8-K

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):  May 13, 2010

ZAGG Incorporated

(Exact name of registrant as specified in its charter)

Nevada	000-52211	20-2559624
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

3855 South 500 West, Suite J Salt Lake City, Utah	84115
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code:  (801) 263-0699

___________________________________________________

(Former name or former address, if changed since last report)

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 (17CFR 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))

SECTION 1 – REGISTRANT’S BUSINESS AND OPERATIONS

Item 1.01 Entry into a Material Definitive Agreement.

ZAGG Incorporated (the “Company”) entered into (i) a Loan Agreement dated May 13, 2010 (the “Loan Agreement”) with U.S. Bank National Association (“U.S. Bank”), and (ii) a Security Agreement dated May 13, 2010 with U.S. Bank (the “Security Agreement”) and related agreements described in the Loan Agreement and/or Security Agreement.

The Loan Agreement provides for revolving loans and other financial accommodations to or for the benefit of the Company of up to $5 million, to be used for working capital and other corporate purposes.  The Company’s obligations under the Loan Agreement and all related agreements are secured by all or substantially all of the Company’s assets.  The obligation of U.S. Bank to make advances under the Loan Agreement is subject to the conditions set forth in the Loan Agreement.

The Loan Agreement and the credit facility mature on May 13, 2011.

Advances under the Loan Agreement bear interest at LIBOR plus 2%.  The default rate of interest is 3% per annum over the otherwise applicable interest rate.  In addition to the accrual of interest at the default rate, in the event a payment is more than fifteen days past due, the Company shall pay a late fee equal to five percent of the missed payment.

Monthly payments of accrued interest shall be due and payable on the fifth day of each month, commencing with June 5, 2010, and continuing on the fifth day of each month thereafter.

At maturity, the entire outstanding principal balance, all remaining accrued and unpaid interest and all other amounts outstanding are be due and payable in full to U.S. Bank.

The Loan Agreement contains customary representations and warranties, certain affirmative and negative covenants as well as events that constitute events of default.  The occurrence of an event of default could result in the acceleration of the obligations under the Loan Agreement. The Loan Agreement requires the Company to maintain a fixed charge coverage ratio of no less than 1.25 to 1.00 measured quarterly on a trailing twelve month basis and a leverage ratio of no greater than 2.0 to 1.0 measured quarterly on a trailing twelve month basis.  The Loan Agreement’s affirmative covenants require the Company to, among other things, deliver its financial statements, comply with applicable laws, and maintain its taxes and insurance.  The Loan Agreement’s negative covenants limit or restrict the Compan y's ability to, among other things, refund indebtedness or fund a distribution to equity holders, grant liens, or consummate mergers or the sale of assets.  Certain of these covenants are subject to certain exceptions which are outlined in the Loan Agreement.

The Loan Agreement, the Security Agreement and the related Revolving Promissory Note and Trademark Security Agreement are filed as exhibits to this Current Report on Form 8-K, and reference is hereby made to such documents for a more complete description of the terms of the agreements and the facility.

2

Item 1.02 Termination of Material Definitive Agreement.

In connection with its execution and delivery of the Loan Agreement and other agreements described or referenced in Item 1.01, the Company terminated its accounts receivable loan agreement with Faunus Group International, Inc. (“Faunus”), which is disclosed in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 15, 2009.  Under the agreement with Faunus, the Company is subject to provisions that require the Company to surrender $75,000.00 to terminate the agreement.

SECTION 2 – FINANCIAL INFORMATION

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

The information contained in Item 1.01 is incorporated herein by reference.

SECTION 9 – FINANCIAL STATEMENTS AND EXHIBITS

Item 9.01. Financial Statements and Exhibits.

Exhibit No.	Description
10.1	Loan Agreement dated as of May 13, 2010
10.2	Security Agreement dated as of May 13, 2010
10.3	Revolving Promissory Note dated as of May 13, 2010
10.4	Trademark Security Agreement dated as of May 13, 2010

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

ZAGG Incorporated

By:           / s/ BRANDON T. O’BRIEN

Brandon T. O’Brien

Chief Financial Officer

Date:           May 14, 2010

EX-10.1

LOAN AGREEMENT

This Loan Agreement (the “Agreement”) is entered into as of May 13, 2010 by and between ZAGG Incorporated, a Nevada corporation (“Borrower”), and U.S. Bank National Association (“Lender”).

RECITALS

Borrower has requested that Lender make a revolving loan to Borrower as described below, and Lender has agreed to provide such credit to Borrower on the terms and conditions contained herein.

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lender and Borrower hereby agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1                        DEFINITIONS.  As used in this Agreement, the following terms shall have the following meanings:

“Agreement” has the meaning given in the introductory paragraph hereto.

“Applicable Law” means, collectively, all applicable Federal, state, and local statutes, treaties, rules, guidelines, regulations, ordinances, codes, and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority.

“Availability Period” means the period from and including the Closing Date to the earliest of (a) the Maturity Date and (b) the date of the termination of the Commitment by agreement between Borrower and Lender or under Section 7.2.

“Bankruptcy Code” means the Bankruptcy Reform Act, Title 11 of the United States Code, as amended or recodified from time to time.

“Borrower” has the meaning given in the introductory paragraph hereto.

“Business Day” means any day except Saturday, Sunday or legal holiday observed by Lender.

“Closing Date” means the first date on which all the conditions precedent in Article IV are satisfied.

“Collateral” means the property encumbered by the Security Agreement and the other Loan Documents.

“Commitment” means the agreement of Lender to advance the Loan on a revolving basis in the principal amount not to exceed Five Million Dollars ($5,000,000.00) and in accordance with the terms of the Loan Documents.

“CPA” means certified public accountant.

“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

“ERISA” means the Employee Retirement Income Security Act of 1974 as amended from time to time and the rules and regulations with respect thereto.

“Environmental Laws” means any and all Federal, state, and local statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions related to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower directly or indirectly resulting from or based on (a) a violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) the release or threatened release of any Hazardous Materials into the environment, or (d) any contract, agreement or other consensual arrangement pursuant to which any such liability is assumed.

“Event of Default” has the meaning given in Section 7.1.

“Fixed Charge Coverage Ratio” means the ratio that is calculated by dividing (a) the sum of net income before interest expense, taxes, depreciation expense, amortization expenses and rent expense (EBITDAR), less cash distributions, accrued income taxes, and a maintenance capital expense as described below by (b) the sum of mandatory debt reductions, operating lease expense, rent expense, and interest expense.  For purposes of the Fixed Charge Coverage Ratio, the maintenance capital expense shall be deemed to be fifty percent (50%) of the non-real estate depreciation expense, prorated evenly for the measurement periods required.

“GAAP” means generally accepted accounting principles.

“Government Authority” means the government of the United States or of any political subdivision thereof, whether state or local, or any agency, authority, court or other entity exercising executive, judicial, taxing, regulatory or administrative powers.

“Hazardous Materials” means all hazardous or toxic substances, wastes or other pollutants regulated pursuant to any Environmental Law.

“Lender” has the meaning given in the introductory paragraph hereto.

“Letter of Credit” and “Letters of Credit” have the meaning given in Section 2.1.

“Leverage Ratio” means that ratio that is calculated by dividing (a) Total Funded Debt by (b) the sum of net income before interest expense, taxes, depreciation expense, and amortization expenses (EBITDA).

“Loan” has the meaning given in Section 2.1.

“Loan Documents” means this Agreement, the Note, the Security Agreement and each other agreement, instrument or other document to be delivered in connection with this Agreement.

“Material Adverse Effect” means a material adverse effect on (a) the ability of the Borrower to perform the Borrower’s payment or other obligations under the Loan Documents, (b) the rights or remedies of Borrower under the Loan Documents, or (c) the financial condition or business of the Borrower.

2

“Maturity Date” means May 13, 2011.

“Note” means the Revolving Promissory Note, in the form provided by Lender attached hereto as Exhibit A, dated on or about the date hereof and made by Borrower in favor of Lender, evidencing the Loan.

“Obligations” means all advances to, and debts, liabilities and other monetary obligations of Borrower under any Loan Document or otherwise with respect to the Loan, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising.

