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-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ht27OJLtUUOdpRcRzhyrbnxp1Fm4XpayX+Hyl6eXo6mDBI6fFGj4haZUu2BeAkF1 okoDjV0lsBE2mVk+YK8TNA== 0000950124-05-002215.txt : 20050405 0000950124-05-002215.hdr.sgml : 20050405 20050405080207 ACCESSION NUMBER: 0000950124-05-002215 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20050331 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050405 DATE AS OF CHANGE: 20050405 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOBILITY ELECTRONICS INC CENTRAL INDEX KEY: 0001075656 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 860843914 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-30907 FILM NUMBER: 05732228 BUSINESS ADDRESS: STREET 1: 7955 E REDFIELD RD CITY: SCOTTSDALE STATE: AZ ZIP: 85260 BUSINESS PHONE: 4805960061 MAIL ADDRESS: STREET 1: 7955 EAST REDFIELD ROAD CITY: SCOTTSDALE STATE: AZ ZIP: 85260 8-K 1 p70452e8vk.htm FORM 8-K e8vk

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported): March 31, 2005

MOBILITY ELECTRONICS, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware
(State or Other Jurisdiction of Incorporation)


0-30907 (Commission File Number)		86-0843914 (IRS Employer Identification No.)


17800 N. Perimeter Dr., Suite 200, Scottsdale, Arizona		85255
(Address of Principal Executive Offices)		(Zip Code)

(480) 596-0061
(Registrant’s telephone number, including area code)

Not applicable
(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:

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

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

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

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

Item 1.01. Entry into a Material Definitive Agreement.

On March 31, 2005, Mobility Electronics, Inc. (“Mobility”), RadioShack Corporation (“RadioShack”) and Motorola, Inc. (“Motorola”) entered into several agreements to restructure their existing strategic relationship. The material agreements include a Strategic Partners Investment Agreement among the parties (the “Investment Agreement”) pursuant to which Motorola and RadioShack each purchased 689,656 shares of Mobility’s common stock at a price of $7.25 per share, for a total aggregate issuance by Mobility of 1,379,312 shares of its common stock and total aggregate proceeds to Mobility of $10 million; two warrants to each of RadioShack and Motorola which provide each with the right to purchase up to an additional 1,190,476 shares of Mobility’s common stock at a price of $8.40 per share upon the achievement of certain performance results by Mobility (collectively, the “Warrants”), providing for a potential aggregate issuance by Mobility of an additional 2,380,952 shares of its common stock; and separate Sales Representative Agreements by and between Mobility and each of Motorola and RadioShack (the “Sales Representative Agreements”), pursuant to which the parties will engage in the sale of power products for low power mobile electronic devices.

The foregoing descriptions of the Investment Agreement, the Warrants, and the Sales Representative Agreements are qualified in their entirety by reference to the terms of such agreements which are attached hereto as Exhibits 4.1 through 4.5, 10.1 and 10.2.

Item 3.02. Unregistered Sales of Equity Securities.

The information disclosed in Item 1.01 of this Current Report on Form 8-K with respect to the Investment Agreement and the Warrants and the issuance of unregistered shares of Mobility’s common stock is incorporated into this Item 3.02. This issuance was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, as a transaction not involving a public offering.

Pursuant to the Investment Agreement, Mobility issued 689,656 shares of common stock, par value $0.01 per share to each of RadioShack and Motorola at a price of $7.25 per share, for a total aggregate issuance by Mobility of 1,379,312 shares of common stock and total aggregate proceeds to Mobility of $10 million.

Pursuant to the terms of the $25 Million Threshold Warrant to Purchase Shares of Common Stock (the “First Warrant”), Motorola and RadioShack will each have the opportunity to purchase an additional 595,238 shares of Mobility’s common stock at a price per share of $8.40 if Mobility’s division for sales of power products for low power mobile electronic devices (the “iTip Division”) achieves earnings before interest and taxes (EBIT) of $25 million or more in any of the calendar years 2005, 2006, or 2007. Pursuant to the terms of the $50 Million Threshold Warrant to Purchase Shares of Common Stock (the “Second Warrant”), Motorola and RadioShack will each have the opportunity to purchase an additional 595,238 shares of Mobility’s common stock at a price per share of $8.40 if Mobility’s iTip Division achieves EBIT of $50 million or more in any of the calendar years 2005 through 2009. Pursuant to the terms of both Warrants, at Mobility’s option following the first anniversary of the closing date, it may require RadioShack and Motorola to exercise or lose the Warrants at any time if Mobility’s stock price is $16.80 or higher for twenty consecutive trading days.

Mobility also agreed to prepare and file a registration statement registering for resale the shares issued to Motorola and RadioShack, and to use its best efforts to cause the registration statement to be effective, within one year of the closing date for this transaction.

The foregoing descriptions of the Investment Agreement and the Warrants are qualified in their entirety by reference to the terms of such agreements which are attached hereto as Exhibits 4.1 through 4.5.

Item 9.01. Financial Statements and Exhibits.

(a)   Financial Statements of Business Acquired.

    Not Applicable

(b)   Pro Forma Financial Information.

    Not Applicable

(c)   Exhibits.


Exhibit No.		Description

Exhibit 4.1		$25 Million Threshold Warrant to Purchase Shares of Common Stock issued to Motorola, Inc., dated as of March 31, 2005.

Exhibit 4.2		$50 Million Threshold Warrant to Purchase Shares of Common Stock issued to Motorola, Inc., dated as of March 31, 2005.

Exhibit 4.3		$25 Million Threshold Warrant to Purchase Shares of Common Stock issued to RadioShack Corporation, dated as of March 31, 2005.

Exhibit 4.4		$50 Million Threshold Warrant to Purchase Shares of Common Stock issued to RadioShack Corporation, dated as of March 31, 2005.

Exhibit 4.5		Strategic Partners Investment Agreement by and among Mobility Electronics, Inc., RadioShack Corporation and Motorola, Inc., dated as of March 31, 2005.

Exhibit 10.1		Sales Representative Agreement by and between Mobility Electronics, Inc. and Motorola, Inc., dated as of March 31, 2005.*

Exhibit 10.2		Sales Representative Agreement by and between Mobility Electronics, Inc. and RadioShack Corporation, dated as of March 31, 2005.*

Exhibit 99.1		Press release issued on April 4, 2005.

*Portions of these exhibits have been omitted pursuant to a request for confidential treatment filed with the Securities and Exchange Commission.

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 thereunto duly authorized.

MOBILITY ELECTRONICS, INC.

Dated: April 5, 2005 By:   /s/ Charles R. Mollo
Name:   Charles R. Mollo
Title:   President and Chief Executive Officer

EXHIBIT INDEX


Exhibit No.		Description

Exhibit 4.1		$25 Million Threshold Warrant to Purchase Shares of Common Stock issued to Motorola, Inc., dated as of March 31, 2005.

Exhibit 4.2		$50 Million Threshold Warrant to Purchase Shares of Common Stock issued to Motorola, Inc., dated as of March 31, 2005.

Exhibit 4.3		$25 Million Threshold Warrant to Purchase Shares of Common Stock issued to RadioShack Corporation, dated as of March 31, 2005.

Exhibit 4.4		$50 Million Threshold Warrant to Purchase Shares of Common Stock issued to RadioShack Corporation, dated as of March 31, 2005.

Exhibit 4.5		Strategic Partners Investment Agreement by and among Mobility Electronics, Inc., RadioShack Corporation and Motorola, Inc., dated as of March 31, 2005.

Exhibit 10.1		Sales Representative Agreement by and between Mobility Electronics, Inc. and Motorola, Inc., dated as of March 31, 2005.*

Exhibit 10.2		Sales Representative Agreement by and between Mobility Electronics, Inc. and RadioShack Corporation, dated as of March 31, 2005.*

Exhibit 99.1		Press release issued on April 4, 2005.

*Portions of these exhibits have been omitted pursuant to a request for confidential treatment filed with the Securities and Exchange Commission.

