NOTE AND WARRANT PURCHASE AGREEMENT

THIS NOTE AND WARRANT PURCHASE AGREEMENT , dated as of September 25, 2009, (this “ Agreement ”) is entered into by and among HZO, INC. , a Delaware corporation (the “ Company ”), with its principal executive office at 3855 South 500 West, Suite J, Salt Lake City, UT 84115, and THE PERSONS AND ENTITIES LISTED ON THE SCHEDULE OF INVESTORS attached hereto as Schedule I (each an “ Investor ,” and collectively, the “ Investors ”).

A.           The Company has duly authorized the sale and issuance to the Investors of secured convertible promissory notes in an aggregate principal amount of up to $3,150,000 (the “ Aggregate Loan Amount ”) together with associated warrants.

B.           On the terms and subject to the conditions set forth herein, each Investor is willing to purchase from the Company, and the Company is willing to sell to such Investor, a secured convertible promissory note in the principal amount set forth opposite such Investor’s name on Schedule I hereto, together with a related warrant to acquire shares of the Company’s capital stock.

C.           Capitalized terms not otherwise defined herein shall have the meaning set forth in the form of Note (as defined below) attached hereto as Exhibit A .

NOW THEREFORE, in consideration of the foregoing, and the representations, warranties, and conditions set forth below, the parties hereto, intending to be legally bound, hereby agree as follows:

1.   The Notes and Warrants .

(a)   Issuance of Notes and Warrants .

(i)   Issuance of Notes .  At the Initial Closing (as defined below), the Company agrees to issue and sell to each of the Investors, and, subject to all of the terms and conditions hereof, each of the Investors agrees to purchase a secured convertible promissory note in the form of Exhibit A hereto (each, a “ Note ”, and collectively, the “ Notes ”) in the principal amount set forth opposite the respective Investor’s name on Schedule I hereto.  The obligations of the Investors to purchase Notes are several and not joint.

(ii)   Issuance of Warrants .  In consideration for the purchase by the Investors of the Notes, the Company will issue to each Investor a warrant in the form attached hereto as Exhibit B (each, a “ Warrant ” and collectively, the “ Warrants ”) to purchase from the Company up to the number of fully paid and nonassessable Shares (as defined in the Warrants) equal to thirty percent (30%) multiplied by the quotient obtained by dividing the principal amount of such Investor’s Note by the Exercise Price (as defined in the Warrants).

(iii)   Delivery .  The initial sale and purchase of the Notes shall take place at an initial closing to be held on September 25, 2009 or at such place and time as the Company and Investors purchasing a majority in interest of the principal amount of the Notes (a “ Majority in Interest ”) to be purchased at the Initial Closing shall agree(the  “ Initial Closing ”).  At the Initial Closing, the Company will deliver to each of the Investors the respective Note and Warrant, against receipt by the Company of the corresponding amount set forth on Schedule I hereto (the “ Purchase Price ”).  Each of the Notes and Warrants will be registered in such Investor’s name in the Company’s records.

(iv)   Subsequent Closings .  At any time after the Initial Closing and prior to the date of the ZAGG Deferred Closing, as that term is defined in the Series A Preferred Stock Purchase Agreement dated as of even date herewith between the Company and the Investors listed on Exhibit A thereto, at one or more subsequent closings, the Company may offer to sell, and the Investors may agree to purchase Notes with an aggregate principal amount of up to $2,000,000, or any portion thereof (each a “ Subsequent Closing ,” and collectively, the “ Subsequent Closings ”).

(v)   Delivery at Subsequent Closings .   All Notes and Warrants purchased and sold at the Subsequent Closings shall be issued pursuant to the terms and conditions set forth in this Agreement, and the representations and warranties of the Company and the Investors set forth in Sections 2 and 3 hereof shall speak as of the date of such Subsequent Closing.  Any Notes and Warrants sold and purchased pursuant to this Section 1(a)(iv) shall be deemed to be “Notes” and “Warrants” for all purposes under this Agreement.  Following each Subsequent Closing, Schedule I hereto shall be updated to reflect the principal amount of the Notes purchased in such Subsequent Closing.

(b)   Payments . The Company will make all cash payments due under the Notes in immediately available funds by 11:00 A.M. Mountain Standard Time on the date such payment is due in the manner and at the address for such purpose specified below each Investor’s name on Schedule I hereto, or at such other address as a Investor or other registered holder of a Note may from time to time direct in writing.