“Permitted Liens” means (i) liens in favor of Lender; (ii) liens existing as of the date hereof and disclosed by Borrower to Lender in writing; (iii) liens of carriers, warehousemen, mechanics, materialmen, vendors, and landlords incurred in the ordinary course of business for sums not overdue or being contested in good faith, provided that provision is made to the reasonable satisfaction of Lender, if requested by Lender, for the release of such lien to ensure the priority of Lender’s security interest in the Collateral; (iv) leases or subleases and licenses or sublicenses granted in the ordinary course of Borrower’s business; (v) liens upon or in any equipment which was acquired or held b y Borrower to secure the purchase price of such equipment or indebtedness incurred solely for the purpose of financing the acquisition of such equipment; (vi) liens for taxes not at the time delinquent or thereafter payable without penalty or being contested in good faith, provided provision is made to the reasonable satisfaction of Lender for the eventual payment thereof if subsequently found payable; and (vii) liens in favor of customs and revenue authorities arising as a matter of law to secure payments of customs duties in connection with the importation of goods.

“Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) and subject to ERISA that is or, within the preceding five years, has been established or maintained or to which contributions have been made or required by Borrower or, any ERISA affiliate or with respect to which Borrower or any ERISA affiliate may have liability.

“Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller of Borrower and solely, for purposes of Section 2.1, any other officer or employee of Borrower designated by any of the foregoing officers in a written notice to Lender.

“Security Agreement” means the Security Agreement dated on or about the date hereof and executed by Borrower in favor of Lender and granting to Lender a security interest in all assets of Borrower.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax, or penalties applicable thereto.

“Total Funded Debt” means the sum of, without duplication, (a) all obligations of Borrower for borrowed money, including, but not limited to the outstanding Loan, (b) all obligations, contingent or otherwise, of Borrower as an account party in respect of letters of credit, and (c) all capitalized lease obligations, all determined on a consolidated basis and in accordance with GAAP.

“Unused Commitment Amount” means the difference on each day in the immediately preceding quarter (or, in the case of the fee payable on the Maturity Date, on each day after the end of the prior quarter through the Maturity Date) between (a) the amount of the Commitment and (b) the aggregate principal amount of all Loan and Letters of Credit outstanding, calculated on an actual day, three hundred and sixty (360) day year basis.

3

ARTICLE II

CREDIT TERMS

SECTION 2.1                        COMMITMENT.  Subject to the terms and conditions of this Agreement, Lender hereby agrees to make credit advances on a revolving basis (collectively the “Loan”) to Borrower from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed the Commitment, the proceeds of which shall be used by Borrower for working capital and other corporate purposes.  Borrower’s obligation to repay the Loan shall be further evidenced by the Note.  Advances on the Loan shall be made pursuant to documentation or correspondence required by Lender that is signed or otherwise submitted by a Responsible Officer.

As a subfeature under the Loan, Lender agrees from time to time during the term thereof to issue standby letters of credit for the account of Borrower (each, a "Letter of Credit" and collectively, "Letters of Credit"). The form and substance of each Letter of Credit shall be subject to approval by Lender, in its sole discretion.  No Letter of Credit shall have an expiration date more than twelve (12) month past the Maturity Date.  The undrawn amount of all Letters of Credit shall reduce the Commitment and be reserved under the Loan and shall not be available for borrowings thereunder.  Each Letter of Credit shall be subject to the additional terms, conditions, fees, and rates set forth in the Letter of Credit agreements, applications and any related documents required by Lender in connection with the issuance thereof.  Each draft paid under a Letter of Credit shall be deemed an advance under the Loan and shall be repaid by Borrower in accordance with the terms and conditions of this Agreement applicable to such advances; provided however, that if advances under the Loan are not available, for any reason, at the time any draft is paid, then Borrower shall immediately pay to Lender the full amount of such draft, together with interest thereon from the date such draft is paid to the date such amount is fully repaid by Borrower, at the rate of interest applicable to the Letter of Credit.  Furthermore, upon the occurrence of the Maturity Date or an Event of Default, Borrower shall immediately pay to Lender an amount equal to all outstanding Letters of Credit to be held by Lender as collateral for the reimbursement obligation that would arise upon a draw under any such outstanding Letters of Credit.  In any such event Borrower agrees that Lender, in its sole discretion, may debit any account maintained by Borrower with Lender for the required amounts to be paid by Borrower.

SECTION 2.2                        INTEREST/PAYMENTS/FEES.

(a)           Interest.  The outstanding principal balance of the Loan shall bear interest at the rate or rates of interest set forth in the Note.

(b)           Computation and Payment.  Interest shall be computed on the basis of a Three Hundred Sixty (360) day year and actual days elapsed.  Interest and principal shall be payable at the times and place set forth in the Note.

(c)           Mandatory Payments of Principal.  If at any time the amount outstanding on the Loan exceeds the Commitment, Borrower shall immediately make principal reductions to ensure that the amount outstanding under the Loan does not exceed the Commitment.

(d)           Unused Fee. On the first Business Day of each calendar quarter, and on the Maturity Date, Borrower shall pay to Lender a nonrefundable fee equal to the Unused Commitment Amount for the immediately preceding calendar quarter (or portion thereof) at the per annum rate of two tenths of a percent (0.20%), calculated on a daily basis.

4

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Borrower makes the following representations and warranties to Lender, which representations and warranties shall survive the execution of this Agreement, and Borrower further covenants that all such representations and warranties shall remain true and correct until the full and final payment, and satisfaction and discharge, of all Obligations:

SECTION 3.1                        LEGAL STATUS.  The Borrower is duly organized and existing and in good standing under the laws of its incorporation or organization, and is qualified or licensed to do business (and is in good standing as a foreign entity, if applicable) in all jurisdictions in which such qualification or licensing is required or in which the failure to so qualify or to be so licensed could reasonably be expected to have a Material Adverse Effect.

SECTION 3.2.                                   AUTHORIZATION AND VALIDITY.  The Loan Documents have been duly authorized, and upon their execution and delivery will constitute legal, valid and binding agreements and obligations of the respective Borrower, enforceable in accordance with their respective terms except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally.

SECTION 3.3.                                   NO VIOLATION.  The execution, delivery and performance by the Borrower of each of the Loan Documents do not violate any Applicable Law, or contravene any provision of organizational documents of the Borrower or result in any breach of or default under any contract, obligation, indenture or other instrument to which the Borrower is a party or by which the Borrower may be bound.

SECTION 3.4.                                   LITIGATION.  There are no pending, or, to the best of Borrower’s knowledge, threatened, actions, claims, investigations, suits or proceedings by or before any Governmental Authority that could have a Material Adverse Effect other than those disclosed by Borrower to Lender in writing prior to the date hereof.

SECTION 3.5.                                   CORRECTNESS OF FINANCIAL STATEMENTS.  The most recent financial statements of Borrower provided to Lender (a) are complete and correct and present accurately and fairly in all material respects the financial condition of the Borrower, (b) disclose all liabilities of the Borrower that are required to be reflected or reserved against under GAAP, whether liquidated or unliquidated, fixed or contingent, and (c) have been prepared in accordance with GAAP consistently applied.  Since the date of such financial statements there has been no mat erial adverse change in the financial condition of the Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or otherwise encumbered any of the Collateral except for Permitted Liens.

SECTION 3.6.                                   PERMITS, FRANCHISES.  Borrower possesses and will hereafter possess all permits, consents, approvals, franchises and licenses required by Government Authorities to enable Borrower to conduct the business in which it is now engaged in material compliance with Applicable Law.

SECTION 3.7.                                   ERISA.  Borrower is in compliance in all material respects with all applicable provisions of ERISA; Borrower has not violated any provision of any Plan; no “Reportable Event” as defined in ERISA has occurred and is continuing with respect to any Plan initiated by Borrower; Borrower has met its minimum funding requirements under ERISA with respect to each Plan; and each Plan will be able to fulfill its benefit obligations as they come due in accordance with the Plan documents and under GAAP.

5

SECTION 3.8.                                   OTHER OBLIGATIONS.  Borrower is not in default on any Tax obligation or any obligation for borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument or obligation except such (a) as Borrower may in good faith contest or as to which a bona fide dispute may arise, and (b) for which Borrower has made provision for eventual payment thereof in the event Borrower is obligated to make such payment.