EX-4.1 2 p70452exv4w1.txt EXHIBIT 4.1 Exhibit 4.1 NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK OF THE COMPANY ISSUABLE UPON ITS EXERCISE HAVE BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES UNDER THE ACT AND APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. MOBILITY ELECTRONICS, INC. (A DELAWARE CORPORATION) $25 MILLION THRESHOLD WARRANT TO PURCHASE SHARES OF COMMON STOCK THIS CERTIFIES THAT, for value received, Motorola, Inc., a Delaware corporation, or its registered successors or assigns (hereinafter, the "Holder"), is entitled to purchase, subject to the conditions set forth below, at any time or from time to time during the Exercise Period (as defined below), Five Hundred Ninety-Five Thousand Two Hundred Thirty-Eight (595,238) fully paid and non-assessable shares (the "Shares") of common stock, par value $0.01 per share (the "Common Stock"), of Mobility Electronics, Inc., a Delaware corporation (the "Company"), at a per share purchase price equal to the Warrant Price. This warrant (this "Warrant") is issued as of March 31, 2005, pursuant to that certain Strategic Partners Investment Agreement dated as of March 31, 2005 (the "Investment Agreement"), by and among the Company, the Holder and the other party thereto. 1. DEFINITIONS Capitalized terms used and not otherwise defined herein will have the meanings ascribed thereto in the Investment Agreement. In addition, as used in this Warrant, the following terms shall have the meanings set forth below: "Computer Products" means the Company's existing line of universal power products for computers (including notebook, laptop, handheld, tablet computers and the like, but excluding personal digital assistants, wireless internet (or e-mail devices), smartphones and the like (the "Portable Computers")) and all future versions (including expanded functionality), modifications, enhancements, and derivatives to such products, and any new universal power product for Portable Computers which is 60 watts or more in power and is offered for sale by the Company from time to time. Such products may also include features for charging non-computer mobile electronic devices. "Division" means the recently formed iTip Division of the Company, which Division was formed by the Company for the purpose of designing, developing, manufacturing, marketing and selling iTip Products; it being acknowledged and agreed that the Division is not a separate legal entity, but is a part of the Company. "Division EBIT" means gross margins of the Division (for the purposes of this calculation, any revenue derived from licensing or enforcement of Mobility's Intellectual Property Rights relating to the iTip Products (i.e., if the Intellectual Property Rights also pertain to non-iTip Products, then only the revenue derived from licensing or enforcing of the portion relating to the iTip Products shall be included in revenue) (including, but not limited to, any settlement amounts and damage awards relating to iTip 1 Products), shall be deemed gross revenue of the Division) less: (i) twenty percent (20%) of the revenues of the Division; and (ii) the aggregate Commissions, as defined in the Sales Representative Agreements dated as of March 31, 2005 between the Company and each of the Holder and RadioShack, respectively (the "Sales Rep Agreements"), payable to the Holder and RadioShack pursuant to the Sales Rep Agreements), with gross margins and revenues of the Division being determined in accordance with GAAP as applied in a manner consistent with the Company's past accounting methodologies. "EBIT Hurdle" means $25 million of Division EBIT for the Division for a given calendar year commencing on January 1, 2005. "Exercise Period" means the period commencing on February 15 of the year following the calendar year in which the EBIT Hurdle was first achieved and ending on February 15, 2008; provided, however, that if the EBIT Hurdle is first achieved in the 2007 calendar year, then the Exercise Period shall be from February 15, 2008 to August 15, 2008. Notwithstanding the foregoing, in the event that the Company enters into a definitive agreement relating to (i) a sale of the Company (whether by merger, sale of all or substantially all assets or otherwise), (ii) a sale of the Division (whether by merger, sale of all or substantially all assets or otherwise), or (iii) the exclusive license of all or substantially all of the iTip Technology (a "Fundamental Event"), the Company will notify the Holder in writing as soon as reasonably practicable thereafter but in any event no later than twenty (20) days prior to the consummation of such Fundamental Event. In connection therewith, the Exercise Period shall commence, and the Warrant will become immediately exercisable in full, upon receipt of such notice and will terminate (A) in the case of a Fundamental Event contemplated by clause (i), immediately prior to the consummation of such Fundamental Event, and (B) in the case of a Fundamental Event described in clauses (ii) or (iii), upon the one hundred eighty-first (181st) day thereafter. "Intellectual Property Rights" means all current and future patents, patentable rights, patents pending, continuations, enhancements, know how, rights in mask works conferred by the U.S. Semiconductor Chip Protection Act of 1984 or any modification or re-enactment thereof, copyrights, trademarks (including service marks), trade secrets, and design rights whether registered or unregistered, and including any applications for registration and any registration of any of the foregoing, and all rights or forms of protection of a similar nature or having equivalent or similar effect to any of these, which may subsist anywhere in the world. "iTips" means any tip, cord or removable or interchangeable item that utilizes iTip Technology to remotely program a power product (including the remote programming of any iTip Product) to correctly determine and provide the appropriate voltage, current and/or power requirements for the purpose of operating or charging the battery for an electronic device (e.g., cell phones, PDA's, digital cameras, MP3 players, CD players, and the like). "iTip Products" means the Company's existing line of universal power products for use with mobile electronic devices and all future versions (including expanded functionality), modifications, enhancements, and derivatives to such products, and any new universal power products offered for sale by the Company from time to time, which: (i) are 70 watts or less in power; (ii) utilize iTip Technology; and (iii) cannot be used to power or charge a Portable Computer. "iTip Technology" means the underlying iTip, combination AC/DC, simultaneous charging and other related Intellectual Property Rights of the Company that are incorporated into the iTips and products of the Company that utilize iTips, including, but not limited to, the patents and patents pending listed on Exhibit A attached hereto. 2 "Warrant Price" means $8.40 per share, subject to appropriate adjustments for any of the events set forth in Section 5 below. 2. EXERCISE OF WARRANT The terms and conditions upon which this Warrant may be exercised, and the Common Stock covered hereby may be purchased, are as follows: 2.1 Method of Exercise. Except as provided in the following sentence, the Holder may, in its sole and absolute discretion and at any time or from time to time during the Exercise Period, exercise in whole or in part the purchase rights evidenced by this Warrant. Notwithstanding the above, if at any time after the first anniversary of the Effective Date but prior to the expiration of the Exercise Period, Holder receives written notice from the Company that the closing price of the Common Stock for any 20 consecutive trading days exceeded $16.80 per share following the first anniversary of the Effective Date (as appropriately adjusted for the events described in Section 5 below), and the Company desires for the Holder to exercise this Warrant (a "Triggering Event"), then the Holder may exercise in whole or in part the purchase rights evidenced by this Warrant for a period of one hundred eighty (180) days following the date of delivery by the Company to the Holder of such written notice; it being acknowledged and agreed that this Warrant shall automatically terminate following the expiration of such 180-day period. Exercise of this Warrant shall be effected by: (a) the surrender of the Warrant, together with a duly executed copy of the form of subscription attached hereto, to the Chief Financial Officer of the Company at the Company's Scottsdale, Arizona office; and (ii) the payment to the Company, by wire transfer to an account designated by the Company, of an amount equal to the aggregate Warrant Price for the number of Shares for which the purchase rights hereunder are being exercised. 2.2 Issuance of Shares and New Warrant. In the event the purchase rights evidenced by this Warrant are exercised in whole or in part, one or more certificates for the purchased Shares shall be issued as soon as practicable thereafter to the Holder. Such Holder shall also be issued at such time a new Warrant representing the number of Shares (if any) for which the purchase rights under this Warrant remain unexercised and continuing in force and effect. Upon exercise of this Warrant, the Holder will be entitled to all rights and privileges granted to the holders of shares of Common Stock. 2.3 No Impairment. The Company will not, by amendment of its certificate of incorporation or bylaws, each as amended to date (the "Charter Documents"), or through reorganization, consolidation, merger, amalgamation, dissolution, issue or sale of securities, sale of assets or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment. Notwithstanding the foregoing, the taking of any action by the Company for which an adjustment is made pursuant to Section 5 hereof and which does not constitute a breach of the other terms of this Warrant will not be deemed to constitute a breach of the foregoing provisions or an impairment of this Warrant. 3. TRANSFERS 3.1 Transfers. This Warrant and all rights hereunder are not transferable in whole or in part by the Holder; provided, however, that the Holder may transfer this Warrant and all rights hereunder to its Affiliate. The transfer shall be recorded on the books of the Company upon the surrender of this Warrant, properly endorsed, to the Chief Financial Officer of the Company at the Company's Scottsdale, Arizona office and the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer. In the event of a partial transfer, the Company shall issue to the several Holders one or more appropriate new Warrants. Subject to compliance with applicable securities laws, 3 any Shares acquired upon exercise of this Warrant may not be transferred by the Holder until thirty-five (35) days after the acquisition thereof. 3.2 Registered Holder. The Holder agrees that until such time as any permitted transfer pursuant to subsection 3.1 is recorded on the books of the Company, the Company may treat the registered Holder as the absolute owner; provided that nothing herein affects any requirement that transfer of any Warrant or share of Common Stock issued or issuable upon the exercise thereof by subject to securities law compliance. 3.3 Form of New Warrants. All Warrants issued in connection with transfers of this Warrant shall bear the same date as this Warrant and shall be identical in form and provision to this Warrant, other than such changes as are necessary to reflect actions taken prior to such transfer (e.g., the name of the Holder, the number of Shares then-purchasable thereunder, etc.). 4. FRACTIONAL SHARES Notwithstanding that the number of Shares purchasable upon the exercise of this Warrant may have been adjusted pursuant to the terms hereof, the Company shall nonetheless not be required to issue fractions of Shares upon exercise of this Warrant or to distribute certificates that evidence fractional shares nor shall the Company be required to make any cash payments in lieu thereof upon exercise of this Warrant. Except as contemplated in the following sentence, the Holder hereby waives any right to receive fractional Shares. If a fractional Share shall result from adjustments in the number of Shares purchasable hereunder, the number of Shares purchasable hereunder shall, on an aggregate basis taking into account all adjustments hereunder from the date of issuance of this Warrant, be rounded up to the next whole number. 5. ANTIDILUTION PROVISIONS The provisions of this Section 5 shall apply in the event that any of the events described in this Section 5 shall occur with respect to the shares of Common Stock at any time on or after the Closing Date: 5.1 Stock Splits and Combinations. If the Company shall at any time subdivide or combine its outstanding shares of Common Stock, this Warrant shall, after that subdivision or combination, evidence the right to purchase the number of shares of Common Stock that would have been issuable as a result of that change with respect to the Shares which were purchasable under this Warrant immediately before that subdivision or combination. If the Company shall at any time subdivide the outstanding shares of Common Stock, the Warrant Price then in effect immediately before that subdivision shall be proportionately decreased, and, if the Company shall at any time combine the outstanding shares of Common Stock, the Warrant Price then in effect immediately before that combination shall be proportionately increased. Any adjustment under this subsection shall become effective at the time that such subdivision or combination becomes effective. 5.2 Reclassification, Exchange and Substitution. If the Shares issuable upon exercise of this Warrant shall be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares provided for in subsection 5.1 above), this Warrant shall represent the right to purchase for the same aggregate consideration, in lieu of the Common Stock which the Holder would have become entitled to purchase but for such change, the number of shares of such other class or classes of stock equivalent to the number of shares of Common Stock that would have been subject to purchase 4 by the Holder on exercise of this Warrant immediately before that change. In such an event, the Warrant Price shall be appropriately adjusted. 5.3 Reorganizations, Mergers, Consolidations or Sale of Assets. If at any time there shall be a capital reorganization, recapitalization, merger, consolidation, sale of all or substantially all assets or similar transaction (other than a combination, reclassification, exchange, or subdivision of shares provided for elsewhere in this Section 5, or a Fundamental Event) (such transaction, an "Organic Change"), then, as a part of such Organic Change, lawful provision shall be made so that the Holder shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified in this Warrant and upon payment of the Warrant Price then in effect, the number of shares of Common Stock or other securities or property of the Company to which a holder of shares of Common Stock deliverable upon exercise of this Warrant would have been entitled in such Organic Change if this Warrant had been exercised immediately before such Organic Change. In any such case, appropriate adjustment (as determined in good faith by the Board, subject to the reasonable approval of the Holder) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the Organic Change to the end that the provisions of this Warrant (including adjustment of the Warrant Price then in effect and number of Shares purchasable upon exercise of this Warrant) shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant. For the avoidance of any doubt, the foregoing provisions will similarly apply to successive Organic Changes. 5.4 Common Stock Dividends; Distributions. In the event the Company should at any time prior to the expiration of this Warrant fix a record date for the determination of the holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or other securities or rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock (hereinafter referred to as the "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of such distribution, split or subdivision if no record date is fixed), the Warrant Price shall be appropriately decreased and the number of shares of Common Stock issuable upon exercise of the Warrant shall be appropriately increased in proportion to such increase of outstanding shares. 5.5 Adjustments of Other Distributions. In the event the Company shall declare a distribution payable in securities of other persons, evidences of indebtedness issued by the Company or other persons, assets (excluding cash dividends) or options or rights not referred to in subsection 5.4, then, in each such case for the purpose of this subsection 5.5, upon exercise of this Warrant the Holder hereof shall be entitled to a proportionate share of any such distribution as though such Holder was the holder of the number of shares of Common Stock into which this Warrant may be exercised as of the record date fixed for the determination of the holders of Common Stock entitled to receive such distribution. 5.6 Certificate as to Adjustments. In the case of each adjustment or readjustment of the Warrant Price pursuant to this Section 5, the Company will promptly compute such adjustment or readjustment in accordance with the terms hereof and cause a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, to be delivered to the Holder. The Company will, upon the written request at any time of the Holder, furnish or cause to be furnished to such Holder a certificate setting forth: (a) such adjustments and readjustments; (b) the Warrant Price at the time in effect; and (c) the number of shares of Common Stock issuable upon exercise of the Warrant and the amount, if any, of other property at the time receivable upon the exercise of the Warrant. 5 5.7 Reservation of Stock Issuable Upon Exercise. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the exercise of this Warrant such number of shares of Common Stock as shall from time to time be sufficient to effect the exercise of this Warrant and, if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the exercise of this Warrant, in addition to such other remedies as shall be available to the Holder, the Company will use its best efforts to take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes. 6. RIGHTS PRIOR TO EXERCISE OF WARRANT This Warrant does not entitle the Holder to any of the rights of a stockholder of the Company. If, however, at any time prior to the expiration of this Warrant and prior to its exercise, any of the following events shall occur: (a) the Company shall declare any dividend payable in any securities upon the shares of Common Stock or make any distribution (other than a cash dividend) to the holders of shares of Common Stock; (b) the Company shall offer to all of the holders of shares of Common Stock any additional shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock or any right to subscribe for or purchase any thereof; or (c) a dissolution, liquidation or winding up of the Company (other than in connection with an Organic Change) shall be proposed and action by the Company with respect thereto has been approved by the Board (each, a "Material Action"); Then the Company shall give notice in writing of such Material Action to the Holder at its last address as it shall appear on the Company's records at least twenty (20) days' prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to such dividends, distribution, or subscription rights, or for the determination of stockholders entitled to vote on the Material Action. Such notice shall specify such record date or the date of closing the transfer books, as the case may be. Failure to publish, mail or receive such notice or any defect therein or in the publication or mailing thereof shall not affect the validity of the Material Action. Each person in whose name any certificate for Shares is to be issued shall for all purposes be deemed to have become the holder of record of such Shares on the date on which this instrument was surrendered and payment of the Warrant Price was made, irrespective of the date of delivery of such stock certificate, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such Shares at the close of business on the next succeeding date on which the stock transfer books are open. 7. SUCCESSORS AND ASSIGNS; TRANSFEREES The terms and provisions of this Warrant shall inure to the benefit of, and be binding upon, the Company and the Holder and their respective successors and permitted assigns and other transferees. Any successor, assign or other transferee of this Warrant, by its acceptance thereof, agrees to be bound by the terms of this Warrant with the same force and effect as if a signatory thereto. 8. RESTRICTED SECURITIES 6 In order to enable the Company to comply with the Securities Act and applicable state laws, the Company may require the Holder as a condition of the transfer or exercise of this Warrant, to give written assurance satisfactory to the Company that the Warrant, or in the case of an exercise hereof the Shares subject to this Warrant, are being acquired for his or her own account, for investment only, with no view to the distribution of the same, and that any disposition of all or any portion of this Warrant or the Shares issuable upon the due exercise of this Warrant shall not be made, unless made in compliance with the requirements of the Securities Act and applicable securities laws of any State or other jurisdiction. Holder acknowledges that this Warrant is, and each of the shares of Common Stock issuable upon the due exercise hereof will be, a restricted security, and that the certificates evidencing securities issued to the Holder upon exercise of this Warrant will bear a legend substantially similar to the legend set forth on the front page of this Warrant. 9. LOSS OR MUTILATION Upon receipt by the Company of satisfactory evidence of the ownership, and the loss, theft, destruction, or mutilation, of any Warrant, and (i) in the case of loss, theft, or destruction, upon receipt by the Company of indemnity satisfactory to it, or (ii) in the case of mutilation, upon receipt of such Warrant and upon surrender and cancellation of such Warrant, the Company shall execute and deliver in lieu thereof a new Warrant representing the right to purchase an equal number of shares of Common Stock. 10. CERTAIN COVENANTS 10.1 Further Assurances. The Company acknowledges that the issuance of the Warrant pursuant to the Investment Agreement is a material inducement to the Holder to (i) enter into the Investment Agreement, (ii) to purchase the Shares thereunder and (iii) to enter into commercial relationships with the Company. In connection therewith and in order to ensure that the intent of the parties with respect to this Warrant are realized in full, the Company (on behalf of itself and its Subsidiaries) hereby agrees to act in good faith and in the spirit of the Investment Agreement, the commercial agreements to be entered into by the parties and the Warrant and shall at all times comply with its obligations hereunder in a manner consistent with the performance standards described in the Sales Rep Agreements as such standards relate to the Sales Rep (as such term is defined therein). 10.2 Reports. On or before the thirtieth (30th) day following each fiscal quarter, the Company will inform the Holder in writing of the Division EBIT for the prior quarter and any adjustments to the Division EBIT as reported to the Holder during any prior quarter. Such reports will be prepared from the books and records of the Company in good faith. 10.3 Meetings. The Company agrees that, if requested by the Holder, it will meet with the Holder once each fiscal quarter at the principal executive offices of the Company to discuss the level of sales of the iTip Products. The Company agrees that it will cause such executives and managers as the Holder may reasonably request to attend such meeting. 10.4 Audit Right. The Holder will have the right, at its sole expense, to audit the books and records of the Company (including, without limitation, the books and records relating to the Division's financial performance) in the event that the Holder reasonably believes that the EBIT Hurdle has been achieved during a prior fiscal year; provided, however, that no more than one audit may be conducted each calendar year. Any audit conducted pursuant to Section 3(d) of the Sales Rep Agreement will also be considered an audit for purposes of this limitation. This audit right may be exercised by written notice to the Company and will be conducted in manner so as not to unreasonably interfere with the conduct of the business of the Company. The Holder agrees to execute, and will cause its accountants to execute, 7 customary and appropriate documentation to assure the Company that any information obtained in the course of such audit will be treated as confidential information. 11. MISCELLANEOUS 11.1 Entire Agreement. This Warrant, together with the Investment Agreement and the other agreements and instruments contemplated thereby constitute the entire agreement of the parties regarding the subject matter hereof, and supersede all prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. 11.2 Amendment. No supplement, modification or amendment of this Agreement shall be binding, unless executed in writing by the Company and the Holder. 11.3 Remedies in General. No delay or omission on the part of any party in exercising any right or remedy shall operate as a waiver of said right or remedy or any other right or remedy. A waiver on any one occasion shall not be construed as a bar to or a waiver of any right on any future occasion. Every right and remedy of a party shall be cumulative and in addition to every other right and remedy expressed in this Agreement or allowed by law or equity, and may be exercised singularly or concurrently. 11.4 Governing Law. This Warrant and any dispute, disagreement or issue of construction of interpretation arising hereunder whether relating to its execution, its validity, the obligations provided herein or performance shall be governed or interpreted according to the internal laws of the State of Delaware without regard to conflicts of law. 11.5 Notices. All notices, requests, demands and other communications under this Warrant shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given, or on the date of mailing if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and properly addressed as follows: if to the Holder, at its address set forth in Section 8.9 of the Investment Agreement or as otherwise shown in the Company records; and if to the Company, at its Scottsdale, Arizona office, attention: Chief Financial Officer. Any party may change its address for purposes of this Section by giving the other party written notice of the new address in the manner set forth above. 11.6 Severability. If for any reason any clause or provision of this Agreement, or the application of any such clause or provision in a particular context or to a particular situation, circumstance, or Person, should be held unenforceable, invalid or in violation of law by any court or other tribunal, then the application of such clause or provision in contexts or to situations, circumstances or Persons other than that in or to which it is held unenforceable, invalid or in violation of law shall not be affected thereby, and the remaining clauses and provisions hereof shall nevertheless remain in full force and effect. In lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be legal, valid and enforceable. Further, where state or federal law governs any aspect of matters or services covered by this Agreement, such state or federal law shall prevail over inconsistent provisions in this Agreement. 11.7 Expenses. If any action at law or in equity is necessary to enforce or interpret the terms of this Warrant, the prevailing party will be entitled to reasonable attorneys' fees, costs and necessary disbursements, in addition to any other relief to which such party may be entitled. 8 11.8 Captions. The captions included in this Agreement have been inserted as a matter of convenience only and in no way are intended to define, limit or to be used in connection with the interpretation of this Agreement. (This space intentionally left blank) 9 IN WITNESS WHEREOF, the undersigned has caused this Warrant to be executed as of the date first set forth above. MOBILITY ELECTRONICS, INC. By: /s/ Charles R. Mollo -------------------- Charles R. Mollo, Chief Executive Officer 10 SUBSCRIPTION MOBILITY ELECTRONICS, INC. Attn: Chief Financial Officer 17800 N. Perimeter Drive, Suite 200 Scottsdale, Arizona 85255 Ladies and Gentlemen: The undersigned, _________________________________________, hereby elects to purchase, pursuant to the provisions of the foregoing Warrant held by the undersigned, ____________ shares (the "Shares") of the common stock, par value $0.01 per share (the "Common Stock"), of Mobility Electronics, Inc., a Delaware corporation. Payment of the purchase price for the Shares being purchased, as required under such Warrant, accompanies this subscription. The undersigned hereby represents and warrants that the undersigned is acquiring the Shares for the account of the undersigned and not for resale or with a view to distribution of such Shares or any part hereof; that the undersigned is fully aware of the transfer restrictions affecting restricted securities under the pertinent securities laws; and the undersigned understands that the Shares purchased hereby are restricted securities and that the certificate or certificates evidencing the same will bear a legend to that effect. DATED: ________________. Signature:____________________________ Printed:______________________________ Address: _____________________________ _____________________________ EXHIBIT A ITIP TECHNOLOGY ISSUED POWER PATENTS

