving to have been false in any material respect when made or furnished; (vi) any loss, theft, substantial damage, destruction, sale, foreclosure of or encumbrance to any of the Collateral, or the making of any levy, seizure or attachment thereof or thereon or the rendering of any judgment or lien or garnishment or attachment against any Obligor or its property, whether actual or threatened; (vii) the death, dissolution, termination of existence, insolvency, business failure, appointment of a receiver of any part of the property of, assignment for the benefit of creditors by, or the commencement of any proceeding under any bankruptcy or insolvency laws, state or federal, by or against Borrower or any other Obligor; (viii) any discontinuance or termination of any guaranty of any of the Obligations by a guarantor; (ix) any amendment or termination of a financing statement naming the Borrower as debtor and the Lender as secured party, or any corrective statement with respect thereto, is filed without the prior written consent of the Lender; (x) any Receivable is not paid within (a) ninety-one (91) days from the date of the invoice (for invoices due within sixty (60) days or less from date of the invoice) or (b) the lesser of one hundred-fifty one (151) days from invoice date or thirty (30) days past due date (for invoices due more than sixty (60) days from date of the invoice), (xi) if the Collateral declines in value or for any reason becomes insufficient in Lender’s sole and exclusive judgment to secure the repayment of the Obligations and Borrower, after demand, fails or refuses to substitute and/or make additions to the Collateral, or pay down the Obligations satisfactory to Lender; or (xii) Lender deeming itself insecure as to the ability of Borrower to repay the Obligations, or as to the sufficiency of the Collateral, thereupon, or at any time thereafter, Lender at its option may terminate any obligation to extend any additional credit, make additional advances or make any other financial accommodation to Borrower and/or may declare all of the Obligations to be due and payable and Lender may exercise any other rights of Lender under the Note or any other agreement with any Obligor or any Pledgor, or the remedies of a secured party under the Code, including, without limitation thereto, the right to take possession of the Collateral, or the proceeds thereof and to sell or otherwise dispose of the same, and for this purpose, to sign in the name of any Obligor any transfer, conveyance or instrument necessary or appropriate in order for Lender to sell or dispose of any of the Collateral, and Lender may, so far as Borrower can give authority therefor, enter upon the premises on which the Collateral or any part thereof may be situated and remove the same therefrom, without being liable in any way to any Obligor on account of entering any premises. Lender may require Borrower to assemble the Collateral and make the Collateral available to Lender at a place to be designated by Lender which is reasonably convenient to both parties. Furthermore, Lender shall be entitled to (and each Obligor hereby consents to) the immediate issuance of a writ of possession with respect to all personal items of Collateral in any Obligor’s possession. Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender shall give Borrower written notice of the time and place of any public sale thereof or of the time after which any private sale or other intended disposition thereof is to be made. The requirement of sending reasonable notice shall be met if such notice is mailed, postage prepaid, or otherwise given, to Borrower at the last address shown on Lender’s records at least five (5) days before such disposition. In the event of a sale of the Collateral, Lender may bid upon or become purchaser at any such sale, if public, free from any right of redemption, which is hereby expressly waived by Borrower, and Lender shall have the right at its option to apply or be credited with the amount of all or any part of the Obligations owing to Lender against the

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purchase price bid by Lender at any such sale. The net cash proceeds resulting from the collection, liquidation, sale, lease or other disposition of the Collateral shall be applied first to the expenses (including all attorney’s fees) of retaking, holding, storing, processing and preparation for sale, selling, collecting, liquidating and the like, and then to the satisfaction of all Obligations, with application as to particular Obligations or against principal or interest to be in Lender’s sole and absolute discretion. Borrower shall be liable to Lender and shall pay to Lender on demand, any deficiency which may remain after such sale, disposition, collection or liquidation of the Collateral, and Lender, in turn, agrees to remit to Borrower any surplus remaining after all Obligations have been paid in full. If any Obligation (including but not limited to the Note) is a demand instrument, the statement of a maturity date or the recitation of defaults and the right of Lender to declare any Obligation due and payable shall not constitute an election by Lender to waive its right to demand payment under a demand at any time and in any event as Lender in its sole discretion may deem appropriate. The rights of Lender specified herein shall be in addition to, and not in limitation of Lender’s rights under the Code, or any other statute or rules of law conferring rights similar to those conferred by the Code, and under the provisions of any other instrument or agreement executed by Borrower, any other Obligor or any Pledgor to Lender. Any rights or remedies of Lender may be exercised or taken in any order or sequence whatsoever, at the sole option of Lender. No waiver by Lender of any default shall be effective unless in writing nor operate as a waiver of any other default or of the same default on a future occasion.