SECTION 3.9.                                   ENVIRONMENTAL MATTERS.  Borrower is in compliance in all material respects with all Environmental Laws.  None of the operations of Borrower is the subject of any Governmental Authority investigation evaluating Borrower’s compliance with Environmental Laws or whether any remedial action under Environmental Laws involving a material expenditure is needed with respect to Borrower’s operations.

SECTION 3.10.                                   ANTI-MONEY LAUNDERING.  The Borrower is in compliance, in all material respects, with the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).  No part of the proceeds of the Loans will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

ARTICLE IV

CONDITIONS

SECTION 4.1.                                   CONDITIONS OF INITIAL ADVANCE ON LOAN.  The Commitment and the obligation of Lender to fund the Loan are subject to the fulfillment to Lender’s satisfaction of all of the following conditions precedent:

(a)             Approval of Lender Counsel.  All legal matters incidental to the extension of credit by Lender shall be reasonably satisfactory to Lender’s counsel.

(b)             Documentation.  Lender shall have received, in form and substance satisfactory to Lender, each of the following, duly executed:

(i) This Agreement.

(ii) The Note.

(iii) The Security Agreement.

(iv) A certificate for the Borrower certifying as to any required attachments thereto and to the resolutions and other proceedings relating to the authorization, execution and delivery of each Loan Document to which the Borrower is a party.

(v) Organizational documents and good standing certificates for the Borrower.

(vi) A certified Uniform Commercial Code search indicating that the security interests of Lender in the Collateral and the financing statements with respect thereto are in a first priority position subject only to the Permitted Liens.

(vii) Such other documents and filings (including written releases by current warehouses and shippers holding inventory) as Lender deems necessary to perfect its security interests in the Collateral.

(viii) A collateral filing with the Patent and Trademark Office with respect to any trademarks included in the Collateral.

(ix) Such other documents as Lender may reasonably require under any other section of this Agreement or as contemplated by the other Loan Documents.

6

(c)             Financial Condition.  There shall have been no material adverse change, as determined by Lender, in the financial condition or business of the Borrower.

(d)             Fees.  Any fees required to be paid on or before the Closing Date shall have been paid.

(e)             Reimbursements.  Borrower shall have reimbursed Lender for all out-of-pocket costs and expenses incurred in connection with the preparation and negotiation of the Loan Documents and the closing of the Loan, including without limitation title expenses, filing fees, appraisal fees, environmental audits, and reasonable attorneys’ fees.

SECTION 4.2                        CONDITIONS TO ALL ADVANCES ON LOAN.  The obligation of Lender to the Loan is subject also to the following conditions precedent:

(a)             Representations and Warranties.  The representations and warranties of the Borrower contained in this Agreement or the other Loan Documents shall be true and correct in all material respects on and as of the date of such advance, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respect as of such earlier date.

(b)             No Default.  No Default shall exist, or would result from such proposed advance on the Loan or from the application of the proceeds thereof.

ARTICLE V

AFFIRMATIVE COVENANTS

Borrower agrees to the following so long as Lender has the Commitment hereunder or any Obligation remains outstanding and unpaid:

SECTION 5.1.                                   PUNCTUAL PAYMENTS.  Borrower shall pay all Obligations when due at the times and place and in the manner specified therein.

SECTION 5.2.                                   ACCOUNTING RECORDS.  Borrower shall maintain adequate books and records in accordance with GAAP, consistently applied, and permit any representative of Lender, during business hours and after reasonable notice, to inspect, audit and examine such books and records and to make copies of the same.

SECTION 5.3.                                   COMPLIANCE.  Borrower shall maintain all licenses, permits, governmental approvals, rights, privileges and franchises necessary for the conduct of its business; and comply with the provisions of all documents pursuant to which Borrower is organized and/or which govern Borrower’s continued existence and with the requirements of all Applicable Laws of any Governmental Authority applicable to Borrower or its business.

SECTION 5.4.                                   INSURANCE.  Borrower shall maintain and keep in force insurance of the types and in amounts customarily carried in lines of business similar to that of Borrower, including but not limited to fire, extended coverage, public liability, flood, property damage and workers’ compensation, and such other insurance as may be required by the other Loan Documents.

7

SECTION 5.5.                                   TAXES AND OTHER LIABILITIES.  Borrower shall pay and discharge when due any and all Taxes, except such (a) as Borrower may in good faith contest or as to which a bona fide dispute may arise, and (b) for which Borrower has made provision for eventual payment thereof in the event Borrower is obligated to make such payment.

SECTION 5.6.                                   NOTICE TO LENDER.  Borrower shall promptly give written notice to Lender in reasonable detail of any Default.

SECTION 5.7.                                   FINANCIAL COVENANTS.  Borrower shall comply with the following covenants:

a. Borrower shall maintain a Fixed Charge Coverage Ratio of no less than 1.25 to 1.00 measured quarterly on a trailing twelve (12) month basis.

b.   Borrower shall maintain at all times a Leverage Ratio of no greater than 2.0 to 1.0, measured quarterly on a trailing twelve (12) month basis.

SECTION 5.8.                                   FINANCIAL INFORMATION.  Borrower shall provide to Lender the following financial statements and information:

a. Annual CPA audited financial statements for Borrower due within one hundred twenty (120) days after each fiscal year-end;

b. Quarterly internally-prepared financial statements for Borrower (with year-to-date information) due within forty-five (45) days after the end of the first, second and third quarters of each fiscal year;

c. Quarterly aging reports for accounts receivable (including names, addresses, and account balance for each account debtor) to be provided within thirty (30) days after the end of each fiscal quarter;

d. Quarterly compliance certificates (due within forty-five (45) days of each quarter) affirming compliance with the financial covenants under Section 5.7; and

e. Such budgets, forecasts, and other financial information as Lender may reasonably request.

ARTICLE VI

NEGATIVE COVENANTS

Borrower agrees to the following so long as any Obligation remains outstanding and unpaid:

SECTION 6.1.                                   USE OF LOAN.  Borrower shall use the Loan proceeds for the purposes stated in Section 2.1.  Borrower will not use the Loan proceeds for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the board of governors of the Federal Reserve System of the United States), or for the purpose of extending credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.  Borrower will not use the Loan proceeds for the purpose of funding a dividend or distribution to Borrower’s equity holders.

8

SECTION 6.2.                                   MERGER, CONSOLIDATION, TRANSFER OF ASSETS.  Borrower shall not merge into or consolidate with any other entity; make any substantial change in the nature of Borrower’s business as conducted as of the date hereof; nor sell, lease (except in the ordinary course of Borrower’s business), transfer or otherwise dispose of all or a substantial or material portion of Borrower’s assets.  Disposition of assets shall occur only in the normal course of business or in circumstances of replacement for obsolescence.

SECTION 6.3.                                   NEGATIVE PLEDGE.  Borrower shall not mortgage, pledge, grant or permit to exist a security interest in, or lien upon, all or any portion of the Collateral, except for the granting or imposition of Permitted Liens.  Lender acknowledges the credit agreement between Borrower and Faunus Group International, Inc., which will be paid and terminated with the initial advance on the Loan, with a UCC termination statement filed thereon by Faunus Group International, Inc., terminating all security interests claimed by Faunus Group International, Inc.

ARTICLE VII

EVENTS OF DEFAULT

SECTION 7.1.                                   EVENTS OF DEFAULT.  The occurrence of any of the following shall constitute an “Event of Default” under this Agreement and the other Loan Documents:

(a)             Borrower shall fail to pay (i) any Obligation for the payment of principal when due, (ii) any Obligation for the payment of interest within seven (7) days after the date it is due, or (iii) any other monetary Obligation within seven (7) days after the date it is due.

(b)             Borrower shall default in compliance with Section 5.7.

(c)             Any financial statement or certificate furnished to Lender in connection with, or any representation or warranty made by the Borrower in any Loan Document, shall prove to be incorrect, false or misleading in any material respect when furnished or made.

(d)             Any default in the performance of or compliance with any obligation, agreement or other provision contained in any other Loan Document (other than those referred to in subsections (a), (b), and (c) above), and with respect to any such default which by its nature can be cured, such default shall continue for a period of thirty (30) days after date the Lender becomes aware of such nonperformance or noncompliance.

(e)             A default or event of default occurs under any other credit transaction between the Borrower and Lender permitting Lender to accelerate or otherwise exercise remedies with respect to that other credit transaction.