A-1 PENDING POWER PATENT APPLICATIONS

A-2 - -------- -------------------------------------------------------- US2004/007084 PCT Dual Input AC/DC Power Converter Having A Programmable Peripheral Power Hub Module US04/16292 PCT Key Universal Power Tip and Power Source Connectors 10-2004-7006621 Dual Input AC/DC Battery Operated Power Supply (South Korea) 2003-541,121 Dual Input AC/DC Battery Operated Power Supply (Japan) 2002342210 Dual Input AC/DC Battery Operated Power Supply (Australia) US02/34766 Dual Input AC/DC Battery Operated Power Supply ( China) 02776371.3 Dual Input AC/DC Battery Operated Power Supply (Europe) 2,466,162 Dual Input AC/DC Battery Operated Power Supply (Canada) 01172/DELNP/200 Dual Input AC/DC Battery Operated Power Supply (India) US04/19301 PCT Programmable Power Converter US04/16292 Key Universal Power Tip and Power Source Connectors (China) 10-2004-7013263 Key Universal Power Tip and Power Source Connectors (South Korea) US04/16292 Key Universal Power Tip and Power Source Connectors (Japan) US04/16292 Key Universal Power Tip and Power Source Connectors (Russia) 2004208705 Key Universal Power Tip and Power Source Connectors (Australia) US04/16292 Key Universal Power Tip and Power Source Connectors (Israel) 2004/6728 Key Universal Power Tip and Power Source Connectors (South Africa) US04/16292 Key Universal Power Tip and Power Source Connectors (India) US04/16292 Key Universal Power Tip and Power Source Connectors (Norway) US04/16292 Key Universal Power Tip and Power Source Connectors (Singapore) 2,475,060 Key Universal Power Tip and Power Source Connectors (Canada) 29/198,752 CONNECTOR ( 5 Watt Connector TIP) 29/198,801 CONNECTOR (15 Watt Connector TIP) 29/198,777 CONNECTOR (25 Watt Connector TIP) 29/198,775 CONNECTOR (35 Watt Connector TIP) 29/198,754 CONNECTOR ( 5 Watt Receptacle) 29/198,776 CONNECTOR (15 Watt Receptacle) 29/198,755 CONNECTOR (25 Watt Receptacle) 29/198,756 CONNECTOR (35 Watt Receptacle) 29/206,090 CONNECTOR (5 Watt Connector-Revised)