10. Minimum Payment. In consideration of Lender extending to Borrower a line of credit of up to $    N/A    , Borrower agrees to (i) either maintain an outstanding loan balance of at least $    N/A     or, (ii) to borrow each month on invoices which aggregate at least $    N/A    , or (iii) pay a minimum monthly administrative fee of $    N/A     whichever is greater.

11. Facility Fee: Borrower will pay to Lender a facility fee equal to one percent (1%) of the $2,000,000.00 maximum line of credit. The Facility Fee will be fully earned and due and payable upon the execution of this Agreement and will be due and payable annually on each anniversary date thereafter. The Facility Fee will be charged to Borrower’s loan account on the date of the initial funding and each anniversary thereafter.

12. Misdirected Payment Fee: For each such occurrence, Borrower agrees to pay to Lender fifteen percent (15%) of the amount of any payment on account of any Receivable where said payment has been received by Borrower and not delivered in kind or the proceeds paid by Borrower to Lender within 2 business days.

13. Audit Fee: Borrower agrees to pay to Lender a fee of $550.00 per day, plus expenses, for all audit examinations of Borrower’s books and records conducted by or on behalf of Lender, up to a maximum of $2,000 per audit.

14. Business Use. Borrower represents and warrants that lender’s loan or loans to Borrower will be used for nonconsumer purposes and not for personal, family or household purposes.

15. Subordination. All indebtedness owed by Borrower to its stockholders shall be subordinate to Lender and will not be repaid in whole or in part without the written consent of Lender.

16 Termination: This Agreement will be effective upon the execution of this Agreement by Borrower and will continue in full force for twelve (12) months thereafter, and shall be further annually extended automatically unless Borrower shall have given Lender written notice of its intention to terminate at least sixty (60) days prior to each such anniversary, whereupon this Agreement shall terminate on said anniversary. In the event Borrower elects to pay out and terminate the line of credit (whether voluntarily, upon defaults, or otherwise) prior to each anniversary date, Borrower agrees to pay Lender one percent (1%) of the $2,000,000.00 maximum line of credit.

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17. Miscellaneous The security agreement set forth herein and the security interest in and security title to the Collateral created hereby shall terminate only when all of the Obligations have been indefeasibly paid in full and such payments are no longer subject to rescission, recovery or repayment upon the bankruptcy, insolvency, reorganization, moratorium, receivership or similar proceeding affecting Borrower, any Obligor, or any other person. All rights of Lender hereunder shall inure to the benefit of its successors and assigns, and all obligations of Borrower shall bind the heirs, legal representatives, successors and assigns of Borrower, provided, however, Borrower shall have no right to assign its rights or obligations under this Agreement without having first received the prior written consent of Lender. Borrower and each endorser, surety or guarantor of the Note, whether bound by this or by separate instrument or agreement, shall be jointly and severally liable for the indebtedness evidenced by the Note and hereby jointly and severally (i) waive presentment for payment, demand, protest, notice of nonpayment or dishonor and any and all other notices and demands whatsoever; (ii) consent that at any time, or from time to time, payment of any sum payable under the Note may be extended by Lender without notice whether for a definite or indefinite time; (iii) agree to remain liable until all of the Obligations are paid in full notwithstanding any release or transfer of Collateral by Lender or of any extension, modification or renewal; and (iv) the undersigned irrevocably consents that any legal action or proceeding against it under, arising out of, or in any manner related to this agreement may be brought in any court in DeKalb County, Georgia. The undersigned, by the execution and delivery of this agreement, expressly and irrevocably assents to and submits to the personal jurisdiction of such court in any such action or proceeding. The undersigned hereby expressly and irrevocably waives any claim or defense in any such action or proceeding based on any alleged lack of jurisdiction and proper venue or forum non conveniens or any similar defense. No conduct of Lender shall be deemed a waiver or release of such liability, unless the holder expressly releases such party in writing. In the event the Obligations evidenced hereby are collected by or through an attorney or Lender following a default hereunder, Lender shall be entitled to recover reasonable attorneys’ fees and all other costs and expenses of collection. Time is of the essence. This Agreement, and the rights and obligations of the parties hereunder, shall be governed and construed in accordance with the laws of the State of Georgia. This Agreement, and the documents executed and delivered pursuant hereto, constitute the entire agreement between the parties, and may be amended only by a writing signed on behalf of the party sought to be charged. If any provision of this Agreement shall be held invalid under any applicable laws, such invalidity shall not affect any other provision of this Agreement that can be given effect without the invalid provision, and to this end, the provisions hereof are severable. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument. Terms used in this Agreement which are defined in the Code shall have the meanings given such terms in the Code unless the context requires otherwise.

IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement under seal the day and year set forth above.

BORROWER:
Action Products International, Inc.
By:	/s/ Robert Burrows
Its:	CFO/Secretary
LENDER:
Presidential Financial Corporation
By:	/s/ Raymond Alberti
Its:	Senior Vice President

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EX-10.2

Exhibit 10.2

DEMAND SECURED PROMISSORY NOTE

Tucker, Georgia

Date: June 25, 2008 $2,000,000.00

FOR VALUE RECEIVED, the undersigned promises to pay on demand to the order of Presidential Financial Corporation (hereinafter referred to as “Lender”) at the Lender’s main office in Tucker, Georgia; or at such other place as Lender may designate, the principal amount of TWO MILLION AND NO/100 DOLLARS ($2,000,000.00), together with interest on said unpaid principal amount or on so much thereof as may from time to time be unpaid, at the rate of one percent (1%) per annum above the prime rate of interest quoted in The Wall Street Journal. The initial interest rate as of the date hereof being six percent (6%) and changes in such rate will be immediately effective upon a change in the prime rate of interest quoted in the Wall Street Journal; so long as any portion of this Note remains outstanding, such interest to be payable commencing on June 30, 2008; together with all costs of collection including reasonable attorney’s fees if collected by or through an attorney-at-law. The rate of interest charged to the undersigned hereunder, together with all amounts reserved, charged, or taken by Lender as compensation for fees, services, or expenses incidental to the making, negotiation, or collection of the loan evidenced hereby, shall in no event exceed the maximum rate of interest on the unpaid principal balance hereof allowable by applicable law. If any sum is charged in excess of the applicable maximum rate, or in violation of any other usury statute of this state, Lender may reduce said charge in conformity therewith. If any sum is collected in excess of the applicable maximum rate, or in violation of any other usury statute of this state, the excess collected shall be applied to reduce the principal balance. All payments received will first be applied to interest and other charges due and owing to the Lender, and any remaining amount shall then be applied to principal.