2.   Representations and Warranties of the Company . The Company represents and warrants to each Investor as of the date of the Closing that:

(a)   Due Incorporation, Qualification, etc . The Company (i) is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation; (ii) has the power and authority to own, lease and operate its properties and carry on its business as now conducted; and (iii) is duly qualified, licensed to do business and in good standing as a foreign corporation in each jurisdiction where the failure to be so qualified or licensed could reasonably be expected to have a Material Adverse Effect.  For purposes of this Agreement the term “ Material Adverse Effect ” means a change, event or occurrence that individually, or together with any other change, event or occurrence, has or would reasonably be expected to have a material adverse impact on the financial position, business results, operations or prospects of the Company, taken as a whole.

(b)   Authority . The execution, delivery and performance by the Company of this Agreement, each Note and each Warrant together with the Security Agreement dated as of the date hereof (the “ Security Agreement ”) to be executed by the Company (collectively the “ Transaction Documents ”) and the consummation of the transactions contemplated thereby (i) are within the power of the Company and (ii) have been duly authorized by all necessary actions on the part of the Company.

(c)   Enforceability . Each Transaction Document executed, or to be executed, by the Company has been, or will be, duly executed and delivered by the Company and constitutes, or will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.

(d)   Non-Contravention . The execution and delivery by the Company of the Transaction Documents executed by the Company and the performance and consummation of the transactions contemplated thereby do not and will not (i) violate the Restated Certificate, as defined below, or Bylaws of the Company or any material judgment, order, writ, decree, statute, rule or regulation applicable to the Company; (ii) violate any provision of, or result in the breach or the acceleration of, or entitle any other Person to accelerate (whether after the giving of notice or lapse of time or both), any material mortgage, indenture, agreement, instrument or contract to which the Company is a party or by which it is bound; or (iii) result in the creation or imposition of any Lien upon any property, asset or revenue of the Company (other than any Lien arising under the Transaction Documents) or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license, authorization or approval applicable to the Company, its business or operations, or any of its assets or properties.

(e)   Approvals . No consent, approval, order or authorization of, or registration, declaration or filing with, any governmental authority or other Person (including, without limitation, the shareholders of any Person) is required in connection with the execution and delivery of the Transaction Documents executed by the Company and the performance and consummation of the transactions contemplated thereby.

(f)   No Violation or Default . The Company is not in violation of or in default with respect to (i) its Certificate of Incorporation or Bylaws or other organizational documents or any material judgment, order, writ, decree, statute, rule or regulation applicable to such Person; or (ii) any material mortgage, indenture, agreement, instrument or contract to which such Person is a party or by which it is bound (nor is there any waiver in effect which, if not in effect, would result in such a violation or default).

(g)   Litigation . No actions (including, without limitation, derivative actions), suits, proceedings or investigations are pending or, to the knowledge of the Company, threatened against the Company at law or in equity in any court or before any other governmental authority which if adversely determined (i) would (alone or in the aggregate) result in a material liability or have a Material Adverse Effect or (ii) seeks to enjoin, either directly or indirectly, the execution, delivery or performance by the Company of the Transaction Documents or the transactions contemplated thereby.

(h)   Title . The Company owns and has good and marketable title in fee simple absolute to, or a valid leasehold interest in, all its real properties and good title to its other respective assets and properties, subject to no Lien, except for Permitted Liens (each as defined in the Security Agreement).

(i)   Accuracy of Information Furnished . None of the Transaction Documents and none of the other certificates delivered by the Company to the Investors pursuant to the Transaction Documents contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(j)   Valid Issuance of Notes and Warrants; Reservation and Status of Shares . The Notes and Warrants, any shares of the applicable series of Preferred Stock issued upon conversion of the Notes and Warrants and any shares of Common Stock issued upon conversion of such Preferred Stock, when issued in compliance with the provisions of this Agreement, will be validly issued and will be free of any liens or encumbrances; provided, however, that such Preferred Stock or Common Stock may be subject to restrictions on transfer under state or federal securities laws and as may be required by future changes in such laws.  The Company will cause all necessary actions to be taken to (i) amend the Company’s Restated Certificate, as defined b