A-3 - -------- -------------------------------------------------------- 29/206,089 CONNECTOR (5 Watt Receptacle-Revised) CANADA 08-901134CA 5 Watt Connector Dashed/Solid Lines 08-901135CA 5 Watt Receptacle Dashed/Solid Lines 08-901136CA 15 Watt Connector Dashed/Solid Lines 08-901137CA 15 Watt Receptacle Dashed/Solid Lines 08-901138CA 25 Watt Connector Dashed/Solid Lines 08-901139CA 25 Watt Receptacle Dashed/Solid Lines 08-901140CA 35 Watt Connector Dashed/Solid Lines 08-901141CA 35 Watt Receptacle Dashed/Solid Lines CHINA DIM040859 5 Watt Connector/Receptacle Solid Lines DIM040860 15 Watt Connector/Receptacle Solid Lines DIM040869 25 Watt Connector/Receptacle Solid Lines DIM040870 35 Watt Connector/Receptacle Solid Lines EUROPE 000213889 5 Watt Connector/Receptacle (Revised) 000188958 15,25,35 Watt Connector/Receptacle INDIA TBD 5 Watt Connector Solid Lines TBD 5 Watt Receptacle Solid Lines TBD 15 Watt Connector Solid Lines TBD 15 Watt Receptacle Solid Lines TBD 25 Watt Connector Solid Lines TBD 25 Watt Receptacle Solid Lines TBD 35 Watt Connector Solid Lines TBD 35 Watt Receptacle Solid Lines ISRAEL 39540 5-35 Watt Connector/Receptacle Dashed/Solid JAPAN 2004-023,370 5 Watt Connector Dashed/Solid Lines 2004-023,371 5 Watt Receptacle Dashed/Solid Lines 2004-023,377 15 Watt Connector Dashed/Solid Lines 2004-023,378 15 Watt Receptacle Dashed/Solid Lines 2004-023,379 25 Watt Connector Dashed/Solid Lines 2004-023,381 25 Watt Receptacle Dashed/Solid Lines 2004-023,383 35 Watt Connector Dashed/Solid Lines 2004-023,384 35 Watt Receptacle Dashed/Solid Lines NORWAY TBD 5-35 Watt Connector/Receptacle RUSSIA 2004502018 5-35 Watt Connectors - Solid Lines 2004502019 5-35 Watt Receptacle - Solid Lines SOUTH AFRICA 2004/1001 5 Watt Connector Dashed/Solid Lines 2004/1000 5 Watt Receptacle Dashed/Solid Lines 2004/1003 15 Watt Connector Dashed/Solid Lines 2004/1002 15 Watt Receptacle Dashed/Solid Lines 2004/1005 25 Watt Connector Dashed/Solid Lines
A-4 - -------- -------------------------------------------------------- 2004/1004 25 Watt Receptacle Dashed/Solid Lines 2004/1007 35 Watt Connector Dashed/Solid Lines 2004/1006 35 Watt Receptacle Dashed/Solid Lines SOUTH KOREA 30-2004-0023709 5 Watt Connector Dashed Lines 30-2004-0023710 5 Watt Receptacle Dashed Lines 30-2004-0023711 15 Watt Connector Dashed Lines 30-2004-0023712 15 Watt Receptacle Dashed Lines 30-2004-0023713 25 Watt Connector Dashed Lines 30-2004-0023714 25 Watt Receptacle Dashed Lines 30-2004-0023715 35 Watt Connector Dashed Lines 30-2004-0023716 35 Watt Receptacle Dashed Lines TAIWAN 93304600 5 Watt Connector Dashed/Solid Lines 93304601 5 Watt Receptacle Dashed/Solid Lines 93304602 15 Watt Connector Dashed/Solid Lines 93304603 15 Watt Receptacle Dashed/Solid Lines 93304604 25 Watt Connector Dashed/Solid Lines 93304605 25 Watt Receptacle Dashed/Solid Lines 93304606 35 Watt Connector Dashed/Solid Lines 93304607 35 Watt Receptacle Dashed/Solid Lines
~~A-5~~ EX-4.2 3 p70452exv4w2.txt EXHIBIT 4.2 EXHIBIT 4.2 NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK OF THE COMPANY ISSUABLE UPON ITS EXERCISE HAVE BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES UNDER THE ACT AND APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. MOBILITY ELECTRONICS, INC. (A DELAWARE CORPORATION) $50 MILLION THRESHOLD WARRANT TO PURCHASE SHARES OF COMMON STOCK THIS CERTIFIES THAT, for value received, Motorola, Inc., a Delaware corporation, or its registered successors or assigns (hereinafter, the "Holder"), is entitled to purchase, subject to the conditions set forth below, at any time or from time to time during the Exercise Period (as defined below), Five Hundred Ninety-Five Thousand Two Hundred Thirty-Eight (595,238) fully paid and non-assessable shares (the "Shares") of common stock, par value $0.01 per share (the "Common Stock"), of Mobility Electronics, Inc., a Delaware corporation (the "Company"), at a per share purchase price equal to the Warrant Price. This warrant (this "Warrant") is issued as of March 31, 2005, pursuant to that certain Strategic Partners Investment Agreement dated as of March 31, 2005 (the "Investment Agreement"), by and among the Company, the Holder and the other party thereto. 1. DEFINITIONS Capitalized terms used and not otherwise defined herein will have the meanings ascribed thereto in the Investment Agreement. In addition, as used in this Warrant, the following terms shall have the meanings set forth below: "Computer Products" means the Company's existing line of universal power products for computers (including notebook, laptop, handheld, tablet computers and the like, but excluding personal digital assistants, wireless internet (or e-mail devices), smartphones and the like (the "Portable Computers")) and all future versions (including expanded functionality), modifications, enhancements, and derivatives to such products, and any new universal power product for Portable Computers which is 60 watts or more in power and is offered for sale by the Company from time to time. Such products may also include features for charging non-computer mobile electronic devices. "Division" means the recently formed iTip Division of the Company, which Division was formed by the Company for the purpose of designing, developing, manufacturing, marketing and selling iTip Products; it being acknowledged and agreed that the Division is not a separate legal entity, but is a part of the Company. "Division EBIT" means gross margins of the Division (for the purposes of this calculation, any revenue derived from licensing or enforcement of Mobility's Intellectual Property Rights relating to the iTip Products (i.e., if the Intellectual Property Rights also pertain to non-iTip Products, then only the revenue derived from licensing or enforcing of the portion relating to the iTip Products shall be included in revenue) (including, but not limited to, any settlement amounts and damage awards relating to iTip 1 Products), shall be deemed gross revenue of the Division) less: (i) twenty percent (20%) of the revenues of the Division; and (ii) the aggregate Commissions, as defined in the Sales Representative Agreements dated as of March 31, 2005 between the Company and each of the Holder and RadioShack, respectively (the "Sales Rep Agreements"), payable to the Holder and RadioShack pursuant to the Sales Rep Agreements), with gross margins and revenues of the Division being determined in accordance with GAAP as applied in a manner consistent with the Company's past accounting methodologies. "EBIT Hurdle" means $50 million of Division EBIT for the Division for a given calendar year commencing on January 1, 2005. "Exercise Period" means the period commencing on February 15 of the year following the calendar year in which the EBIT Hurdle was first achieved and ending on February 15, 2010; provided, however, that if the EBIT Hurdle is first achieved in the 2009 calendar year, then the Exercise Period shall be from February 15, 2010 to August 15, 2010. Notwithstanding the foregoing, in the event that the Company enters into a definitive agreement relating to (i) a sale of the Company (whether by merger, sale of all or substantially all assets or otherwise), (ii) a sale of the Division (whether by merger, sale of all or substantially all assets or otherwise), or (iii) the exclusive license of all or substantially all of the iTip Technology (a "Fundamental Event"), the Company will notify the Holder in writing as soon as reasonably practicable thereafter but in any event no later than twenty (20) days prior to the consummation of such Fundamental Event. In connection therewith, the Exercise Period shall commence, and the Warrant will become immediately exercisable in full, upon receipt of such notice and will terminate (A) in the case of a Fundamental Event contemplated by clause (i), immediately prior to the consummation of such Fundamental Event, and (B) in the case of a Fundamental Event described in clauses (ii) or (iii), upon the one hundred eighty-first (181st) day thereafter. "Intellectual Property Rights" means all current and future patents, patentable rights, patents pending, continuations, enhancements, know how, rights in mask works conferred by the U.S. Semiconductor Chip Protection Act of 1984 or any modification or re-enactment thereof, copyrights, trademarks (including service marks), trade secrets, and design rights whether registered or unregistered, and including any applications for registration and any registration of any of the foregoing, and all rights or forms of protection of a similar nature or having equivalent or similar effect to any of these, which may subsist anywhere in the world. "iTips" means any tip, cord or removable or interchangeable item that utilizes iTip Technology to remotely program a power product (including the remote programming of any iTip Product) to correctly determine and provide the appropriate voltage, current and/or power requirements for the purpose of operating or charging the battery for an electronic device (e.g., cell phones, PDA's, digital cameras, MP3 players, CD players, and the like). "iTip Products" means the Company's existing line of universal power products for use with mobile electronic devices and all future versions (including expanded functionality), modifications, enhancements, and derivatives to such products, and any new universal power products offered for sale by the Company from time to time, which: (i) are 70 watts or less in power; (ii) utilize iTip Technology; and (iii) cannot be used to power or charge a Portable Computer. "iTip Technology" means the underlying iTip, combination AC/DC, simultaneous charging and other related Intellectual Property Rights of the Company that are incorporated into the iTips and products of the Company that utilize iTips, including, but not limited to, the patents and patents pending listed on Exhibit A attached hereto. 2 "Warrant Price" means $8.40 per share, subject to appropriate adjustments for any of the events set forth in Section 5 below. 2. EXERCISE OF WARRANT The terms and conditions upon which this Warrant may be exercised, and the Common Stock covered hereby may be purchased, are as follows: 2.1 Method of Exercise. Except as provided in the following sentence, the Holder may, in its sole and absolute discretion and at any time or from time to time during the Exercise Period, exercise in whole or in part the purchase rights evidenced by this Warrant. Notwithstanding the above, if at any time after the first anniversary of the Effective Date but prior to the expiration of the Exercise Period, Holder receives written notice from the Company that the closing price of the Common Stock for any 20 consecutive trading days exceeded $16.80 per share following the first anniversary of the Effective Date (as appropriately adjusted for the events described in Section 5 below), and the Company desires for the Holder to exercise this Warrant (a "Triggering Event"), then the Holder may exercise in whole or in part the purchase rights evidenced by this Warrant for a period of one hundred eighty (180) days following the date of delivery by the Company to the Holder of such written notice; it being acknowledged and agreed that this Warrant shall automatically terminate following the expiration of such 180-day period. Exercise of this Warrant shall be effected by: (a) the surrender of the Warrant, together with a duly executed copy of the form of subscription attached hereto, to the Chief Financial Officer of the Company at the Company's Scottsdale, Arizona office; and (ii) the payment to the Company, by wire transfer to an account designated by the Company, of an amount equal to the aggregate Warrant Price for the number of Shares for which the purchase rights hereunder are being exercised. 2.2 Issuance of Shares and New Warrant. In the event the purchase rights evidenced by this Warrant are exercised in whole or in part, one or more certificates for the purchased Shares shall be issued as soon as practicable thereafter to the Holder. Such Holder shall also be issued at such time a new Warrant representing the number of Shares (if any) for which the purchase rights under this Warrant remain unexercised and continuing in force and effect. Upon exercise of this Warrant, the Holder will be entitled to all rights and privileges granted to the holders of shares of Common Stock. 2.3 No Impairment. The Company will not, by amendment of its certificate of incorporation or bylaws, each as amended to date (the "Charter Documents"), or through reorganization, consolidation, merger, amalgamation, dissolution, issue or sale of securities, sale of assets or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment. Notwithstanding the foregoing, the taking of any action by the Company for which an adjustment is made pursuant to Section 5 hereof and which does not constitute a breach of the other terms of this Warrant will not be deemed to constitute a breach of the foregoing provisions or an impairment of this Warrant. 3. TRANSFERS 3.1 Transfers. This Warrant and all rights hereunder are not transferable in whole or in part by the Holder; provided, however, that the Holder may transfer this Warrant and all rights hereunder to its Affiliate. The transfer shall be recorded on the books of the Company upon the surrender of this Warrant, properly endorsed, to the Chief Financial Officer of the Company at the Company's Scottsdale, Arizona office and the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer. In the event of a partial transfer, the Company shall issue to the several Holders one or more appropriate new Warrants. Subject to compliance with applicable securities laws, any Shares 3 acquired upon exercise of this Warrant may not be transferred by the Holder until thirty-five (35) days after the acquisition thereof. 3.2 Registered Holder. The Holder agrees that until such time as any permitted transfer pursuant to subsection 3.1 is recorded on the books of the Company, the Company may treat the registered Holder as the absolute owner; provided that nothing herein affects any requirement that transfer of any Warrant or share of Common Stock issued or issuable upon the exercise thereof by subject to securities law compliance. 3.3 Form of New Warrants. All Warrants issued in connection with transfers of this Warrant shall bear the same date as this Warrant and shall be identical in form and provision to this Warrant, other than such changes as are necessary to reflect actions taken prior to such transfer (e.g., the name of the Holder, the number of Shares then-purchasable thereunder, etc.). 4. FRACTIONAL SHARES Notwithstanding that the number of Shares purchasable upon the exercise of this Warrant may have been adjusted pursuant to the terms hereof, the Company shall nonetheless not be required to issue fractions of Shares upon exercise of this Warrant or to distribute certificates that evidence fractional shares nor shall the Company be required to make any cash payments in lieu thereof upon exercise of this Warrant. Except as contemplated in the following sentence, the Holder hereby waives any right to receive fractional Shares. If a fractional Share shall result from adjustments in the number of Shares purchasable hereunder, the number of Shares purchasable hereunder shall, on an aggregate basis taking into account all adjustments hereunder from the date of issuance of this Warrant, be rounded up to the next whole number. 5. ANTIDILUTION PROVISIONS The provisions of this Section 5 shall apply in the event that any of the events described in this Section 5 shall occur with respect to the shares of Common Stock at any time on or after the Closing Date: 5.1 Stock Splits and Combinations. If the Company shall at any time subdivide or combine its outstanding shares of Common Stock, this Warrant shall, after that subdivision or combination, evidence the right to purchase the number of shares of Common Stock that would have been issuable as a result of that change with respect to the Shares which were purchasable under this Warrant immediately before that subdivision or combination. If the Company shall at any time subdivide the outstanding shares of Common Stock, the Warrant Price then in effect immediately before that subdivision shall be proportionately decreased, and, if the Company shall at any time combine the outstanding shares of Common Stock, the Warrant Price then in effect immediately before that combination shall be proportionately increased. Any adjustment under this subsection shall become effective at the time that such subdivision or combination becomes effective. 5.2 Reclassification, Exchange and Substitution. If the Shares issuable upon exercise of this Warrant shall be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares provided for in subsection 5.1 above), this Warrant shall represent the right to purchase for the same aggregate consideration, in lieu of the Common Stock which the Holder would have become entitled to purchase but for such change, the number of shares of such other class or classes of stock equivalent to the number of shares of Common Stock that would have been subject to purchase 4 by the Holder on exercise of this Warrant immediately before that change. In such an event, the Warrant Price shall be appropriately adjusted. 5.3 Reorganizations, Mergers, Consolidations or Sale of Assets. If at any time there shall be a capital reorganization, recapitalization, merger, consolidation, sale of all or substantially all assets or similar transaction (other than a combination, reclassification, exchange, or subdivision of shares provided for elsewhere in this Section 5, or a Fundamental Event) (such transaction, an "Organic Change"), then, as a part of such Organic Change, lawful provision shall be made so that the Holder shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified in this Warrant and upon payment of the Warrant Price then in effect, the number of shares of Common Stock or other securities or property of the Company to which a holder of shares of Common Stock deliverable upon exercise of this Warrant would have been entitled in such Organic Change if this Warrant had been exercised immediately before such Organic Change. In any such case, appropriate adjustment (as determined in good faith by the Board, subject to the reasonable approval of the Holder) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the Organic Change to the end that the provisions of this Warrant (including adjustment of the Warrant Price then in effect and number of Shares purchasable upon exercise of this Warrant) shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant. For the avoidance of any doubt, the foregoing provisions will similarly apply to successive Organic Changes. 5.4 Common Stock Dividends; Distributions. In the event the Company should at any time prior to the expiration of this Warrant fix a record date for the determination of the holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or other securities or rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock (hereinafter referred to as the "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of such distribution, split or subdivision if no record date is fixed), the Warrant Price shall be appropriately decreased and the number of shares of Common Stock issuable upon exercise of the Warrant shall be appropriately increased in proportion to such increase of outstanding shares. 