THE INTEREST RATE ON THE PRINCIPAL INDEBTEDNESS EVIDENCED BY THIS NOTE, AS CALCULATED ON THE BASIS OF A 360-DAY YEAR, ANNUAL PERCENTAGE RATE, AND ASSUMING THAT INTEREST PAYMENTS ARE MADE WHEN DUE, IS ONE PERCENT (1%) AB0VE THE DAILY PRIME INTEREST RATE AS QUOTED IN THE WALL STREET JOURNAL. ALL OTHER FEES AND CHARGES PAID IN CONNECTION WITH THIS NOTE BY THE UNDERSIGNED TO THE LENDER ARE PAYMENTS FOR THE COST OF ORIGINATING, BOOKING, SERVICING AND MAINTAINING THE LOAN AND OTHER ADMINISTRATIVE COSTS AS SET FORTH IN O.C.G.A. SECTION 7-4-2(A)(1), AND DO NOT CONSTITUTE FEES FOR THE USE OF MONEY. INTEREST HEREIN SHALL BE COMPUTED, AND IS DUE AND PAYABLE ON THE FIFTEENTH (15th) AND LAST DAY OF EACH MONTH. THEREAFTER, ALL UNPAID INTEREST AND OTHER CHARGES PROVIDED FOR HEREIN, ARE DEEMED BY THE PARTIES TO BE PRINCIPAL PURSUANT TO O.C.G.A. SECTION 7-4-2(A)(3), AND SHALL BE CHARGED AS ADVANCES TO BORR0WER’S LOAN ACCOUNT WITH LENDER, BEARING INTEREST UPON THE SAME TERMS AS OTHER ADVANCES. BORROWER SPECIFICALLY AGREES, BY EXECUTION OF THIS NOTE, TO SAID TREATMENT OF ALL UNPAID INTEREST AND CHARGES AS PRINCIPAL ADVANCED UNDER THIS LOAN.

In addition to the interest provided for hereunder, the following service charge shall be earned by Lender and shall be payable by the undersigned to Lender:

A monthly service charge equal to zero point six percent (.6%) of the average daily outstanding balance during the month.

In the event of the declaration of a default by Lender, in lieu of the above interest and service charges, the outstanding loan will accrue interest at the rate of two percent (2%) per month.

The undersigned has entered into a Loan Agreement and Security Agreement (“Agreement”) of even date herewith, pursuant to which this Demand Secured Promissory Note has been made and delivered to Lender. Any act of default by the undersigned under said Agreement and any default by the undersigned under its obligations under said Agreement shall constitute a default under this Note. The undersigned and Lender contemplate that the original principal sum evidenced by this Note may be reduced from time to time and that additional loans may be made by Lender to the undersigned in the future. Such additional loans, as so designated shall be evidenced by this Note and subject to its terms; provided, however, that the principal amount evidenced by this Note shall not exceed the principal amount shown above. Upon payment in full by the undersigned, any then unearned service charges hereunder shall become earned by and due and payable to Lender.

The undersigned hereby waives demand, presentment, notice, protest and notice of dishonor. Lender shall not be deemed to waive or have waived any of its rights hereunder unless such waiver be in writing and signed by Lender, and no failure, delay or omission by Lender in exercising any of its rights shall operate as a waiver of such rights. A

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waiver by Lender in writing on one occasion shall not be construed as a consent to or a waiver of any right or remedy on any future occasion. The parties hereto agree that the venue for any and all actions, suits or other legal proceedings arising under or related to this Note or any agreement associated herewith shall lie in the appropriate state or federal court of competent jurisdiction located in DeKalb County, Georgia. The parties hereto hereby waive any objection to this choice of venue. The undersigned and the Lender hereby knowingly, voluntarily and intentionally waive the right either of them may have to a trial by jury in respect to any litigation based hereon, or arising out of, under or in connection with this Note and any other agreement contemplated to be executed in conjunction herewith, or any course of conduct, course of dealing, statements (whether verbal or written) or actions of either party. This provision is a materiel inducement for the Lender making the loan evidenced by the Note.

This instrument shall be governed by and interpreted in accordance with the laws of the State of Georgia. Time is of the essence of this Promissory Note.

The word “undersigned” as used herein shall include the plural, should more than one execute this Note; the masculine and feminine gender, regardless of the sex of the undersigned or any of them; partnerships, corporations, and other legal entities, should such an entity execute this Note; endorsers, guarantors and sureties, unless by the express terms of the endorsement or guarantee, an obligation of the undersigned is limited or varied; and the heirs, legal representatives, successors and assigns of the undersigned. The word “Lender” as used herein shall when the circumstances or context requires, include the plural and the successors and assigns of Lender.

IN WITNESS WHEREOF, the undersigned has caused this Demand Secured Promissory Note to be duly executed and its seal to be affixed by its duly authorized officers, or has signed and sealed this Note as the case may be, and has delivered this Note to Lender, the day and year first above written.