(f)             A default or event of default occurs under any other credit transaction between the Borrower and a creditor other than Lender (and the amount outstanding exceeds One Hundred Thousand Dollars ($100,000.00)), permitting that creditor to accelerate or otherwise exercise remedies with respect to that other credit transaction.

(g)             Any judgment not covered by insurance shall be obtained against the Borrower which, together with all other outstanding unsatisfied judgments against the Borrower, shall exceed the sum of One Hundred Thousand Dollars ($100,000.00) and shall remain unvacated, unbonded or unstayed for a period of thirty (30) days following the date of entry thereof; provided that a judgment shall not be deemed “covered by insurance” for the purposes of this Agreement in the event that the insurer providing primary or secondary coverage potentially applicable to such judgment shall have issued a reservation of rights notice, letter or statement to Borrower or shall be contesting the applicability of its insurance cov erage to such judgment.

9

(h)             The Borrower shall become insolvent, or shall suffer or consent to or apply for the appointment of a receiver, trustee, custodian or liquidator for the Borrower or any of its property, or shall generally fail to pay debts as they become due, or shall make a general assignment for the benefit of creditors; the Borrower shall file a voluntary petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Code, or under any Applicable Law granting relief to debtors, whether now or hereafter in effect; or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any other Applicable Law relating to bankruptc y, reorganization or other relief for debtors is filed or commenced against the Borrower and such involuntary petition or proceeding is not dismissed within sixty days of filing, or the Borrower shall file an answer admitting the jurisdiction of the court and the material allegations of any involuntary petition; or an order for relief shall be entered against the Borrower by any court of competent jurisdiction under the Bankruptcy Code or any other Applicable Law relating to bankruptcy, reorganization or other relief for debtors.

(i)             Lender deems itself insecure as a result of circumstances with a Material Adverse Effect.

SECTION 7.2.                                REMEDIES.  Upon the occurrence of an Event of Default: (a) Lender may declare all Obligations immediately due and payable in full without presentment, demand, protest or notice to Borrower, all of which are hereby expressly waived by Borrower except for those rights of notice and cure expressly described herein; (b) Lender may declare the Commitment immediately terminated; and (c) Lender shall have all rights, powers and remedies available under each of the Loan Documents or accorded by Applicable Law.  All rights, powers and remedies of Lender may be exer cised at any time by Lender and from time to time after the occurrence of an Event of Default and are cumulative.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.1.                                   DEPOSIT ACCOUNTS.  As security for the Obligations, Borrower hereby grants to Lender a security interest in all deposit accounts (as that term is defined in Chapter 9a of the Utah Uniform Commercial Code) held by Borrower at Lender.  In addition to that security interest, Lender shall have all rights of setoff provided by Applicable Law with respect to such deposit accounts of Borrower.  Upon the occurrence of an Event of Default, Lender shall have the right to apply immediately all funds in those deposit accounts against the outstanding Obl igations without notice to Borrower.

SECTION 8.2.                                   NO WAIVER.  No delay, failure or discontinuance of Lender in exercising any right, power or remedy under any of the Loan Documents shall affect or operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any such right, power or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power or remedy.  Any waiver, forbearance, consent or approval of any kind by Lender with respect to any Event of Default must be in a writing signed by Lender and shall be effective only to the extent set forth in such writing.

10

SECTION 8.3.                                   NOTICES.  All notices, requests and demands which any party is required or may desire to give to any other party under the Loan Documents must be in writing delivered to each party at the following address:

BORROWER:                    ZAGG Incorporated

3855 South 500 West, Suite J

Salt Lake City, Utah 84115

Attn:  Brandon T. O’Brien

LENDER:                    U.S. Bank National Association

170 South Main Street, Sixth Floor

Salt Lake City, Utah 84101

Attn: Nate Quist

or to such other address as any party may designate by written notice to all other parties.  Each such notice, request and demand shall be deemed given or made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, upon the earlier of the date of receipt or two days after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by overnight delivery service, one day after the date it is given to the service.

SECTION 8.4.                                   COSTS, EXPENSES AND ATTORNEYS’ FEES.  Borrower shall pay to Lender immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys’ fees expended or incurred by Lender in connection with (a) the enforcement of Lender’s rights in the collection of any amounts which become due to Lender under any of the Loan Documents, (b) any workout negotiations and measures (with Lender having no obligation to undertake such negotiations, and measures), and (c) the prosecution or defense of any ac tion in any way related to any of the Loan Documents, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, and including any of the foregoing incurred in connection with any bankruptcy or insolvency proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Lender or any other person) relating to the Borrower or any other person or entity.

SECTION 8.5.                                   SUCCESSORS, ASSIGNMENT.  This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties; provided however, that Borrower may not assign or transfer its rights and obligations hereunder without Lender’s prior written consent.  Lender reserves the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, Lender’s rights and benefits under each of the Loan Documents.  In connection therewith, Lender may disclose all documents and informat ion which Lender now has or may hereafter acquire relating to the Loan, the Loan Documents, the Borrower, or its respective business, provided that such other party agrees with Lender to keep such matters confidential.

SECTION 8.6.                                   ENTIRE AGREEMENT; AMENDMENT.  This Agreement and the other Loan Documents constitute the entire agreement between Borrower and Lender with respect to each credit subject hereto and supersede all prior negotiations, communications, discussions and correspondence concerning the subject matter hereof.  This Agreement may be amended or modified only in writing signed by each party hereto.

SECTION 8.7.                                   NO THIRD PARTY BENEFICIARIES.  This Agreement is made and entered into for the sole protection and benefit of the parties hereto and their respective permitted successors and assigns, and no other person or entity shall be a third party beneficiary of, or have any direct or indirect cause of action­ or claim in connection with, this Agreement or any other of the Loan Documents to which it is not a party.

11

SECTION 8.8                        INDEMNIFICATION.  Except for harm arising from Lender’s gross negligence or willful misconduct as determined in a final order issued by a court of competent jurisdiction, Borrower hereby indemnifies and agrees to defend and hold Lender, its directors, officers, employees, and agents harmless from any and all losses, costs, damages, claims and expenses of any kind (whether based on contract, intentional tort, negligence, or otherwise) suffered by or asserted against one or more of such indemnitees related to claims by third parties arising out of (a) the financing provided under the Loan Documents and/or (b) the Borrower& #8217;s breach of or noncompliance with Environmental Laws or circumstances related to Hazardous Materials.  This indemnification and hold harmless provision will survive the termination of the Loan Documents and repayment of the Obligations.

SECTION 8.9                        JURISDICTION.  Any suit, action or proceeding with respect to the Loan Documents must be brought in (a) the courts of Salt Lake County, State of Utah, or (b) the United States District Court for the District of Utah, and Borrower hereby submits to any such suit, action, proceeding or judgment and waives any other preferential jurisdiction by reason of domicile.  Borrower hereby consents to the service of process provided by applicable law.  Borrower waives any objection which it may now or hereafter have to the laying of the venue of any suit, action or proceeding arising out of or relating to the Loan Docu ments brought in the courts identified above and also irrevocably waives any claim that any such suit, action or proceeding brought in any of those courts has been bought in an inconvenient forum.

SECTION 8.10                                   WAIVER OF JURY TRIAL.  BORROWER AND LENDER HEREBY JOINTLY AND SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS THEREUNDER, OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED THERETO. BORROWER AND LENDER EACH REPRESENTS TO THE OTHER THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.

SECTION 8.11.                                   TIME.  Time is of the essence of each and every provision of this Agreement and each other of the Loan Documents.

SECTION 8.12.                                   SEVERABILITY OF PROVISIONS.  If any provision of this Agreement shall be prohibited by or invalid under Applicable Law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or any remaining provisions of this Agreement.

SECTION 8.13.                                   COUNTERPARTS.  This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be deemed to be an original, and all of which when taken together shall constitute one and the same Agreement.

SECTION 8.14.                                   GOVERNING LAW.  This Agreement shall be governed by and construed in accordance with the laws of the State of Utah, without reference to conflict of law rules.