5.5 Adjustments of Other Distributions. In the event the Company shall declare a distribution payable in securities of other persons, evidences of indebtedness issued by the Company or other persons, assets (excluding cash dividends) or options or rights not referred to in subsection 5.4, then, in each such case for the purpose of this subsection 5.5, upon exercise of this Warrant the Holder hereof shall be entitled to a proportionate share of any such distribution as though such Holder was the holder of the number of shares of Common Stock into which this Warrant may be exercised as of the record date fixed for the determination of the holders of Common Stock entitled to receive such distribution. 5.6 Certificate as to Adjustments. In the case of each adjustment or readjustment of the Warrant Price pursuant to this Section 5, the Company will promptly compute such adjustment or readjustment in accordance with the terms hereof and cause a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, to be delivered to the Holder. The Company will, upon the written request at any time of the Holder, furnish or cause to be furnished to such Holder a certificate setting forth: (a) such adjustments and readjustments; (b) the Warrant Price at the time in effect; and (c) the number of shares of Common Stock issuable upon exercise of the Warrant and the amount, if any, of other property at the time receivable upon the exercise of the Warrant. 5 5.7 Reservation of Stock Issuable Upon Exercise. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the exercise of this Warrant such number of shares of Common Stock as shall from time to time be sufficient to effect the exercise of this Warrant and, if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the exercise of this Warrant, in addition to such other remedies as shall be available to the Holder, the Company will use its best efforts to take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes. 6. RIGHTS PRIOR TO EXERCISE OF WARRANT This Warrant does not entitle the Holder to any of the rights of a stockholder of the Company. If, however, at any time prior to the expiration of this Warrant and prior to its exercise, any of the following events shall occur: (a) the Company shall declare any dividend payable in any securities upon the shares of Common Stock or make any distribution (other than a cash dividend) to the holders of shares of Common Stock; (b) the Company shall offer to all of the holders of shares of Common Stock any additional shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock or any right to subscribe for or purchase any thereof; or (c) a dissolution, liquidation or winding up of the Company (other than in connection with an Organic Change) shall be proposed and action by the Company with respect thereto has been approved by the Board (each, a "Material Action"); Then the Company shall give notice in writing of such Material Action to the Holder at its last address as it shall appear on the Company's records at least twenty (20) days' prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to such dividends, distribution, or subscription rights, or for the determination of stockholders entitled to vote on the Material Action. Such notice shall specify such record date or the date of closing the transfer books, as the case may be. Failure to publish, mail or receive such notice or any defect therein or in the publication or mailing thereof shall not affect the validity of the Material Action. Each person in whose name any certificate for Shares is to be issued shall for all purposes be deemed to have become the holder of record of such Shares on the date on which this instrument was surrendered and payment of the Warrant Price was made, irrespective of the date of delivery of such stock certificate, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such Shares at the close of business on the next succeeding date on which the stock transfer books are open. 7. SUCCESSORS AND ASSIGNS; TRANSFEREES The terms and provisions of this Warrant shall inure to the benefit of, and be binding upon, the Company and the Holder and their respective successors and permitted assigns and other transferees. Any successor, assign or other transferee of this Warrant, by its acceptance thereof, agrees to be bound by the terms of this Warrant with the same force and effect as if a signatory thereto. 8. RESTRICTED SECURITIES 6 In order to enable the Company to comply with the Securities Act and applicable state laws, the Company may require the Holder as a condition of the transfer or exercise of this Warrant, to give written assurance satisfactory to the Company that the Warrant, or in the case of an exercise hereof the Shares subject to this Warrant, are being acquired for his or her own account, for investment only, with no view to the distribution of the same, and that any disposition of all or any portion of this Warrant or the Shares issuable upon the due exercise of this Warrant shall not be made, unless made in compliance with the requirements of the Securities Act and applicable securities laws of any State or other jurisdiction. Holder acknowledges that this Warrant is, and each of the shares of Common Stock issuable upon the due exercise hereof will be, a restricted security, and that the certificates evidencing securities issued to the Holder upon exercise of this Warrant will bear a legend substantially similar to the legend set forth on the front page of this Warrant. 9. LOSS OR MUTILATION Upon receipt by the Company of satisfactory evidence of the ownership, and the loss, theft, destruction, or mutilation, of any Warrant, and (i) in the case of loss, theft, or destruction, upon receipt by the Company of indemnity satisfactory to it, or (ii) in the case of mutilation, upon receipt of such Warrant and upon surrender and cancellation of such Warrant, the Company shall execute and deliver in lieu thereof a new Warrant representing the right to purchase an equal number of shares of Common Stock. 10. CERTAIN COVENANTS 10.1 Further Assurances. The Company acknowledges that the issuance of the Warrant pursuant to the Investment Agreement is a material inducement to the Holder to (i) enter into the Investment Agreement, (ii) to purchase the Shares thereunder and (iii) to enter into commercial relationships with the Company. In connection therewith and in order to ensure that the intent of the parties with respect to this Warrant are realized in full, the Company (on behalf of itself and its Subsidiaries) hereby agrees to act in good faith and in the spirit of the Investment Agreement, the commercial agreements to be entered into by the parties and the Warrant and shall at all times comply with its obligations hereunder in a manner consistent with the performance standards described in the Sales Rep Agreements as such standards relate to the Sales Rep (as such term is defined therein). 10.2 Reports. On or before the thirtieth (30th) day following each fiscal quarter, the Company will inform the Holder in writing of the Division EBIT for the prior quarter and any adjustments to the Division EBIT as reported to the Holder during any prior quarter. Such reports will be prepared from the books and records of the Company in good faith. 10.3 Meetings. The Company agrees that, if requested by the Holder, it will meet with the Holder once each fiscal quarter at the principal executive offices of the Company to discuss the level of sales of the iTip Products. The Company agrees that it will cause such executives and managers as the Holder may reasonably request to attend such meeting. 10.4 Audit Right. The Holder will have the right, at its sole expense, to audit the books and records of the Company (including, without limitation, the books and records relating to the Division's financial performance) in the event that the Holder reasonably believes that the EBIT Hurdle has been achieved during a prior fiscal year; provided, however, that no more than one audit may be conducted each calendar year. Any audit conducted pursuant to Section 3(d) of the Sales Rep Agreement will also be considered an audit for purposes of this limitation. This audit right may be exercised by written notice to the Company and will be conducted in manner so as not to unreasonably interfere with the conduct of the business of the Company. The Holder agrees to execute, and will cause its accountants to execute, 7 customary and appropriate documentation to assure the Company that any information obtained in the course of such audit will be treated as confidential information. 11. MISCELLANEOUS 11.1 Entire Agreement. This Warrant, together with the Investment Agreement and the other agreements and instruments contemplated thereby constitute the entire agreement of the parties regarding the subject matter hereof, and supersede all prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. 11.2 Amendment. No supplement, modification or amendment of this Agreement shall be binding, unless executed in writing by the Company and the Holder. 11.3 Remedies in General. No delay or omission on the part of any party in exercising any right or remedy shall operate as a waiver of said right or remedy or any other right or remedy. A waiver on any one occasion shall not be construed as a bar to or a waiver of any right on any future occasion. Every right and remedy of a party shall be cumulative and in addition to every other right and remedy expressed in this Agreement or allowed by law or equity, and may be exercised singularly or concurrently. 11.4 Governing Law. This Warrant and any dispute, disagreement or issue of construction of interpretation arising hereunder whether relating to its execution, its validity, the obligations provided herein or performance shall be governed or interpreted according to the internal laws of the State of Delaware without regard to conflicts of law. 11.5 Notices. All notices, requests, demands and other communications under this Warrant shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given, or on the date of mailing if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and properly addressed as follows: if to the Holder, at its address set forth in Section 8.9 of the Investment Agreement or as otherwise shown in the Company records; and if to the Company, at its Scottsdale, Arizona office, attention: Chief Financial Officer. Any party may change its address for purposes of this Section by giving the other party written notice of the new address in the manner set forth above. 11.6 Severability. If for any reason any clause or provision of this Agreement, or the application of any such clause or provision in a particular context or to a particular situation, circumstance, or Person, should be held unenforceable, invalid or in violation of law by any court or other tribunal, then the application of such clause or provision in contexts or to situations, circumstances or Persons other than that in or to which it is held unenforceable, invalid or in violation of law shall not be affected thereby, and the remaining clauses and provisions hereof shall nevertheless remain in full force and effect. In lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be legal, valid and enforceable. Further, where state or federal law governs any aspect of matters or services covered by this Agreement, such state or federal law shall prevail over inconsistent provisions in this Agreement. 11.7 Expenses. If any action at law or in equity is necessary to enforce or interpret the terms of this Warrant, the prevailing party will be entitled to reasonable attorneys' fees, costs and necessary disbursements, in addition to any other relief to which such party may be entitled. 8 11.8 Captions. The captions included in this Agreement have been inserted as a matter of convenience only and in no way are intended to define, limit or to be used in connection with the interpretation of this Agreement. (This space intentionally left blank) 9 IN WITNESS WHEREOF, the undersigned has caused this Warrant to be executed as of the date first set forth above. MOBILITY ELECTRONICS, INC. By: /s/ Charles R. Mollo -------------------- Charles R. Mollo, Chief Executive Officer 10 SUBSCRIPTION MOBILITY ELECTRONICS, INC. Attn: Chief Financial Officer 17800 N. Perimeter Drive, Suite 200 Scottsdale, Arizona 85255 Ladies and Gentlemen: The undersigned,________________________________________, hereby elects to purchase, pursuant to the provisions of the foregoing Warrant held by the undersigned, ____________ shares (the "Shares") of the common stock, par value $0.01 per share (the "Common Stock"), of Mobility Electronics, Inc., a Delaware corporation. Payment of the purchase price for the Shares being purchased, as required under such Warrant, accompanies this subscription. The undersigned hereby represents and warrants that the undersigned is acquiring the Shares for the account of the undersigned and not for resale or with a view to distribution of such Shares or any part hereof; that the undersigned is fully aware of the transfer restrictions affecting restricted securities under the pertinent securities laws; and the undersigned understands that the Shares purchased hereby are restricted securities and that the certificate or certificates evidencing the same will bear a legend to that effect. DATED: . ---------------- Signature: ------------------------------ Printed: -------------------------------- Address: -------------------------------- -------------------------------- EXHIBIT A ITIP TECHNOLOGY ISSUED POWER PATENTS
ISSUED PATENT # TITLE 5,347,211 Selectable Output Power Converter 6,643,158 Dual input AC/DC to Programmable DC Output Converter 6,700,808 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing A Secondary Buck Converter 6,650,560 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing Single-Loop Optical Feedback 6,751,109 Dual Input AC/DC Battery Operated Power Supply 6,064,177 Two-Part Battery Charger/Power Cable Article with Multiple Device Capability 6,433,274 Power Converter Device 6,775,163 Dual Input AC/DC to Programmable DC Output Converter 6,791,853 Dual Input AC/DC Power Converter Having a Programmable Peripheral Power Hub Module D2004/1351/A Singapore - 5 Watt Connector Solid Lines D2004/1352/H Singapore - 5 Watt Receptacle Solid Lines D2004/1353/D Singapore - 15 Watt Connector Solid Lines D2004/1354/J Singapore - 15 Watt Receptacle Solid Lines D2004/1355/G Singapore - 25 Watt Connector Solid Lines D2004/1356/C Singapore - 25 Watt Receptacle Solid Lines D2004/1357/Z Singapore - 35 Watt Connector Solid Lines D2004/1358/F Singapore - 35 Watt Receptacle Solid Lines 157405 Australia - 15 Watt Connector Solid Lines 157401 Australia - 15 Watt Receptacle Solid Lines 157404 Australia - 15 Watt Connector Solid Lines 157507 Australia - 15 Watt Receptacle Solid Lines 157403 Australia - 15 Watt Plug only 157400 Australia - 25 Watt Receptacle Solid Lines 157406 Australia - 25 Watt Connector Solid Lines 157503 Australia - 25 Watt Receptacle Solid Lines 157506 Australia - 25 Watt Plug only 157402 Australia - 35 Watt Receptacle Solid Lines 157399 Australia - 35 Watt Connector Solid Lines 157505 Australia - 35 Watt Receptacle Solid Lines 157502 Australia - 35 Watt Connector Solid Lines 157508 Australia - 35 Watt Plug only
A-1 PENDING POWER PATENT APPLICATION
SERIAL # TITLE 10/790,654 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing A Secondary Buck Converter 10/715,259 Dual Input AC and DC Power Supply Having A Programmable DC Output Utilizing Single-Loop Optical Feedback US02/03542 PCT Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing A Secondary Buck Converter US02/34766 PCT Dual Input AC/DC Battery Operated Power Supply US02/34749 PCT Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing Single-Loop Optical Feedback US02/34748 PCT Dual Input AC/DC to Programmable DC Output Converter 10/623,060 Programmable Power Converter 60/494,860 Dual Input AC/DC Fuel Cell Operated Power Supply 10/663,868 Compact Electronics Plenum 60/525,857 Retractable Cable System For Power Converter 02707726.2 Dual Input AC and DC Power Supply Having a Programmable DC Output (Europe) 02815764.8 Dual Input AC and DC Power Supply Having a Programmable DC Output (China) 10-2004-7002345 Dual Input AC and DC Power Supply Having a Programmable DC Output (South Korea) 2003-541,122 Dual Input AC and DC Power Supply Having a Programmable DC Output (Japan) 2004104345 Dual Input AC and DC Power Supply Having a Programmable DC Output (Russia) 2002242115 Dual Input AC and DC Power Supply Having a Programmable DC Output (Australia) 160167 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing a Secondary Buck Converter (Israel) 2004/0930 Dual Input AC and DC Power Supply Having a Programmable DC Output (South Africa) 00315/DELNP/2004 Dual Input AC and DC Power Supply Having a Programmable DC Output (India) 2004 0455 Dual Input AC and DC Power Supply Having a Programmable DC Output (Norway) 200400703-5 Dual Input AC and DC Power Supply Having a Programmable DC Output (Singapore) 2,454,044 Dual Input AC and DC Power Supply Having a Programmable DC Output (Canada) 10/790,877 Key Universal Power Tip and Power Source Connectors
A-2 US2004/007084 PCT Dual Input AC/DC Power Converter Having A Programmable Peripheral Power Hub Module US04/16292 PCT Key Universal Power Tip and Power Source Connectors 10-2004-7006621 Dual Input AC/DC Battery Operated Power Supply (South Korea) 2003-541,121 Dual Input AC/DC Battery Operated Power Supply (Japan) 2002342210 Dual Input AC/DC Battery Operated Power Supply (Australia) US02/34766 Dual Input AC/DC Battery Operated Power Supply (China) 02776371.3 Dual Input AC/DC Battery Operated Power Supply (Europe) 2,466,162 Dual Input AC/DC Battery Operated Power Supply (Canada) 01172/DELNP/200 Dual Input AC/DC Battery Operated Power Supply (India) US04/19301 PCT Programmable Power Converter US04/16292 Key Universal Power Tip and Power Source Connectors (China) 10-2004-7013263 Key Universal Power Tip and Power Source Connectors (South Korea) US04/16292 Key Universal Power Tip and Power Source Connectors (Japan) US04/16292 Key Universal Power Tip and Power Source Connectors (Russia) 2004208705 Key Universal Power Tip and Power Source Connectors (Australia) US04/16292 Key Universal Power Tip and Power Source Connectors (Israel) 2004/6728 Key Universal Power Tip and Power Source Connectors (South Africa) US04/16292 Key Universal Power Tip and Power Source Connectors (India) US04/16292 Key Universal Power Tip and Power Source Connectors (Norway) US04/16292 Key Universal Power Tip and Power Source Connectors (Singapore) 2,475,060 Key Universal Power Tip and Power Source Connectors (Canada) 29/198,752 CONNECTOR ( 5 Watt Connector TIP) 29/198,801 CONNECTOR (15 Watt Connector TIP) 29/198,777 CONNECTOR (25 Watt Connector TIP) 29/198,775 CONNECTOR (35 Watt Connector TIP) 29/198,754 CONNECTOR ( 5 Watt Receptacle) 29/198,776 CONNECTOR (15 Watt Receptacle) 29/198,755 CONNECTOR (25 Watt Receptacle) 29/198,756 CONNECTOR (35 Watt Receptacle) 29/206,090 CONNECTOR (5 Watt Connector-Revised)