Action Products International, Inc.
By:	/s/ Robert Burrows
	CFO/Secretary

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EX-10.3

Exhibit 10.3

INVENTORY AGREEMENT

ADDENDUM TO LOAN AGREEMENT AND SECURITY AGREEMENT DATED JUNE 25, 2008

AND DEMAND SECURED PROMISSORY NOTE DATED JUNE 25, 2008

THIS AGREEMENT made this twenty-fifth day of June, 2008 by and between Action Products International, Inc., a Florida Corporation (hereinafter referred to as “Borrower”), and Presidential Financial Corporation (hereinafter referred to as “Lender”) for the purpose of Lender advancing funds based upon inventory. The terms and conditions of said advances are as follows:

1. The maximum amount available for draws against inventory is as shown below and is within the limits of the Demand Secured Promissory Note executed by Borrower, dated June 25, 2008 in the amount of Two Million and no/100 Dollars ($2,000,000.00), provided however draws against inventory shall not exceed draws against Approved Receivables (as that term is defined in the Loan Agreement and Security Agreement between Borrower and Lender dated June 25, 2008):

Period Available	Maximum Amount Available
October 1 through June 30	$	600,000.00
July 1 through September 30	$	700,000.00

If on October 1 of any calendar year, the amount outstanding against inventory exceeds $600,000.00, Borrower shall immediately repay the amount of the inventory loan in excess of $600,000.00. Borrower’s failure to repay the inventory loan as required herein shall constitute a default under the Loan Agreement.

2. A service charge of zero point six percent (.6%) based on the average daily outstanding inventory loan balance during the month shall be earned by Lender and the undersigned hereby agrees that the service charge will be transferred to the A/R line. An interest rate of Prime plus one percent (1%) on the principal will also be earned by Lender and transferred to the A/R line.

3. Borrower agrees to provide to Lender at the end of each month a summary listing of inventory stating approximate values and location. In addition, Borrower agrees to maintain property damage insurance coverage on all inventory with Lender named as Loss Payee and Additional Insured.

4. It is agreed that inventory advances will be limited to the lesser of (a) fifty percent (50%) of the value of all eligible inventory as provided by Borrower (“inventory availability”); (b) Six Hundred Thousand and No/100 Dollars ($600,000.00) with the exception during the period of July 1 through September 30 when the maximum amount available for draws against inventory is Seven Hundred Thousand and no/100 Dollars ($700,000.00) or (c) the accounts receivable loan balance.

IN WITNESS WHEREOF, the parties have signed and sealed on the day first above written.

BORROWER:
Action Products International, Inc.
By:	/s/ Robert Burrows
Name:	Robert L. Burrows
Title :	CFO/Secretary
LENDER:
Presidential Financial Corporation
By:	/s/ Raymond Alberti
Name:	Raymond Alberti
Title:	Senior Vice President

EX-10.4

Exhibit 10.4

MORTGAGE AND SECURITY AGREEMENT

THIS AGREEMENT is made this twenty-fifth day of June, 2008, by and between Action Products International, Inc., a Florida Corporation, whose address is 344 Cypress Road, Ocala, Florida 34472, (hereinafter called “Mortgagor”), and Presidential Financial Corporation, whose address is 1979 Lakeside Parkway Suite 400, Tucker, GA 30084 (hereinafter called “Mortgagee”).

W I T N E S S E T H:

Mortgagor, in consideration of the sum of Ten and No/100 Dollars ($10.00) and other valuable consideration to Mortgagor paid by Mortgagee, receipt whereof is hereby acknowledged, does hereby grant, bargain, sell, assign, transfer, convey and confirm unto Mortgagee the following property, situated in Marion County, Florida, described as:

See exhibit “A” attached

Together with all buildings, structures, and other improvements and all fixtures, furniture, and furnishings, equipment, carpeting, appliances, and all other personality now on such land or that may hereafter be erected or placed thereon or acquired therefor, including but not limited to, all heating, lighting, plumbing, ventilating, air conditioning, sprinkling, water and power systems, appliances and fixtures; and all substitutions and replacements thereof and all proceeds thereof, including insurance proceeds . The real and personal property described herein is sometimes hereafter collectively called “the property” or the “mortgaged property.”