**Signatures on following page**

12

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

“Borrower”

ZAGG Incorporated

By:                                                                    

Name:                                                                    

Title:                                                                    

“Lender”

U.S. Bank National Association

By:                                                                    

Name:                                                                    

Title:                                                                    

EX-10.2

SECURITY AGREEMENT

This Security Agreement (“Agreement”) is made as of May 13, 2010, by and between ZAGG Incorporated, a Nevada corporation (“Debtor”), and U.S. Bank National Association (“Secured Party”).

WHEREAS, Debtor has entered into a Loan Agreement on or about the date hereof (the “Loan Agreement”) with Secured Party, pursuant to which Secured Party, subject to the terms and conditions contained therein, is to make available to Debtor a revolving loan in the stated principal amount of Five Million Dollars ($5,000,000.00) (“Loan”);

WHEREAS, it is a condition precedent to Secured Party’s making the Loan to Debtor under the Loan Agreement that Debtor execute and deliver to Secured Party a security agreement in substantially the form hereof encumbering certain personal property of the Debtor; and

WHEREAS, Debtor wishes to grant a security interest in favor of Secured Party in all of Debtor’s Collateral as herein provided.

NOW, THEREFORE, in consideration of the promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.           Definitions.  All capitalized terms used herein without definitions shall have the respective meanings provided therefor in the Loan Agreement. All terms defined in the Article 9 equivalent of the Utah Uniform Commercial Code, as may be amended (the “Uniform Commercial Code”), and used herein shall have the same definitions herein as specified therein. In addition to the foregoing, the following terms as used herein are defined as follows:

1.1           Obligations.  Means, collectively, (a) the payment of the Loan from Secured Party to Debtor pursuant to the Loan Agreement as evidenced also by that certain Revolving Promissory Note (“Note”), executed (or to be executed) by Debtor and payable to the order of Secured Party, together with interest thereon and charges with respect thereto, and any and all advances now or hereafter made by Secured Party under the terms and conditions of the  Loan Agreement, the Note, or this Agreement, and any and all renewals, replacements, amendments, modifications or extensions of the Loan Agreement, the Note or this Agreement; (b) all of the terms, conditions, agreements, stipulations, covenants, and provisions of this Agreement, the Loan Agreement and any other agreement, document or instrument executed in connection therewith (with the Note, the Loan Agreement, this Agreement and all such other agreements, documents and instruments referred to as the “Loan Documents”) and any and all renewals, replacements, amendments, modifications or extensions thereof, given by Debtor to Secured Party to evidence or to secure the indebtedness secured hereby; (c) all obligations owed to Secured Party or any of its affiliates under any and all interest rate protection agreements executed by Debtor in connection with the Loan Documents; (d) all late charges, default interest, prepayment charges or premiums, loan fees, commitment fees and extension fees described in the Note or the Loan Agreement and all costs of collecting the indebtedness or other amounts evidenced by the Note or described in this Agreement or the Loan Agreement, including any and all costs and expenditures of a receiver in possession and reasonable attorneys’ fees; (e) payment of all sums advanced by Secured Party to protect the Collateral, with interest thereon equal to the highest default rate as provided by the Note; and (f) all modifications, extensions and renewals of any of the obligations secured hereby, however evidenced. This Agreement shall also secure the payment and performance of any additional credit that may hereafter be extended by Secured Party to Debtor.

1.2           Event of Default.  Means the occurrence of an Event of Default under the Loan Agreement, including without limitation the failure of Debtor to pay or perform any of the Obligations as and when due to be paid or performed under the terms of the Loan Agreement, the Note and other Loan Documents (after the expiration of any stated grace or notice period, as applicable).

2.           Grant of Security Interest.  Debtor hereby grants to Secured Party, to secure the payment and performance in full of all of the Obligations, a security interest in and so pledges and assigns to Secured Party the following properties, assets and rights of Debtor, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof (all of the same being hereinafter called the “Collateral”): all inventory, accounts, instruments; chattel paper; documents, contract rights, letter of credit rights, deposit accounts, general intangibles representing the right to the payment of money, payment intangibles, and general intangibles related to the manufac turing, packaging or marketing of inventory, including without limitation trademarks and trademark applications.

3.           Authorization to File Financing Statements.  Debtor hereby irrevocably authorizes Secured Party at any time and from time to time to file in any filing office in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that (a) indicate the Collateral (i) as all assets of Debtor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the Uniform Commercial Code or such jurisdiction, or (ii) as being of an equal or lesser scope or with greater detail, and (b) provide any other information required by Part 5 of Article 9 of the Uniform Commercial Code or such other jurisdictio n, for the sufficiency or filing office acceptance of any financing statement or amendment.  Debtor also ratifies its authorization for Secured Party to have filed in any Uniform Commercial Code jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof.

4.           Other Actions.  To further the attachment, perfection and first priority of, and the ability of Secured Party to enforce, Secured Party’s security interest in the Collateral, and without limitation on Debtor’s other obligations in this Agreement, Debtor agrees, in each case at Debtor’s expense, to take the following actions with respect to the following Collateral:

4.1           Promissory Notes and Tangible Chattel Paper.  If Debtor shall at any time hold or acquire any promissory notes, tangible chattel paper, negotiable documents, or warehouse receipts related to the Collateral, Debtor shall forthwith endorse, assign and deliver the same to Secured Party, accompanied by such instruments of transfer or assignment duly executed in blank as Secured Party may from time to time specify.

4.2           Collateral in the Possession of a Bailee. If any Collateral is at any time in the possession of a bailee, Debtor shall promptly notify Secured Party thereof and, at Secured Party’s request and option, shall promptly obtain an acknowledgement from the bailee, in form and substance satisfactory to Secured Party, that the bailee holds such Collateral for the benefit of Secured Party, and that such bailee agrees to comply, without further consent of Debtor, with instructions from Secured Party as to such Collateral. Secured Party agrees with Debtor that Secured Party shall not give any such instructions unless an Event of Default has occurred and is con tinuing or would occur after taking into account any action by Debtor with respect to the bailee.

4.3           Other Actions as to Any and All Collateral.  Debtor further agrees, at the request and option of Secured Party, to take any and all other actions Secured Party may determine to be necessary or useful for the attachment, perfection and first priority of, and the ability of Secured Party to enforce, Secured Party’s security interest in any and all of the Collateral, including, without limitation, (a) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the Uniform Commercial Code, to the extent, if any, that Debtor’s signature thereon is required therefor, (b) causing Secured Party’s name to be noted as secured party o n any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of Secured Party to enforce, Secured Party’s security interest in such Collateral, (c) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of Secured Party to enforce, Secured Party’s security interest in such Collateral, (d) obtaining governmental and other third party waivers, consents and approvals in form and substance satisfactory to Secured Party, including, without limitation, any consent of any licensor, lessor or other person obligated on Collateral, (e) obtaining waivers from mortgagees, warehousemen, and landlords in form and substance satisfactory to Secured Party, (f) obtaining control agreements from third parties with respect to Collateral that must or may be perfected by control, and (g) takin g all actions under any earlier versions of the Uniform Commercial Code or under any other law, as reasonably determined by Secured Party to be applicable in any relevant Uniform Commercial Code or other jurisdiction, including any foreign jurisdiction.

2

5.           Relation to Other Security Documents.  The provisions of this Agreement supplement the provisions of any other collateral document granted by Debtor to Secured Party which secures the payment or performance of any of the Obligations. Nothing contained in any such other collateral document shall affect or limit any of the rights or remedies of Secured Party hereunder.

6.           Representations and Warranties Concerning Debtor’s Legal Status.  Debtor represents and warrants to Secured Party as follows: (a) Debtor’s exact legal name is that indicated in the introductory paragraph hereto and on the signature page hereof, and (b) Debtor is an organization of the type, and is organized in the jurisdiction set forth in the introductory paragraph hereto.

7.           Covenants Concerning Debtor’s Legal Status.  Debtor covenants with Secured Party as follows: (a) without providing at least thirty (30) days’ prior written notice to Secured Party, Debtor will not change its name, its place of business or, if more than one, chief executive office, or its mailing address or organizational identification number if it has one, (b) if Debtor does not have an organizational identification number and later obtains one, Debtor shall forthwith notify Secured Party of such organizational identification number, and (c) Debtor will not change its type of organization, jurisdiction of organization or other legal structure.