A-3 29/206,089 CONNECTOR (5 Watt Receptacle-Revised) CANADA 08-901134CA 5 Watt Connector Dashed/Solid Lines 08-901135CA 5 Watt Receptacle Dashed/Solid Lines 08-901136CA 15 Watt Connector Dashed/Solid Lines 08-901137CA 15 Watt Receptacle Dashed/Solid Lines 08-901138CA 25 Watt Connector Dashed/Solid Lines 08-901139CA 25 Watt Receptacle Dashed/Solid Lines 08-901140CA 35 Watt Connector Dashed/Solid Lines 08-901141CA 35 Watt Receptacle Dashed/Solid Lines CHINA DIM040859 5 Watt Connector/Receptacle Solid Lines DIM040860 15 Watt Connector/Receptacle Solid Lines DIM040869 25 Watt Connector/Receptacle Solid Lines DIM040870 35 Watt Connector/Receptacle Solid Lines EUROPE 000213889 5 Watt Connector/Receptacle (Revised) 000188958 15,25,35 Watt Connector/Receptacle INDIA TBD 5 Watt Connector Solid Lines TBD 5 Watt Receptacle Solid Lines TBD 15 Watt Connector Solid Lines TBD 15 Watt Receptacle Solid Lines TBD 25 Watt Connector Solid Lines TBD 25 Watt Receptacle Solid Lines TBD 35 Watt Connector Solid Lines TBD 35 Watt Receptacle Solid Lines ISRAEL 39540 5-35 Watt Connector/Receptacle Dashed/Solid JAPAN 2004-023,370 5 Watt Connector Dashed/Solid Lines 2004-023,371 5 Watt Receptacle Dashed/Solid Lines 2004-023,377 15 Watt Connector Dashed/Solid Lines 2004-023,378 15 Watt Receptacle Dashed/Solid Lines 2004-023,379 25 Watt Connector Dashed/Solid Lines 2004-023,381 25 Watt Receptacle Dashed/Solid Lines 2004-023,383 35 Watt Connector Dashed/Solid Lines 2004-023,384 35 Watt Receptacle Dashed/Solid Lines NORWAY TBD 5-35 Watt Connector/Receptacle RUSSIA 2004502018 5-35 Watt Connectors - Solid Lines 2004502019 5-35 Watt Receptacle - Solid Lines SOUTH AFRICA 2004/1001 5 Watt Connector Dashed/Solid Lines 2004/1000 5 Watt Receptacle Dashed/Solid Lines 2004/1003 15 Watt Connector Dashed/Solid Lines 2004/1002 15 Watt Receptacle Dashed/Solid Lines 2004/1005 25 Watt Connector Dashed/Solid Lines