Mortgagor also hereby grants, assigns, transfers, and conveys to Mortgagee all rents, issues, income and profits from the property, which are hereby specifically assigned and pledged to Mortgagee as Security for the payment of the debt herein referred to and Mortgagor’s performance of all of Mortgagor’s covenants and Agreements herein contained.

Mortgagor also hereby grants, assigns, transfers, and conveys to Mortgagee all and singular the ways, easements, riparian and other rights, and all tenements, hereditaments, and appurtenances belonging to the property or in anywise appertaining thereto.

Mortgagor hereby grants to Mortgagee a mortgage and security interest in all of the property described in this Agreement and in addition to the rights of a mortgagee, Mortgagee shall have all of the rights of a secured party under the Florida Uniform Commercial Code.

TO HAVE AND TO HOLD the above described property unto Mortgagee forever.

Mortgagor hereby covenants with Mortgagee that Mortgagor is indefeasibly seized with the absolute and fee simple title to the property; that Mortgagor has full power and lawful authority to sell, convey, assign, transfer, and mortgage the same; that it shall be lawful for Mortgagee at any time hereafter peaceably and quietly to enter upon, have, hold, and enjoy the property and every part thereof; that the property is free and discharged from all liens, encumbrances, and claims of every kind, except for all taxes and assessments not yet due and payable and governmental regulations.

Mortgagor covenants that Mortgagor, at Mortgagor’s own expense, will execute such other and further instruments and assurances to vest a first priority mortgage and security interest to the property in Mortgagee that may be requested by Mortgagee; and that Mortgagor will warrant and defend the title to the property unto Mortgagee against the lawful claims and demands of all persons whomsoever.

This mortgage, inter alia, is given to secure to Mortgagee payment of that certain promissory note in the amount of Two Million and No/100 Dollars ($2,000,000.00) by Mortgagor, accruing interest at the rate in said note on the principal amounts remaining from time to time unpaid (said note is incorporated herein by reference and hereinafter referred to as the “Note”). The Note is payable to the order of Mortgagee at:

1979 Lakeside Parkway Suite 400, Tucker, GA 30084

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Until full payment of the Note or any extensions, renewals, modifications, or replacements thereof, in whole or in part, and until payment of all other indebtedness or liability that may become due or owing hereunder and secured hereby, if Mortgagor shall faithfully and promptly comply with and perform each every obligation herein on the part of Mortgagor to be compiled with and performed, then this agreement shall be void.

Mortgagor agrees that any additional sum or sums advanced by the then holder of the Note secured hereby to or for the benefit of Mortgagor or Borrower, whether such advances are obligatory or made at the option of Mortgagee, or otherwise, at any time within twenty (20) years from the date of this mortgage, with interest thereon at the rate agreed upon at the time of each additional loan or advance, shall be equally secured with and have the same priority as the original indebtedness secured hereby and all such sums shall be subject to all of the terms and provisions of this mortgage, whether or not such additional loan or advance is evidenced by a promissory note and whether or not identified by a recital that it is secured by this mortgage; provided that the aggregate amount of equity for the principal indebtedness outstanding at any one time shall not exceed the sum of $2,000,000.00, plus travel and expenses; and provided further that it is understood and agreed that this future advance provision shall not be construed to obligate Mortgagee to make any such additional loans or advances. It is further agreed that any additional note or notes executed and delivered under this future advance provision shall be included in the word “Note” wherever it appears in the context of this mortgage.