8.           Representations and Warranties Concerning Collateral, etc.  Debtor further represents and warrants to Secured Party as follows: (a) Debtor is the owner of or has other rights in or power to transfer the Collateral, free from any right or claim or any person or any adverse lien, security interest or other encumbrance, except for the security interest created by this Agreement and other liens permitted, if any, by the Loan Agreement, (b) none of the account debtors or other persons obligated on any of the Collateral is a governmental authority covered by the Federal Assignment of Claims Act or like federal, state or local statute or role in respect of such Collateral, and (c) Debtor has at all ti mes operated its business in compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances.

9.           Covenants Concerning Collateral, etc.  Debtor further covenants with Secured Party as follows: (a) except for the security interest herein granted and liens permitted by the Loan Agreement, Debtor shall be the owner of or have other rights in the Collateral free from any right or claim of any other person, lien, security interest or other encumbrance, and Debtor shall defend the same against all claims and demands of all persons at any time claiming the same or any interests therein adverse to Secured Party, (b) Debtor shall not pledge, mortgage or create, or suffer to exist any right of any person in or claim by any person to the Collateral, or any security interest, lien or encumbrance in the Collateral in favor of any person, other than Secured Party except for liens permitted by the Loan Agreement, (c) Debtor will keep the Collateral in good order and repair and will not use the same in violation of law or any policy of insurance thereon, (d) Debtor will permit Secured Party, or its designee, to inspect the Collateral at any reasonable time, wherever located, (e) Debtor will pay promptly when due all taxes, assessments, governmental charges and levies upon the Collateral or incurred in connection with the use or operation of such Collateral or incurred in connection with this Agreement, (f) Debtor will continue to operate its business in compliance with all applicable provisions of the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances, and (g) Debtor will not sell or otherwise dispose, or offer to sell or otherwise dispose, of the Collateral or any interest therein except for sales of inventory in the ordinary course of business.

3

10.           Insurance.

10.1           Maintenance of Insurance.  Debtor will maintain with financially sound and reputable insurers insurance with respect to its properties and business against such casualties and contingencies as shall be in accordance with general practices of businesses engaged in similar activities in similar geographic areas. Such insurance shall be in such minimum amounts that Debtor will not be deemed a co-insurer under applicable insurance laws, regulations and policies and otherwise shall be in such amounts, contain such terms, be in such forms and be for such periods as may be reasonably satisfactory to Secured Party. In addition, all such insurance in respect of the Collateral shall be payable to Secu red Party as loss payee. Without limiting the foregoing, Debtor will (i) keep all of its physical property insured with casualty or physical hazard insurance on an “all risks” basis, with a full replacement cost endorsement and an “agreed amount” clause in an amount equal to one hundred percent (100%) of the full replacement cost of such property, (ii) maintain all such workers’ compensation or similar insurance as may be required by law, and (iii) maintain, in amounts and with deductibles equal to those generally maintained by businesses engaged in similar activities in similar geographic areas, general public liability insurance against claims of bodily injury, death or property damage occurring, on, in or about the properties of Debtor; business interruption insurance; and product liability insurance.

10.2           Insurance Proceeds.  The proceeds of any casualty insurance in respect of any casualty loss of any of the Collateral shall, subject to the rights, if any, of other parties with an interest having priority in the property covered thereby, (a) so long as no Event of Default has occurred and is continuing and to the extent that the amount of such proceeds is less than Fifty Thousand Dollars ($50,000.00), be disbursed to Debtor for direct application by Debtor solely to the repair or replacement of Debtor’s property so damaged or destroyed, and (b) in all other circumstances, be held by Secured Party as cash collateral for the Obligations. Secured Party may, at its sole option, disburse fr om time to time all or any part of such proceeds so held as cash collateral, upon such terms and conditions as Secured Party may reasonably prescribe, for direct application by Debtor solely to the repair or replacement of Debtor’s property so damaged or destroyed, or Secured Party may apply all or any part of such proceeds to the Obligations.

10.3           Continuation of Insurance.  All policies of insurance in respect of the Collateral shall provide for at least thirty (30) days’ prior written cancellation notice to Secured Party. In the event of failure by Debtor to provide and maintain insurance as herein provided, Secured Party may, at its option, provide such insurance and charge the amount thereof to Debtor. Debtor shall furnish Secured Party with certificates of insurance and policies evidencing compliance with the foregoing insurance provision.

4

11.           Collateral Protection Expenses; Preservation of Collateral.

11.1           Expenses Incurred by Secured Party.  In Secured Party’s discretion, if Debtor fails to do so, Secured Party may discharge taxes and other encumbrances at any time levied or placed on any of the Collateral, maintain any of the Collateral, make repairs thereto and pay any necessary filing fees or insurance premiums. Debtor agrees to reimburse Secured Party on demand for all expenditures so made. Secured Party shall have no obligation to Debtor to make any such expenditures, nor shall the making thereof be construed as the waiver or cure of any Event of Default.

11.2           Secured Party’s Obligations and Duties.  Anything herein to the contrary notwithstanding, Debtor shall remain obligated and liable under each contract or agreement comprised in the Collateral to be observed or performed by Debtor thereunder. Secured Party shall not have any obligation or liability under any such contract or agreement by reason of or arising out of this Agreement or the receipt by Secured Party of any payment relating to any of the Collateral, nor shall Secured Party be obligated in any manner to perform any of the obligations of Debtor under or pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment received by Secured Party in respect of the Collateral or as to the sufficiency of any performance by any party under any such contract or agreement, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to Secured Party or to which Secured Party may be entitled at any time or times. Secured Party’s sole duty with respect to the custody, safe keeping and physical preservation of the Collateral in its possession, under Section 9-207 of the Uniform Commercial Code or otherwise, shall be to deal with such Collateral in the same manner as Secured Party deals with similar property for its own account.

12.           Securities and Deposits.  Secured Party may at any time following and during the continuance of an Event of Default, at its option, transfer to itself or any nominee any securities constituting Collateral, receive any income thereon and hold such income as additional Collateral or apply it to the Obligations. Whether or not any Obligations are due, Secured Party may following and during the continuance of an Event of Default, demand, sue for, collect, or make any settlement or compromise which it deems desirable with respect to the Collateral. Regardless of the adequacy of Collateral or any other security for the Obligations, any deposits or other sums at any time credited by or due from Secur ed Party to Debtor may at any time be applied to or set off against any of the Obligations.

13.           Notification to Account Debtors and Other Persons Obligated on Collateral.  If an Event of Default shall have occurred and be continuing, Debtor shall, at the request and option of Secured Party, notify account debtors and other persons obligated on any of the Collateral of the security interest of Secured Party in any account, chattel paper, general intangible, instrument or other Collateral and that payment thereof is to be made directly to Secured Party or to any financial institution designated by Secured Party as Secured Party’s agent therefor, and Secured Party may itself, if an Event of Default shall have occurred and be continuing, without notice to or demand upon Debtor, so noti fy account debtors and other persons obligated on Collateral. After the making of such a request or the giving of any such notification, Debtor shall hold any proceeds of collection of accounts, chattel paper, general intangibles, instruments and other Collateral received by Debtor as trustee for Secured Party without commingling the same with other funds of Debtor and shall turn the same over to Secured Party in the identical form received, together with any necessary endorsements or assignments. Secured Party shall apply the proceeds of collection of accounts, chattel paper, general intangibles, instruments and other Collateral received by Secured Party to the Obligations, such proceeds to be immediately credited after final payment in cash or other immediately available funds of the items giving rise to them.

5

14.           Power of Attorney.

14.1           Appointment and Powers of Secured Party.  Debtor hereby irrevocably constitutes and appoints Secured Party and any officer or agent thereof, with full power of substitution, as its true and lawful attorneys-in-fact with full irrevocable power and authority in the place and stead of Debtor or in Secured Party’s own name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate action and to execute any and all documents and instruments that may be necessary or useful to accomplish the purposes of this Agreement and, without limiting the generality of the foregoing, hereby gives said attorneys the power and right, on behalf of Debtor, without notice to or assent by Debtor, to do the following:

(a)           upon the occurrence and during the continuance of an Event of Default, generally to sell, transfer, pledge, make any agreement with respect to or otherwise dispose of or deal with any of the Collateral in such manner as is consistent with the Uniform Commercial Code and as fully and completely as though Secured Party were the absolute owner thereof for all purposes, and to do, at Debtor’s expense, at any time, or from time to time, all acts and things which Secured Party deems necessary or useful to protect, preserve or realize upon the Collateral and Secured Party’s security interest therein, in order to effect the intent of this Agreement, all at least as fully and effectively as Debtor might do, including, without limitation, (i) the filing and prosec uting of registration and transfer applications with the appropriate federal, state, local or other agencies or authorities with respect to trademarks, copyrights and patentable inventions and processes, (ii) upon written notice to Debtor, the exercise of voting rights with respect to voting securities, which rights may be exercised, if Secured Party so elects, with a view to causing the liquidation of assets of the issuer of any such securities, and (iii) the execution, delivery and recording, in connection with any sale or other disposition of any Collateral, of the endorsements, assignments or other instruments of conveyance or transfer with respect to such Collateral; and

(b)           to the extent that Debtor’s authorization given in Section 3 is not sufficient, to file such financing statements with respect hereto as Secured Party may deem appropriate.