A-4 2004/1004 25 Watt Receptacle Dashed/Solid Lines 2004/1007 35 Watt Connector Dashed/Solid Lines 2004/1006 35 Watt Receptacle Dashed/Solid Lines SOUTH KOREA 30-2004-0023709 5 Watt Connector Dashed Lines 30-2004-0023710 5 Watt Receptacle Dashed Lines 30-2004-0023711 15 Watt Connector Dashed Lines 30-2004-0023712 15 Watt Receptacle Dashed Lines 30-2004-0023713 25 Watt Connector Dashed Lines 30-2004-0023714 25 Watt Receptacle Dashed Lines 30-2004-0023715 35 Watt Connector Dashed Lines 30-2004-0023716 35 Watt Receptacle Dashed Lines TAIWAN 93304600 5 Watt Connector Dashed/Solid Lines 93304601 5 Watt Receptacle Dashed/Solid Lines 93304602 15 Watt Connector Dashed/Solid Lines 93304603 15 Watt Receptacle Dashed/Solid Lines 93304604 25 Watt Connector Dashed/Solid Lines 93304605 25 Watt Receptacle Dashed/Solid Lines 93304606 35 Watt Connector Dashed/Solid Lines 93304607 35 Watt Receptacle Dashed/Solid Lines

~~A-5~~ EX-4.3 4 p70452exv4w3.txt EXHIBIT 4.3 EXHIBIT 4.3 NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK OF THE COMPANY ISSUABLE UPON ITS EXERCISE HAVE BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES UNDER THE ACT AND APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. MOBILITY ELECTRONICS, INC. (A DELAWARE CORPORATION) $25 MILLION THRESHOLD WARRANT TO PURCHASE SHARES OF COMMON STOCK THIS CERTIFIES THAT, for value received, RadioShack Corporation, a Delaware corporation, or its registered successors or assigns (hereinafter, the "Holder"), is entitled to purchase, subject to the conditions set forth below, at any time or from time to time during the Exercise Period (as defined below), Five Hundred Ninety-Five Thousand Two Hundred Thirty-Eight (595,238) fully paid and non-assessable shares (the "Shares") of common stock, par value $0.01 per share (the "Common Stock"), of Mobility Electronics, Inc., a Delaware corporation (the "Company"), at a per share purchase price equal to the Warrant Price. This warrant (this "Warrant") is issued as of March 31, 2005, pursuant to that certain Strategic Partners Investment Agreement dated as of March 31, 2005 (the "Investment Agreement"), by and among the Company, the Holder and the other party thereto. 1. DEFINITIONS Capitalized terms used and not otherwise defined herein will have the meanings ascribed thereto in the Investment Agreement. In addition, as used in this Warrant, the following terms shall have the meanings set forth below: "Computer Products" means the Company's existing line of universal power products for computers (including notebook, laptop, handheld, tablet computers and the like, but excluding personal digital assistants, wireless internet (or e-mail devices), smartphones and the like (the "Portable Computers")) and all future versions (including expanded functionality), modifications, enhancements, and derivatives to such products, and any new universal power product for Portable Computers which is 60 watts or more in power and is offered for sale by the Company from time to time. Such products may also include features for charging non-computer mobile electronic devices. "Division" means the recently formed iTip Division of the Company, which Division was formed by the Company for the purpose of designing, developing, manufacturing, marketing and selling iTip Products; it being acknowledged and agreed that the Division is not a separate legal entity, but is a part of the Company. "Division EBIT" means gross margins of the Division (for the purposes of this calculation, any revenue derived from licensing or enforcement of Mobility's Intellectual Property Rights relating to the iTip Products (i.e., if the Intellectual Property Rights also pertain to non-iTip Products, then only the revenue derived from licensing or enforcing of the portion relating to the iTip Products shall be included in revenue) (including, but not limited to, any settlement amounts and damage awards relating to iTip 1 Products), shall be deemed gross revenue of the Division) less: (i) twenty percent (20%) of the revenues of the Division; and (ii) the aggregate Commissions, as defined in the Sales Representative Agreements dated as of March 31, 2005 between the Company and each of the Holder and Motorola, respectively (the "Sales Rep Agreements"), payable to the Holder and Motorola pursuant to the Sales Rep Agreements), with gross margins and revenues of the Division being determined in accordance with GAAP as applied in a manner consistent with the Company's past accounting methodologies. "EBIT Hurdle" means $25 million of Division EBIT for the Division for a given calendar year commencing on January 1, 2005. "Exercise Period" means the period commencing on February 15 of the year following the calendar year in which the EBIT Hurdle was first achieved and ending on February 15, 2008; provided, however, that if the EBIT Hurdle is first achieved in the 2007 calendar year, then the Exercise Period shall be from February 15, 2008 to August 15, 2008. Notwithstanding the foregoing, in the event that the Company enters into a definitive agreement relating to (i) a sale of the Company (whether by merger, sale of all or substantially all assets or otherwise), (ii) a sale of the Division (whether by merger, sale of all or substantially all assets or otherwise), or (iii) the exclusive license of all or substantially all of the iTip Technology (a "Fundamental Event"), the Company will notify the Holder in writing as soon as reasonably practicable thereafter but in any event no later than twenty (20) days prior to the consummation of such Fundamental Event. In connection therewith, the Exercise Period shall commence, and the Warrant will become immediately exercisable in full, upon receipt of such notice and will terminate (A) in the case of a Fundamental Event contemplated by clause (i), immediately prior to the consummation of such Fundamental Event, and (B) in the case of a Fundamental Event described in clauses (ii) or (iii), upon the one hundred eighty-first (181st) day thereafter. "Intellectual Property Rights" means all current and future patents, patentable rights, patents pending, continuations, enhancements, know how, rights in mask works conferred by the U.S. Semiconductor Chip Protection Act of 1984 or any modification or re-enactment thereof, copyrights, trademarks (including service marks), trade secrets, and design rights whether registered or unregistered, and including any applications for registration and any registration of any of the foregoing, and all rights or forms of protection of a similar nature or having equivalent or similar effect to any of these, which may subsist anywhere in the world. "iTips" means any tip, cord or removable or interchangeable item that utilizes iTip Technology to remotely program a power product (including the remote programming of any iTip Product) to correctly determine and provide the appropriate voltage, current and/or power requirements for the purpose of operating or charging the battery for an electronic device (e.g., cell phones, PDA's, digital cameras, MP3 players, CD players, and the like). "iTip Products" means the Company's existing line of universal power products for use with mobile electronic devices and all future versions (including expanded functionality), modifications, enhancements, and derivatives to such products, and any new universal power products offered for sale by the Company from time to time, which: (i) are 70 watts or less in power; (ii) utilize iTip Technology; and (iii) cannot be used to power or charge a Portable Computer. "iTip Technology" means the underlying iTip, combination AC/DC, simultaneous charging and other related Intellectual Property Rights of the Company that are incorporated into the iTips and products of the Company that utilize iTips, including, but not limited to, the patents and patents pending listed on Exhibit A attached hereto. 2 "Warrant Price" means $8.40 per share, subject to appropriate adjustments for any of the events set forth in Section 5 below. 2. EXERCISE OF WARRANT The terms and conditions upon which this Warrant may be exercised, and the Common Stock covered hereby may be purchased, are as follows: 2.1 Method of Exercise. Except as provided in the following sentence, the Holder may, in its sole and absolute discretion and at any time or from time to time during the Exercise Period, exercise in whole or in part the purchase rights evidenced by this Warrant. Notwithstanding the above, if at any time after the first anniversary of the Effective Date but prior to the expiration of the Exercise Period, Holder receives written notice from the Company that the closing price of the Common Stock for any 20 consecutive trading days exceeded $16.80 per share following the first anniversary of the Effective Date (as appropriately adjusted for the events described in Section 5 below), and the Company desires for the Holder to exercise this Warrant (a "Triggering Event"), then the Holder may exercise in whole or in part the purchase rights evidenced by this Warrant for a period of one hundred eighty (180) days following the date of delivery by the Company to the Holder of such written notice; it being acknowledged and agreed that this Warrant shall automatically terminate following the expiration of such 180-day period. Exercise of this Warrant shall be effected by: (a) the surrender of the Warrant, together with a duly executed copy of the form of subscription attached hereto, to the Chief Financial Officer of the Company at the Company's Scottsdale, Arizona office; and (ii) the payment to the Company, by wire transfer to an account designated by the Company, of an amount equal to the aggregate Warrant Price for the number of Shares for which the purchase rights hereunder are being exercised. 2.2 Issuance of Shares and New Warrant. In the event the purchase rights evidenced by this Warrant are exercised in whole or in part, one or more certificates for the purchased Shares shall be issued as soon as practicable thereafter to the Holder. Such Holder shall also be issued at such time a new Warrant representing the number of Shares (if any) for which the purchase rights under this Warrant remain unexercised and continuing in force and effect. Upon exercise of this Warrant, the Holder will be entitled to all rights and privileges granted to the holders of shares of Common Stock. 2.3 No Impairment. The Company will not, by amendment of its certificate of incorporation or bylaws, each as amended to date (the "Charter Documents"), or through reorganization, consolidation, merger, amalgamation, dissolution, issue or sale of securities, sale of assets or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment. Notwithstanding the foregoing, the taking of any action by the Company for which an adjustment is made pursuant to Section 5 hereof and which does not constitute a breach of the other terms of this Warrant will not be deemed to constitute a breach of the foregoing provisions or an impairment of this Warrant. 3. TRANSFERS 3.1 Transfers. This Warrant and all rights hereunder are not transferable in whole or in part by the Holder; provided, however, that the Holder may transfer this Warrant and all rights hereunder to its Affiliate. The transfer shall be recorded on the books of the Company upon the surrender of this Warrant, properly endorsed, to the Chief Financial Officer of the Company at the Company's Scottsdale, Arizona office and the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer. In the event of a partial transfer, the Company shall issue to the several Holders one or more appropriate new Warrants. Subject to compliance with applicable securities laws, 3 any Shares acquired upon exercise of this Warrant may not be transferred by the Holder until thirty-five (35) days after the acquisition thereof. 3.2 Registered Holder. The Holder agrees that until such time as any permitted transfer pursuant to subsection 3.1 is recorded on the books of the Company, the Company may treat the registered Holder as the absolute owner; provided that nothing herein affects any requirement that transfer of any Warrant or share of Common Stock issued or issuable upon the exercise thereof by subject to securities law compliance. 3.3 Form of New Warrants. All Warrants issued in connection with transfers of this Warrant shall bear the same date as this Warrant and shall be identical in form and provision to this Warrant, other than such changes as are necessary to reflect actions taken prior to such transfer (e.g., the name of the Holder, the number of Shares then-purchasable thereunder, etc.). 4. FRACTIONAL SHARES Notwithstanding that the number of Shares purchasable upon the exercise of this Warrant may have been adjusted pursuant to the terms hereof, the Company shall nonetheless not be required to issue fractions of Shares upon exercise of this Warrant or to distribute certificates that evidence fractional shares nor shall the Company be required to make any cash payments in lieu thereof upon exercise of this Warrant. Except as contemplated in the following sentence, the Holder hereby waives any right to receive fractional Shares. If a fractional Share shall result from adjustments in the number of Shares purchasable hereunder, the number of Shares purchasable hereunder shall, on an aggregate basis taking into account all adjustments hereunder from the date of issuance of this Warrant, be rounded up to the next whole number. 5. ANTIDILUTION PROVISIONS The provisions of this Section 5 shall apply in the event that any of the events described in this Section 5 shall occur with respect to the shares of Common Stock at any time on or after the Closing Date: 5.1 Stock Splits and Combinations. If the Company shall at any time subdivide or combine its outstanding shares of Common Stock, this Warrant shall, after that subdivision or combination, evidence the right to purchase the number of shares of Common Stock that would have been issuable as a result of that change with respect to the Shares which were purchasable under this Warrant immediately before that subdivision or combination. If the Company shall at any time subdivide the outstanding shares of Common Stock, the Warrant Price then in effect immediately before that subdivision shall be proportionately decreased, and, if the Company shall at any time combine the outstanding shares of Common Stock, the Warrant Price then in effect immediately before that combination shall be proportionately increased. Any adjustment under this subsection shall become effective at the time that such subdivision or combination becomes effective. 5.2 Reclassification, Exchange and Substitution. If the Shares issuable upon exercise of this Warrant shall be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares provided for in subsection 5.1 above), this Warrant shall represent the right to purchase for the same aggregate consideration, in lieu of the Common Stock which the Holder would have become entitled to purchase but for such change, the number of shares of such other class or classes of stock equivalent to the number of shares of Common Stock that would have been subject to purchase 4 by the Holder on exercise of this Warrant immediately before that change. In such an event, the Warrant Price shall be appropriately adjusted. 5.3 Reorganizations, Mergers, Consolidations or Sale of Assets. If at any time there shall be a capital reorganization, recapitalization, merger, consolidation, sale of all or substantially all assets or similar transaction (other than a combination, reclassification, exchange, or subdivision of shares provided for elsewhere in this Section 5, or a Fundamental Event) (such transaction, an "Organic Change"), then, as a part of such Organic Change, lawful provision shall be made so that the Holder shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified in this Warrant and upon payment of the Warrant Price then in effect, the number of shares of Common Stock or other securities or property of the Company to which a holder of shares of Common Stock deliverable upon exercise of this Warrant would have been entitled in such Organic Change if this Warrant had been exercised immediately before such Organic Change. In any such case, appropriate adjustment (as determined in good faith by the Board, subject to the reasonable approval of the Holder) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the Organic Change to the end that the provisions of this Warrant (including adjustment of the Warrant Price then in effect and number of Shares purchasable upon exercise of this Warrant) shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant. For the avoidance of any doubt, the foregoing provisions will similarly apply to successive Organic Changes. 5.4 Common Stock Dividends; Distributions. In the event the Company should at any time prior to the expiration of this Warrant fix a record date for the determination of the holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or other securities or rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock (hereinafter referred to as the "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of such distribution, split or subdivision if no record date is fixed), the Warrant Price shall be appropriately decreased and the number of shares of Common Stock issuable upon exercise of the Warrant shall be appropriately increased in proportion to such increase of outstanding shares. 5.5 Adjustments of Other Distributions. In the event the Company shall declare a distribution payable in securities of other persons, evidences of indebtedness issued by the Company or other persons, assets (excluding cash dividends) or options or rights not referred to in subsection 5.4, then, in each such case for the purpose of this subsection 5.5, upon exercise of this Warrant the Holder hereof shall be entitled to a proportionate share of any such distribution as though such Holder was the holder of the number of shares of Common Stock into which this Warrant may be exercised as of the record date fixed for the determination of the holders of Common Stock entitled to receive such distribution. 5.6 Certificate as to Adjustments. In the case of each adjustment or readjustment of the Warrant Price pursuant to this Section 5, the Company will promptly compute such adjustment or readjustment in accordance with the terms hereof and cause a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, to be delivered to the Holder. The Company will, upon the written request at any time of the Holder, furnish or cause to be furnished to such Holder a certificate setting forth: (a) such adjustments and readjustments; (b) the Warrant Price at the time in effect; and (c) the number of shares of Common Stock issuable upon exercise of the Warrant and the amount, if any, of other property at the time receivable upon the exercise of the Warrant. 5 5.7 Reservation of Stock Issuable Upon Exercise. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the exercise of this Warrant such number of shares of Common Stock as shall from time to time be sufficient to effect the exercise of this Warrant and, if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the exercise of this Warrant, in addition to such other remedies as shall be available to the Holder, the Company will use its best efforts to take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes. 6. RIGHTS PRIOR TO EXERCISE OF WARRANT This Warrant does not entitle the Holder to any of the rights of a stockholder of the Company. If, however, at any time prior to the expiration of this Warrant and prior to its exercise, any of the following events shall occur: (a) the Company shall declare any dividend payable in any securities upon the shares of Common Stock or make any distribution (other than a cash dividend) to the holders of shares of Common Stock; (b) the Company shall offer to all of the holders of shares of Common Stock any additional shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock or any right to subscribe for or purchase any thereof; or (c) a dissolution, liquidation or winding up of the Company (other than in connection with an Organic Change) shall be proposed and action by the Company with respect thereto has been approved by the Board (each, a "Material Action"); Then the Company shall give notice in writing of such Material Action to the Holder at its last address as it shall appear on the Company's records at least twenty (20) days' prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to such dividends, distribution, or subscription rights, or for the determination of stockholders entitled to vote on the Material Action. Such notice shall specify such record date or the date of closing the transfer books, as the case may be. Failure to publish, mail or receive such notice or any defect therein or in the publication or mailing thereof shall not affect the validity of the Material Action. Each person in whose name any certificate for Shares is to be issued shall for all purposes be deemed to have become the holder of record of such Shares on the date on which this instrument was surrendered and payment of the Warrant Price was made, irrespective of the date of delivery of such stock certificate, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such Shares at the close of business on the next succeeding date on which the stock transfer books are open. 7. SUCCESSORS AND ASSIGNS; TRANSFEREES The terms and provisions of this Warrant shall inure to the benefit of, and be binding upon, the Company and the Holder and their respective successors and permitted assigns and other transferees. Any successor, assign or other transferee of this Warrant, by its acceptance thereof, agrees to be bound by the terms of this Warrant with the same force and effect as if a signatory thereto. 8. RESTRICTED SECURITIES 6 In order to enable the Company to comply with the Securities Act and applicable state laws, the Company may require the Holder as a condition of the transfer or exercise of this Warrant, to give written assurance satisfactory to the Company that the Warrant, or in the case of an exercise hereof the Shares subject to this Warrant, are being acquired for his or her own account, for investment only, with no view to the distribution of the same, and that any disposition of all or any portion of this Warrant or the Shares issuable upon the due exercise of this Warrant shall not be made, unless made in compliance with the requirements of the Securities Act and applicable securities laws of any State or other jurisdiction. Holder acknowledges that this Warrant is, and each of the shares of Common Stock issuable upon the due exercise hereof will be, a restricted security, and that the certificates evidencing securities issued to the Holder upon exercise of this Warrant will bear a legend substantially similar to the legend set forth on the front page of this Warrant. 9. LOSS OR MUTILATION Upon receipt by the Company of satisfactory evidence of the ownership, and the loss, theft, destruction, or mutilation, of any Warrant, and (i) in the case of loss, theft, or destruction, upon receipt by the Company of indemnity satisfactory to it, or (ii) in the case of mutilation, upon receipt of such Warrant and upon surrender and cancellation of such Warrant, the Company shall execute and deliver in lieu thereof a new Warrant representing the right to purchase an equal number of shares of Common Stock. 10. CERTAIN COVENANTS 10.1 Further Assurances. The Company acknowledges that the issuance of the Warrant pursuant to the Investment Agreement is a material inducement to the Holder to (i) enter into the Investment Agreement, (ii) to purchase the Shares thereunder and (iii) to enter into commercial relationships with the Company. In connection therewith and in order to ensure that the intent of the parties with respect to this Warrant are realized in full, the Company (on behalf of itself and its Subsidiaries) hereby agrees to act in good faith and in the spirit of the Investment Agreement, the commercial agreements to be entered into by the parties and the Warrant and shall at all times comply with its obligations hereunder in a manner consistent with the performance standards described in the Sales Rep Agreements as such standards relate to the Sales Rep (as such term is defined therein). 10.2 Reports. On or before the thirtieth (30th) day following each fiscal quarter, the Company will inform the Holder in writing of the Division EBIT for the prior quarter and any adjustments to the Division EBIT as reported to the Holder during any prior quarter. Such reports will be prepared from the books and records of the Company in good faith. 10.3 Meetings. The Company agrees that, if requested by the Holder, it will meet with the Holder once each fiscal quarter at the principal executive offices of the Company to discuss the level of sales of the iTip Products. The Company agrees that it will cause such executives and managers as the Holder may reasonably request to attend such meeting. 10.4 Audit Right. The Holder will have the right, at its sole expense, to audit the books and records of the Company (including, without limitation, the books and records relating to the Division's financial performance) in the event that the Holder reasonably believes that the EBIT Hurdle has been achieved during a prior fiscal year; provided, however, that no more than one audit may be conducted each calendar year. Any audit conducted pursuant to Section 3(d) of the Sales Rep Agreement will also be considered an audit for purposes of this limitation. This audit right may be exercised by written notice to the Company and will be conducted in manner so as not to unreasonably interfere with the conduct of the business of the Company. The Holder agrees to execute, and will cause its accountants to execute, 7 customary and appropriate documentation to assure the Company that any information obtained in the course of such audit will be treated as confidential information. 11. MISCELLANEOUS 11.1 Entire Agreement. This Warrant, together with the Investment Agreement and the other agreements and instruments contemplated thereby constitute the entire agreement of the parties regarding the subject matter hereof, and supersede all prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. 11.2 Amendment. No supplement, modification or amendment of this Agreement shall be binding, unless executed in writing by the Company and the Holder. 11.3 Remedies in General. No delay or omission on the part of any party in exercising any right or remedy shall operate as a waiver of said right or remedy or any other right or remedy. A waiver on any one occasion shall not be construed as a bar to or a waiver of any right on any future occasion. Every right and remedy of a party shall be cumulative and in addition to every other right and remedy expressed in this Agreement or allowed by law or equity, and may be exercised singularly or concurrently. 11.4 Governing Law. This Warrant and any dispute, disagreement or issue of construction of interpretation arising hereunder whether relating to its execution, its validity, the obligations provided herein or performance shall be governed or interpreted according to the internal laws of the State of Delaware without regard to conflicts of law. 11.5 Notices. All notices, requests, demands and other communications under this Warrant shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given, or on the date of mailing if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and properly addressed as follows: if to the Holder, at its address set forth in Section 8.9 of the Investment Agreement or as otherwise shown in the Company records; and if to the Company, at its Scottsdale, Arizona office, attention: Chief Financial Officer. Any party may change its address for purposes of this Section by giving the other party written notice of the new address in the manner set forth above. 11.6 Severability. If for any reason any clause or provision of this Agreement, or the application of any such clause or provision in a particular context or to a particular situation, circumstance, or Person, should be held unenforceable, invalid or in violation of law by any court or other tribunal, then the application of such clause or provision in contexts or to situations, circumstances or Persons other than that in or to which it is held unenforceable, invalid or in violation of law shall not be affected thereby, and the remaining clauses and provisions hereof shall nevertheless remain in full force and effect. In lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be legal, valid and enforceable. Further, where state or federal law governs any aspect of matters or services covered by this Agreement, such state or federal law shall prevail over inconsistent provisions in this Agreement. 11.7 Expenses. If any action at law or in equity is necessary to enforce or interpret the terms of this Warrant, the prevailing party will be entitled to reasonable attorneys' fees, costs and necessary disbursements, in addition to any other relief to which such party may be entitled. 8 11.8 Captions. The captions included in this Agreement have been inserted as a matter of convenience only and in no way are intended to define, limit or to be used in connection with the interpretation of this Agreement. (This space intentionally left blank) 9 IN WITNESS WHEREOF, the undersigned has caused this Warrant to be executed as of the date first set forth above. MOBILITY ELECTRONICS, INC. By: /s/ Charles R. Mollo -------------------- Charles R. Mollo, Chief Executive Officer 10 SUBSCRIPTION MOBILITY ELECTRONICS, INC. Attn: Chief Financial Officer 17800 N. Perimeter Drive, Suite 200 Scottsdale, Arizona 85255 Ladies and Gentlemen: The undersigned, _____________________________________, hereby elects to purchase, pursuant to the provisions of the foregoing Warrant held by the undersigned, ____________ shares (the "Shares") of the common stock, par value $0.01 per share (the "Common Stock"), of Mobility Electronics, Inc., a Delaware corporation. Payment of the purchase price for the Shares being purchased, as required under such Warrant, accompanies this subscription. The undersigned hereby represents and warrants that the undersigned is acquiring the Shares for the account of the undersigned and not for resale or with a view to distribution of such Shares or any part hereof; that the undersigned is fully aware of the transfer restrictions affecting restricted securities under the pertinent securities laws; and the undersigned understands that the Shares purchased hereby are restricted securities and that the certificate or certificates evidencing the same will bear a legend to that effect. DATED: . ---------------- Signature: ------------------------------ Printed: -------------------------------- Address: -------------------------------- -------------------------------- EXHIBIT A ITIP TECHNOLOGY ISSUED POWER PATENTS
ISSUED PATENT # TITLE 5,347,211 Selectable Output Power Converter 6,643,158 Dual input AC/DC to Programmable DC Output Converter 6,700,808 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing A Secondary Buck Converter 6,650,560 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing Single-Loop Optical Feedback 6,751,109 Dual Input AC/DC Battery Operated Power Supply 6,064,177 Two-Part Battery Charger/Power Cable Article with Multiple Device Capability 6,433,274 Power Converter Device 6,775,163 Dual Input AC/DC to Programmable DC Output Converter 6,791,853 Dual Input AC/DC Power Converter Having a Programmable Peripheral Power Hub Module D2004/1351/A Singapore - 5 Watt Connector Solid Lines D2004/1352/H Singapore - 5 Watt Receptacle Solid Lines D2004/1353/D Singapore - 15 Watt Connector Solid Lines D2004/1354/J Singapore - 15 Watt Receptacle Solid Lines D2004/1355/G Singapore - 25 Watt Connector Solid Lines D2004/1356/C Singapore - 25 Watt Receptacle Solid Lines D2004/1357/Z Singapore - 35 Watt Connector Solid Lines D2004/1358/F Singapore - 35 Watt Receptacle Solid Lines 157405 Australia - 15 Watt Connector Solid Lines 157401 Australia - 15 Watt Receptacle Solid Lines 157404 Australia - 15 Watt Connector Solid Lines 157507 Australia - 15 Watt Receptacle Solid Lines 157403 Australia - 15 Watt Plug only 157400 Australia - 25 Watt Receptacle Solid Lines 157406 Australia - 25 Watt Connector Solid Lines 157503 Australia - 25 Watt Receptacle Solid Lines 157506 Australia - 25 Watt Plug only 157402 Australia - 35 Watt Receptacle Solid Lines 157399 Australia - 35 Watt Connector Solid Lines 157505 Australia - 35 Watt Receptacle Solid Lines 157502 Australia - 35 Watt Connector Solid Lines 157508 Australia - 35 Watt Plug only
A-1 PENDING POWER PATENT APPLICATIONS
SERIAL # TITLE 10/790,654 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing A Secondary Buck Converter 10/715,259 Dual Input AC and DC Power Supply Having A Programmable DC Output Utilizing Single-Loop Optical Feedback US02/03542 PCT Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing A Secondary Buck Converter US02/34766 PCT Dual Input AC/DC Battery Operated Power Supply US02/34749 PCT Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing Single-Loop Optical Feedback US02/34748 PCT Dual Input AC/DC to Programmable DC Output Converter 10/623,060 Programmable Power Converter 60/494,860 Dual Input AC/DC Fuel Cell Operated Power Supply 10/663,868 Compact Electronics Plenum 60/525,857 Retractable Cable System For Power Converter 02707726.2 Dual Input AC and DC Power Supply Having a Programmable DC Output (Europe) 02815764.8 Dual Input AC and DC Power Supply Having a Programmable DC Output (China) 10-2004-7002345 Dual Input AC and DC Power Supply Having a Programmable DC Output (South Korea) 2003-541,122 Dual Input AC and DC Power Supply Having a Programmable DC Output (Japan) 2004104345 Dual Input AC and DC Power Supply Having a Programmable DC Output (Russia) 2002242115 Dual Input AC and DC Power Supply Having a Programmable DC Output (Australia) 160167 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing a Secondary Buck Converter (Israel) 2004/0930 Dual Input AC and DC Power Supply Having a Programmable DC Output (South Africa) 00315/DELNP/2004 Dual Input AC and DC Power Supply Having a Programmable DC Output (India) 2004 0455 Dual Input AC and DC Power Supply Having a Programmable DC Output (Norway) 200400703-5 Dual Input AC and DC Power Supply Having a Programmable DC Output (Singapore) 2,454,044 Dual Input AC and DC Power Supply Having a Programmable DC Output (Canada) 10/790,877 Key Universal Power Tip and Power Source Connectors
A-2 US2004/007084 PCT Dual Input AC/DC Power Converter Having A Programmable Peripheral Power Hub Module US04/16292 PCT Key Universal Power Tip and Power Source Connectors 10-2004-7006621 Dual Input AC/DC Battery Operated Power Supply (South Korea) 2003-541,121 Dual Input AC/DC Battery Operated Power Supply (Japan) 2002342210 Dual Input AC/DC Battery Operated Power Supply (Australia) US02/34766 Dual Input AC/DC Battery Operated Power Supply ( China) 02776371.3 Dual Input AC/DC Battery Operated Power Supply (Europe) 2,466,162 Dual Input AC/DC Battery Operated Power Supply (Canada) 01172/DELNP/200 Dual Input AC/DC Battery Operated Power Supply (India) US04/19301 PCT Programmable Power Converter US04/16292 Key Universal Power Tip and Power Source Connectors (China) 10-2004-7013263 Key Universal Power Tip and Power Source Connectors (South Korea) US04/16292 Key Universal Power Tip and Power Source Connectors (Japan) US04/16292 Key Universal Power Tip and Power Source Connectors (Russia) 2004208705 Key Universal Power Tip and Power Source Connectors (Australia) US04/16292 Key Universal Power Tip and Power Source Connectors (Israel) 2004/6728 Key Universal Power Tip and Power Source Connectors (South Africa) US04/16292 Key Universal Power Tip and Power Source Connectors (India) US04/16292 Key Universal Power Tip and Power Source Connectors (Norway) US04/16292 Key Universal Power Tip and Power Source Connectors (Singapore) 2,475,060 Key Universal Power Tip and Power Source Connectors (Canada) 29/198,752 CONNECTOR ( 5 Watt Connector TIP) 29/198,801 CONNECTOR (15 Watt Connector TIP) 29/198,777 CONNECTOR (25 Watt Connector TIP) 29/198,775 CONNECTOR (35 Watt Connector TIP) 29/198,754 CONNECTOR ( 5 Watt Receptacle) 29/198,776 CONNECTOR (15 Watt Receptacle) 29/198,755 CONNECTOR (25 Watt Receptacle) 29/198,756 CONNECTOR (35 Watt Receptacle) 29/206,090 CONNECTOR (5 Watt Connector-Revised)