And Mortgagor hereby further covenants to the following obligations:

To pay, with interest and service charges, the Note and any extensions or renewals thereof, in whole or in part, and all other indebtedness or liability hereby secured, however created or evidenced, promptly when the same respectively becomes due; to pay and/or discharge any other amounts, indebtedness and/or liability that may in the future become due, owing or outstanding from Mortgagor to Mortgagee, however the same may be or may have been contracted, evidenced or accrued; to pay all taxes and assessments levied or assessed upon the property before the same become delinquent, and in no event to permit the property, or any part thereof, to be sold for nonpayment of taxes or assessments; to keep the property in good repair and to permit, commit or suffer no waste, impairment or deterioration thereof; to comply strictly with all laws and governmental regulations and rules affecting the property or its operation; and to pay all taxes that may be levied or assessed on this mortgage or the moneys secured hereby; to permit no mechanic’s or other liens arising either by contract or by law, to be created or rest upon all or any part of the property for ten days without the same being paid or released, and discharge of the property therefrom procured; and to pay all costs and expenses incurred or paid by Mortgagee in collecting the moneys hereby secured or in enforcing or protecting the rights and security of the Mortgagee hereunder, including reasonable attorney’s fees incurred out of court, at trial, on appeal, or in bankruptcy proceedings, in the event the mortgage and the note or other evidence of indebtedness or liability be placed in the hands of an attorney for collection.

Mortgagor further covenants to keep the building, structures and other improvements now or hereafter erected or placed on the premises and constituting a part of the mortgage security constantly insured against all loss or damage for the full insurable value of the property for fire, windstorm and extended coverage in insurance companies satisfactory to Mortgagee which policies shall provide for not less than ten days written notice of cancellation to Mortgagee, and to pay promptly all premiums for such insurance (with a copy to Mortgagee), the policies representing which shall be delivered to Mortgagee as additional security for the payment of the indebtedness and liability security hereby. All sums recoverable on any such insurance policies shall be made payable to Mortgagee by a loss payable clause satisfactory to Mortgagee. In the event any such insurance policy shall expire during the life hereof, Mortgagor agrees to procure and pay for renewal thereof, with the above requirements, replacing such expired policy, and deposit the same with Mortgagee, together with receipts showing payment in full of premiums therefor, ten days prior to the expiration date of such policy.

It is further covenanted the Mortgagee may (but shall not be obligated so to do) advance moneys that should have been paid by Mortgagor hereunder in order to protect the lien or security hereof, and Mortgagor agrees without demand to forthwith repay such money, which amount shall bear interest from the date so advanced until paid at the rate in the Note and shall be considered as so much additional indebtedness secured hereby; but no payment by Mortgagee of any such moneys shall be deemed a waiver of Mortgagee’s right to declare the principal sum due hereunder by reason of the default or violation of Mortgagor in any of the Mortgagor’s covenants hereunder.

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The Mortgagor further covenants and agrees that a sale, transfer, assignment, or conveyance of all or any part of the legal or equitable title to the property or any part of or interest in the property, whether voluntarily or by operation of law shall not occur without the consent of Mortgagee.

Mortgagor further agrees not to create or permit the creation of any other mortgage, charge, lien or encumbrance against the mortgaged property without obtaining the written consent of Mortgagee. Mortgagor agrees that a default by Mortgagor in any term, covenant or provision of any mortgage, whether junior or senior to this Mortgage, that may now or hereafter encumber the mortgaged property, or any part hereof, shall constitute a default hereunder.

Mortgagor further agrees not to crate or permit the creation of any other mortgage, charge, lien, or encumbrance against the mortgaged property without obtaining the written consent of Mortgagee. Mortgagor further covenants that granting any extension or extensions of the time payment of any part of all of the total indebtedness or liability secured hereby, or taking other or additional security for payment thereof, shall not affect this mortgage or the rights of Mortgagee hereunder, or operate as a release from any liability upon any part of the indebtedness hereby secured under any covenant herein contained.

It is further stipulated and agreed by and between the parties that the Mortgagee shall have the right to exercise any option or privilege herein given or reserved and to enforce any duty of the Mortgagor at any time without further or other notice regardless of any prior waiver by Mortgagee or default of Mortgagor or delay by Mortgagee in exercising any right, option, or privilege or enforcing such duty of Mortgagor, and no waiver by Mortgagee of default of Mortgagor nor delay of Mortgagee in exercising any right, privilege or option or in enforcing any duty of Mortgagor shall be deemed, held, or construed to be a waiver of any of the terms or provisions of this mortgage or of any subsequent or continuing default.