14.2           Ratification by Debtor.  To the extent permitted by law, Debtor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and is irrevocable.

14.3           No Duty on Secured Party.  The powers conferred on Secured Party hereunder are solely to protect its interests in the Collateral and shall not impose any duty upon it to exercise any such powers. Secured Party shall be accountable only for the amounts that it actually receives as a result of the exercise of such powers, and neither it nor any of its officers, directors, employees or agents shall be responsible to Debtor for any act or failure to act, except for Secured Party’s own gross negligence or willful misconduct.

15.           Rights and Remedies.  If an Event of Default shall have occurred and be continuing, Secured Party, without any other notice to or demand upon Debtor, shall have in any jurisdiction in which enforcement hereof is sought, in addition to all other rights and remedies, the rights and remedies of a secured party under the Uniform Commercial Code and any additional rights and remedies which may be provided to a secured party in any jurisdiction in which Collateral is located, including, without limitation, the right to take possession of the Collateral, and for that purpose Secured Party may, so far as Debtor can give authority therefor, enter upon any premises on which the Collateral may be situate d and remove the same therefrom. Secured Party may in its discretion require Debtor to assemble all or any part of the Collateral at such location or locations within the jurisdiction(s) of Debtor’s principal office(s) or at such other locations as Secured Party may reasonably designate. Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Secured Party shall give to Debtor at least ten (10) Business Days prior written notice of the time and place of any public sale of Collateral or of the time after which any private sale or any other intended disposition is to be made. Debtor hereby acknowledges that ten Business Days prior written notice of such sale or sales shall be reasonable notice. In addition, Debtor waives any and all rights that it may have to a judicial hearing in advance of the enforcement of any of Secured Party’s rights and remedies hereunder, including, without limitation, its right following an Even t of Default to take immediate possession of the Collateral and to exercise its rights and remedies with respect thereto.

6

16.           Standards for Exercising Rights and Remedies.  To the extent that applicable law imposes duties on Secured Party to exercise remedies in a commercially reasonable manner, Debtor acknowledges and agrees that it is not commercially unreasonable for Secured Party (a) to fail to incur expenses reasonably deemed significant by Secured Party to prepare Collateral for disposition or otherwise to fail to complete raw material or work in process into finished goods or other finished products for disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against account debtors or other persons obligated on Collateral or to fail to remove liens or encumbrances on or any adverse claims against Collateral, (d) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other persons, whether or not in the same business as Debtor, for expressions of interest in acquiring all or any portion of the Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the collateral is of a specialized nature, (h) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the t ypes included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim disposition warranties, (k) to purchase insurance or credit enhancements to insure Secured Party against risks of loss, collection or disposition of Collateral or to provide to Secured Party a guaranteed return from the collection or disposition of Collateral, or (1) to the extent deemed appropriate by Secured Party, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Secured Party in the collection or disposition of any of the Collateral. Debtor acknowledges that the purpose of this Section 16 is to provide non-exhaustive indications of what actions or omissions by Secured Party would fulfill Secured Party’s duties under the Uniform Commercial Code or other law of the State of Utah or any other relevant jurisdiction in Secured Party’s exercise of remedies against the Collateral and that other actions or omissions by Secured Party shall not be deemed to fail to fulfill such duties solely on account of not being indicated in this Section 16. Without limitation upon the foregoing, nothing contained in this Section 16 shall be construed to grant any rights to Debtor or to impose any duties on Secured Party that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section 16.

17.           No Waiver.  Neither party hereto shall be deemed to have waived any of its rights, interests or remedies in respect of the Obligations or the Collateral unless such waiver shall be in writing and signed by the waiving party. No delay or omission on the part of a party in exercising any right, interest or remedy shall operate as a waiver of such right, interest or remedy or any other right, interest or remedy. A waiver on any one occasion shall not be construed as a bar to or waiver of any right, interest or remedy on any future occasion. All rights and remedies of Secured Party with respect to the Obligations or the Collateral, whether evidenced hereby or by any other instrument or papers, sha ll be cumulative and may be exercised singularly, alternatively, successively or concurrently at such time or at such times as Secured Party deems expedient.

7

18.           Suretyship Waivers by Debtor.  Debtor waives demand, notice, protest, notice of acceptance of this Agreement, notice of loans made, credit extended, Collateral received or delivered or other action taken in reliance hereon and all other demands and notices of any description. With respect to both the Obligations and the Collateral, Debtor assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of or failure to perfect any security interest in any Collateral, to the addition or release of any party or person primarily or secondarily liable, to the acceptance of partial payment thereon and the settlement, compromising or a djusting of any thereof, all in such manner and at such time or times as Secured Party may deem advisable. Secured Party shall have no duty as to the collection or protection of the Collateral or any income therefrom, the preservation of rights against prior parties, or the preservation of any rights pertaining thereto beyond the safe custody thereof as set forth in Section 11.2. Debtor further waives any and all other suretyship defenses.

19.           Marshalling.  Secured Party shall not be required to marshal any present or future collateral security (including but not limited to the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of its rights and remedies hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising. To the extent that it lawfully may, Debtor hereby agrees that it will not invoke any law relating to the marshalling of collateral which might cause delay in or imped e the enforcement of Secured Party’s rights and remedies under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, Debtor hereby irrevocably waives the benefits of all such laws.

20.           Proceeds of Dispositions; Expenses.  Debtor shall pay to Secured Party on demand any and all expenses, including reasonable attorneys’ fees and disbursements, incurred or paid by Secured Party in protecting, preserving or enforcing Secured Party’s rights and remedies under or in respect of any of the Obligations or any of the Collateral. After deducting all of said expenses, the residue of any proceeds of collection or sale or other disposition of the Collateral shall, to the extent actually received in cash, be applied to the payment of the Obligations in such order or preference as Secured Party may determine, proper allowance and provision being made for any Obligations not then due. Upon the final payment and satisfaction in full of all of the Obligations and after making any payments required by Sections 9-608 or 9-615 of the Uniform Commercial Code, any excess shall be returned to Debtor. In the absence of final payment and satisfaction in full of all of the Obligations, Debtor shall remain liable for any deficiency.

21.           Overdue Amounts.  Until paid, all amounts due and payable by Debtor hereunder shall be a debt secured by the Collateral and shall bear, whether before or after judgment, interest at the highest default rate set forth in the Loan Documents.

22.           Governing Law.  The validity of this Agreement and the other Loan Documents, the construction, interpretation, and enforcement hereof and thereof, and the rights of the parties hereto and thereto with respect to all matters arising hereunder or thereunder or related hereto or thereto shall be determined under, governed by, and construed in accordance with the laws of the State of Utah without giving effect to conflict of laws principles.

8

23.           Waiver of Right to Jury Trial.  AS A MATERIAL PART OF THE CONSIDERATION FOR THE MAKING OF THE LOAN, DEBTOR HEREBY UNCONDITIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY PRESENT OR FUTURE CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THE LOAN, ANY LOAN DOCUMENT OR ANY OTHER DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION WITH THE LOAN, OR IN ANY WAY CONNECTED WITH OR RELATED TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN OR ANY DOCUMENTS EXECUTED IN CONNECTION THEREWITH.  IF ANY DISPUTE IN CONNECTION WITH THE LOAN OR THE LOAN DOCUMENTS IS DECIDED BY LITIGATION AS PERMITTED BY THE LOAN DOCUMENTS, SUCH DISPUTE SHALL BE DECIDED BY A COU RT TRIAL WITHOUT A JURY.

24.           Miscellaneous.  The headings of each section of this Agreement are for convenience only and shall not define or limit the provisions thereof. This Agreement and all rights and obligations hereunder shall be binding upon Debtor and its respective successors and assigns, and shall inure to the benefit of Secured Party and its successors and assigns. If any term of this Agreement shall be held to be invalid, illegal or unenforceable, the validity of all other terms hereof shall in no way be affected thereby, and this Agreement shall be construed and be enforceable as if such invalid, illegal or unenforceable term had not been included herein. Debtor acknowledges receipt of a copy of this Agreemen t. All notices required or permitted hereunder shall be made in the manner required or permitted by the Utah Uniform Commercial Code and otherwise in accordance with the terms and at the addresses set forth in the Loan Agreement.

[Signature Page to Follow]

9

IN WITNESS WHEREOF, intending to be legally bound, Debtor has caused this Agreement to be duly executed as of the date first above written.

“Debtor”

ZAGG Incorporated, a Utah corporation

By:                                                                

Name:                                                                           

Title:                                                                

Organizational Identification No.: 6725072-0143

Mailing address:

ZAGG Incorporated

Attn: Brandon O’Brien

3855 South 500 West, Suite J

Salt Lake City, Utah 84115

EX-10.3

Loan No. _______________

Salt Lake City, Utah

May 13, 2010

REVOLVING PROMISSORY NOTE

FOR VALUE RECEIVED, the undersigned (“Borrower”) promises to pay to the order of U. S. Bank National Association (“Lender”) at its office located at 170 South Main Street, 6th Floor, Salt Lake City, Utah 84101 or at such other location as designated by Lender, in lawful money of the United States of America, the principal amount of Five Million and 00/100 Dollars ($5,000,000.00), or such portion thereof as from time to time may be outstanding, on May  13, 2011 (the “Maturity Date”), and to also pay interest thereon at said location, in like money, from the date hereof on the unpaid principal amount hereof until such amount shall be paid in full.

This Revolving Note is the Note referred to in a Loan Agreement (the “Agreement”; terms used herein but not defined herein have the meanings given in the Agreement) of even date herewith and is entitled to the benefits thereof and is secured by the Security Agreement.

Interest on the outstanding principal balance shall accrue at an annual variable rate equal to 2.00% plus the thirty (30) day LIBOR rate quoted by Lender from Reuters Screen LIBOR01 or any successor thereto, which shall be that thirty (30) day LIBOR rate in effect and reset each New York Banking Day, adjusted for any reserve requirement and any subsequent costs arising from a change in government regulation.  The term “New York Banking Day” means any day (other than a Saturday or Sunday) on which commercial banks are open for business in New York, New York.  Lender’s internal records of applicable interest rates shall be determinative in the absence of manifest error.

Upon the occurrence of an Event of Default, the applicable rate of interest shall increase by three percent (3%) per annum.

Monthly payments of accrued interest shall be due and payable on the fifth (5th) day of each month, commencing with June 5, 2010, and continuing on the fifth day of each month thereafter.

On the Maturity Date, the entire outstanding principal balance, all remaining accrued and unpaid interest and all other amounts outstanding under this Note or the Agreement shall be due and payable in full.

In addition to the accrual of interest at the default rate, in the event a payment due under this Note is more than fifteen (15) days past due, Borrower shall pay to Lender a late fee equal to five percent (5%) of the missed payment.

The actual interest to be charged under this Note shall be calculated on a year of three hundred sixty (360) days on a daily basis for the actual number of days the unpaid principal balance hereof is outstanding.

If a payment on this Note becomes due and payable on a Saturday, Sunday or legal holiday under the laws of the State of Utah, the payment date shall be extended to the next succeeding business day and interest hereon shall be payable at the then applicable rate during such extension.

All payments received by Lender on this Note shall be applied as follows and in the order indicated, at the option of Lender:  (1) to the payment of Lender’s attorneys’ fees and other expenses as provided in the Loan Documents, (2) to late fees, (3) to accrued interest, and (4) to the reduction of principal.

This Note may be paid in whole or in part from time to time or at any time without penalty or premium.

Upon the occurrence of an Event of Default, it shall be optional with the holder of this Note to declare the entire principal and interest sum hereof due and payable in full, and proceedings may at once be instituted for the enforcement and collection of the same by law.

Borrower agrees to pay all reasonable attorneys’ fees and other expenses incurred by Lender in the enforcement of any of its rights hereunder whether the default is ultimately cured or whether Lender is obligated to pursue its legal remedies, including such expenses incurred prior to the institution of legal action, during the pendency of such legal action, during any bankruptcy or insolvency proceeding and continuing to include all such expenses incurred in connection with any appeal to higher courts arising out of legal proceedings to enforce Borrower’s obligations hereunder.

The makers, sureties, guarantors and endorsers of this Note jointly and severally waive presentment for payment, protest, notice of protest and of nonpayment of this Note.  Borrower agrees that failure of Lender or any holder of this Note to exercise its rights hereunder shall not constitute a waiver of the right to exercise the same in the event of a later default.

This Note shall be construed according to the laws of the State of Utah.

“Borrower”

ZAGG Incorporated, a Nevada corporation

By:                                                                

Name:                                                                           

Its:                                                                

EX-10.4

TRADEMARK SECURITY AGREEMENT

THIS TRADEMARK SECURITY AGREEMENT, dated as of May 13, 2010, is made by the entity listed on the signature page hereof (“Grantor”) in favor of U.S. Bank National Association (“Lender”).

W I T N E S S E T H:

WHEREAS, pursuant to the Loan Agreement dated as of the date hereof (as the same may be amended, restated, modified or otherwise supplemented from time to time, the “Loan Agreement”) between Borrower and Lender.  Lender, subject to the terms and conditions contained therein, has agreed to make available to Borrower a loan in the aggregate principal amount of the Commitment,

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor hereby agrees with Lender as follows:

Section 1.                      Defined Terms. Capitalized terms used herein without definition are used as defined in the Loan Agreement.

Section 2.                      Grant of Security Interest in Trademark Collateral.  Grantor, as collateral security for the prompt and complete payment and performance when due of the Obligations, hereby mortgages, pledges and hypothecates to Lender, and grants to Lender a lien on and security interest in, all of its right, title and interest in, to and under the following Collateral of Grantor (the “Trademark Co llateral”):

(a)all of its trademarks, including, without limitation, those referred to on Schedule 1 hereto;

(b)all renewals and extensions of the foregoing;

(c)all goodwill of the business connected with the use of, and symbolized by, each such trademark; and

(d)all income, royalties, proceeds and liabilities at any time due or payable or asserted under and with respect to any of the foregoing, including, without limitation, all rights to sue and recover at law or in equity for any past, present and future infringement, misappropriation, dilution, violation or other impairment thereof.

Section 3.                      Security Agreement.  The security interest granted pursuant to this Trademark Security Agreement is granted in conjunction with the security interest granted to Lender pursuant to the Security Agreement and Grantor hereby acknowledges and agrees that the rights and remedies of Lender with respect to the security interest in the Trademark Collateral made and granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated by reference herein as if fully set forth herein.

Section 4.                      Grantor Remains Liable.  Grantor hereby agrees that, anything herein to the contrary notwithstanding, Grantor shall assume full and complete responsibility for the prosecution, defense, enforcement or any other necessary or desirable actions in connection with such Grantor’s trademarks subject to a security interest hereunder.

Section 5.                      Counterparts.  This Trademark Security Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Signature pages may be detached from multiple separate counterparts and attached to a single counterpart.

Section 6.                      Governing Law.  This Trademark Security Agreement and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the law of the State of Utah.

[Signature Page Follows]

2

IN WITNESS WHEREOF, Grantor has caused this Trademark Security Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

GRANTOR:

ZAGG Incorporated, a Nevada corporation

as Grantor

By:

Name:

Title:

ACCEPTED AND AGREED

as of the date first above written:

U.S. BANK NATIONAL ASSOCIATION

By:

Name:

Title:

3

SCHEDULE 1

TO

TRADEMARK SECURITY AGREEMENT

Trademark Registrations

TRADEMARK REGISTRATION NUMBER REGISTRATION DATE OWNER