The mortgagor further covenants and agrees to make all payments and perform all conditions and covenants called for in any prior mortgages now encumbering the property and in the event of default in any such payment or payments, conditions or stipulations, the Mortgagee, without waiving the option to foreclose, herein reserves the right to make such payments. Any and all such sums paid or expenses incurred on behalf of the Mortgagor, together with interest thereon from the date of payment at the rate of interest prescribed in the note underlying this mortgage, shall be added to the mortgage indebtedness and be secured by this mortgage.

It is further covenanted and agreed that if at any time in the opinion of Mortgagee a receivership may be necessary to protect the mortgaged property, or its rents, issues, profits, crops, or produce whether before or after maturity of the indebtedness hereby secured or at the time of or after the institution of suit to collect such indebtedness, or to enforce the mortgage, Mortgagee shall, as a matter of strict right and regardless of the value of the mortgage security for the amounts due hereunder or secured hereby, or of the solvency of any party bound for the payment of such indebtedness, have the right to the appointment on ex parte application, and without notice to anyone, by any Court having jurisdiction, of a receiver to take charge of, manage, preserve, protect, or operate the property.

It is further covenanted and made of the essence hereof that in case of default for ten (10) days in the performance of any of the covenants, agreements, terms, provisions, duties or obligations on the part of Mortgagor herein, on the part of the Borrower in the Note, or on the part of the Borrower or Mortgagor in any other instrument relating to or securing the Note, then it shall be optional with Mortgagee to consider all unmatured indebtedness or liability secured hereby, and accrued interest thereof, as immediately due and payable, without demand and without notice or declaration of said option, and Mortgagee shall have the right forthwith to institute proceedings to enforce the collection of all moneys secured hereby and/or to foreclose the lien hereof.

In the event that any of the covenants, agreements, terms, or provisions contained in the Note, this Mortgage or any other instrument relating to or securing the Note shall be invalid, illegal, or unenforceable in any respect, the validity of the remaining covenants, agreements, terms or provisions contained herein, in the Note, or in any other instrument relating to or securing the Note, shall be in no way affected, prejudiced, or disturbed thereby.

Notwithstanding any provision contained herein, the total liability of Borrower or Mortgagor for payment of interest including service charges, penalties and any other fees pursuant to the Note, this Mortgage or any other instrument relating to or securing the Note, shall not exceed the maximum amount of such interest permitted by applicable law to be charged, and if any payments by Mortgagor or Borrower include interest in excess of such maximum amount, Mortgagee shall apply such excess to the reduction of the unpaid principal amount due pursuant hereto.

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BORROWER AND LENDER KNOWINGLY, VOLUNTARILY AND INTENTIONALLY BY EXECUTING THIS AGREEMENT OR ANY OTHER DOCUMENT IN CONNECTION HEREWITH, WAIVE THEIR RIGHTS TO A TRIAL BY JURY IN ANY ACTION, WHETHER ARISING IN CONTRACT OR TORT, BY STATUTE OR OTHERWISE, IN ANY WAY RELATED TO THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF EITHER PARTY, OR ANY OF THEM. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER ENTERING INTO THIS AGREEMENT AND NO WAIVER OR LENDER ENTERING INTO THIS AGREEMENT AND NO WAIVER OR LIMITATION OF LENDER’S RIGHT UNDER THIS PARAGRAPH SHALL BE EFFECTIVE UNLESS IN WRITING AND MANUALLY SIGNED ON LENDER’S BEHALF.

IN WITNESS WHEREOF, Mortgagors have executed this mortgage the 25th day of June, 2008.

Signed, sealed and delivered

in the presence of:

	Action Products International, Inc., a Florida Corporation
/s/ Raymond Alberti	By:	/s/ Robert Burrows
Name printed: Raymond Alberti		Robert Burrows, Chief Financial Officer
/s/ Tomario Causey
Name printed: Tomario Causey

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