A-3 29/206,089 CONNECTOR (5 Watt Receptacle-Revised) CANADA 08-901134CA 5 Watt Connector Dashed/Solid Lines 08-901135CA 5 Watt Receptacle Dashed/Solid Lines 08-901136CA 15 Watt Connector Dashed/Solid Lines 08-901137CA 15 Watt Receptacle Dashed/Solid Lines 08-901138CA 25 Watt Connector Dashed/Solid Lines 08-901139CA 25 Watt Receptacle Dashed/Solid Lines 08-901140CA 35 Watt Connector Dashed/Solid Lines 08-901141CA 35 Watt Receptacle Dashed/Solid Lines CHINA DIM040859 5 Watt Connector/Receptacle Solid Lines DIM040860 15 Watt Connector/Receptacle Solid Lines DIM040869 25 Watt Connector/Receptacle Solid Lines DIM040870 35 Watt Connector/Receptacle Solid Lines EUROPE 000213889 5 Watt Connector/Receptacle (Revised) 000188958 15,25,35 Watt Connector/Receptacle INDIA TBD 5 Watt Connector Solid Lines TBD 5 Watt Receptacle Solid Lines TBD 15 Watt Connector Solid Lines TBD 15 Watt Receptacle Solid Lines TBD 25 Watt Connector Solid Lines TBD 25 Watt Receptacle Solid Lines TBD 35 Watt Connector Solid Lines TBD 35 Watt Receptacle Solid Lines ISRAEL 39540 5-35 Watt Connector/Receptacle Dashed/Solid JAPAN 2004-023,370 5 Watt Connector Dashed/Solid Lines 2004-023,371 5 Watt Receptacle Dashed/Solid Lines 2004-023,377 15 Watt Connector Dashed/Solid Lines 2004-023,378 15 Watt Receptacle Dashed/Solid Lines 2004-023,379 25 Watt Connector Dashed/Solid Lines 2004-023,381 25 Watt Receptacle Dashed/Solid Lines 2004-023,383 35 Watt Connector Dashed/Solid Lines 2004-023,384 35 Watt Receptacle Dashed/Solid Lines NORWAY TBD 5-35 Watt Connector/Receptacle RUSSIA 2004502018 5-35 Watt Connectors - Solid Lines 2004502019 5-35 Watt Receptacle - Solid Lines SOUTH AFRICA 2004/1001 5 Watt Connector Dashed/Solid Lines 2004/1000 5 Watt Receptacle Dashed/Solid Lines 2004/1003 15 Watt Connector Dashed/Solid Lines 2004/1002 15 Watt Receptacle Dashed/Solid Lines 2004/1005 25 Watt Connector Dashed/Solid Lines

A-4 2004/1004 25 Watt Receptacle Dashed/Solid Lines 2004/1007 35 Watt Connector Dashed/Solid Lines 2004/1006 35 Watt Receptacle Dashed/Solid Lines SOUTH KOREA 30-2004-0023709 5 Watt Connector Dashed Lines 30-2004-0023710 5 Watt Receptacle Dashed Lines 30-2004-0023711 15 Watt Connector Dashed Lines 30-2004-0023712 15 Watt Receptacle Dashed Lines 30-2004-0023713 25 Watt Connector Dashed Lines 30-2004-0023714 25 Watt Receptacle Dashed Lines 30-2004-0023715 35 Watt Connector Dashed Lines 30-2004-0023716 35 Watt Receptacle Dashed Lines TAIWAN 93304600 5 Watt Connector Dashed/Solid Lines 93304601 5 Watt Receptacle Dashed/Solid Lines 93304602 15 Watt Connector Dashed/Solid Lines 93304603 15 Watt Receptacle Dashed/Solid Lines 93304604 25 Watt Connector Dashed/Solid Lines 93304605 25 Watt Receptacle Dashed/Solid Lines 93304606 35 Watt Connector Dashed/Solid Lines 93304607 35 Watt Receptacle Dashed/Solid Lines

~~A-5~~ EX-4.4 5 p70452exv4w4.txt EXHIBIT 4.4 EXHIBIT 4.4 NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK OF THE COMPANY ISSUABLE UPON ITS EXERCISE HAVE BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES UNDER THE ACT AND APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. MOBILITY ELECTRONICS, INC. (A DELAWARE CORPORATION) $50 MILLION THRESHOLD WARRANT TO PURCHASE SHARES OF COMMON STOCK THIS CERTIFIES THAT, for value received, RadioShack Corporation, a Delaware corporation, or its registered successors or assigns (hereinafter, the "Holder"), is entitled to purchase, subject to the conditions set forth below, at any time or from time to time during the Exercise Period (as defined below), Five Hundred Ninety-Five Thousand Two Hundred Thirty-Eight (595,238) fully paid and non-assessable shares (the "Shares") of common stock, par value $0.01 per share (the "Common Stock"), of Mobility Electronics, Inc., a Delaware corporation (the "Company"), at a per share purchase price equal to the Warrant Price. This warrant (this "Warrant") is issued as of March 31, 2005, pursuant to that certain Strategic Partners Investment Agreement dated as of March 31, 2005 (the "Investment Agreement"), by and among the Company, the Holder and the other party thereto. 1. DEFINITIONS Capitalized terms used and not otherwise defined herein will have the meanings ascribed thereto in the Investment Agreement. In addition, as used in this Warrant, the following terms shall have the meanings set forth below: "Computer Products" means the Company's existing line of universal power products for computers (including notebook, laptop, handheld, tablet computers and the like, but excluding personal digital assistants, wireless internet (or e-mail devices), smartphones and the like (the "Portable Computers")) and all future versions (including expanded functionality), modifications, enhancements, and derivatives to such products, and any new universal power product for Portable Computers which is 60 watts or more in power and is offered for sale by the Company from time to time. Such products may also include features for charging non-computer mobile electronic devices. "Division" means the recently formed iTip Division of the Company, which Division was formed by the Company for the purpose of designing, developing, manufacturing, marketing and selling iTip Products; it being acknowledged and agreed that the Division is not a separate legal entity, but is a part of the Company. "Division EBIT" means gross margins of the Division (for the purposes of this calculation, any revenue derived from licensing or enforcement of Mobility's Intellectual Property Rights relating to the iTip Products (i.e., if the Intellectual Property Rights also pertain to non-iTip Products, then only the revenue derived from licensing or enforcing of the portion relating to the iTip Products shall be included in revenue) (including, but not limited to, any settlement amounts and damage awards relating to iTip 1 Products), shall be deemed gross revenue of the Division) less: (i) twenty percent (20%) of the revenues of the Division; and (ii) the aggregate Commissions, as defined in the Sales Representative Agreements dated as of March 31, 2005 between the Company and each of the Holder and Motorola, respectively (the "Sales Rep Agreements"), payable to the Holder and Motorola pursuant to the Sales Rep Agreements), with gross margins and revenues of the Division being determined in accordance with GAAP as applied in a manner consistent with the Company's past accounting methodologies. "EBIT Hurdle" means $50 million of Division EBIT for the Division for a given calendar year commencing on January 1, 2005. "Exercise Period" means the period commencing on February 15 of the year following the calendar year in which the EBIT Hurdle was first achieved and ending on February 15, 2010; provided, however, that if the EBIT Hurdle is first achieved in the 2009 calendar year, then the Exercise Period shall be from February 15, 2010 to August 15, 2010. Notwithstanding the foregoing, in the event that the Company enters into a definitive agreement relating to (i) a sale of the Company (whether by merger, sale of all or substantially all assets or otherwise), (ii) a sale of the Division (whether by merger, sale of all or substantially all assets or otherwise), or (iii) the exclusive license of all or substantially all of the iTip Technology (a "Fundamental Event"), the Company will notify the Holder in writing as soon as reasonably practicable thereafter but in any event no later than twenty (20) days prior to the consummation of such Fundamental Event. In connection therewith, the Exercise Period shall commence, and the Warrant will become immediately exercisable in full, upon receipt of such notice and will terminate (A) in the case of a Fundamental Event contemplated by clause (i), immediately prior to the consummation of such Fundamental Event, and (B) in the case of a Fundamental Event described in clauses (ii) or (iii), upon the one hundred eighty-first (181st) day thereafter. "Intellectual Property Rights" means all current and future patents, patentable rights, patents pending, continuations, enhancements, know how, rights in mask works conferred by the U.S. Semiconductor Chip Protection Act of 1984 or any modification or re-enactment thereof, copyrights, trademarks (including service marks), trade secrets, and design rights whether registered or unregistered, and including any applications for registration and any registration of any of the foregoing, and all rights or forms of protection of a similar nature or having equivalent or similar effect to any of these, which may subsist anywhere in the world. "iTips" means any tip, cord or removable or interchangeable item that utilizes iTip Technology to remotely program a power product (including the remote programming of any iTip Product) to correctly determine and provide the appropriate voltage, current and/or power requirements for the purpose of operating or charging the battery for an electronic device (e.g., cell phones, PDA's, digital cameras, MP3 players, CD players, and the like). "iTip Products" means the Company's existing line of universal power products for use with mobile electronic devices and all future versions (including expanded functionality), modifications, enhancements, and derivatives to such products, and any new universal power products offered for sale by the Company from time to time, which: (i) are 70 watts or less in power; (ii) utilize iTip Technology; and (iii) cannot be used to power or charge a Portable Computer. "iTip Technology" means the underlying iTip, combination AC/DC, simultaneous charging and other related Intellectual Property Rights of the Company that are incorporated into the iTips and products of the Company that utilize iTips, including, but not limited to, the patents and patents pending listed on Exhibit A attached hereto. 2 "Warrant Price" means $8.40 per share, subject to appropriate adjustments for any of the events set forth in Section 5 below. 2. EXERCISE OF WARRANT The terms and conditions upon which this Warrant may be exercised, and the Common Stock covered hereby may be purchased, are as follows: 2.1 Method of Exercise. Except as provided in the following sentence, the Holder may, in its sole and absolute discretion and at any time or from time to time during the Exercise Period, exercise in whole or in part the purchase rights evidenced by this Warrant. Notwithstanding the above, if at any time after the first anniversary of the Effective Date but prior to the expiration of the Exercise Period, Holder receives written notice from the Company that the closing price of the Common Stock for any 20 consecutive trading days exceeded $16.80 per share following the first anniversary of the Effective Date (as appropriately adjusted for the events described in Section 5 below), and the Company desires for the Holder to exercise this Warrant (a "Triggering Event"), then the Holder may exercise in whole or in part the purchase rights evidenced by this Warrant for a period of one hundred eighty (180) days following the date of delivery by the Company to the Holder of such written notice; it being acknowledged and agreed that this Warrant shall automatically terminate following the expiration of such 180-day period. Exercise of this Warrant shall be effected by: (a) the surrender of the Warrant, together with a duly executed copy of the form of subscription attached hereto, to the Chief Financial Officer of the Company at the Company's Scottsdale, Arizona office; and (ii) the payment to the Company, by wire transfer to an account designated by the Company, of an amount equal to the aggregate Warrant Price for the number of Shares for which the purchase rights hereunder are being exercised. 2.2 Issuance of Shares and New Warrant. In the event the purchase rights evidenced by this Warrant are exercised in whole or in part, one or more certificates for the purchased Shares shall be issued as soon as practicable thereafter to the Holder. Such Holder shall also be issued at such time a new Warrant representing the number of Shares (if any) for which the purchase rights under this Warrant remain unexercised and continuing in force and effect. Upon exercise of this Warrant, the Holder will be entitled to all rights and privileges granted to the holders of shares of Common Stock. 2.3 No Impairment. The Company will not, by amendment of its certificate of incorporation or bylaws, each as amended to date (the "Charter Documents"), or through reorganization, consolidation, merger, amalgamation, dissolution, issue or sale of securities, sale of assets or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment. Notwithstanding the foregoing, the taking of any action by the Company for which an adjustment is made pursuant to Section 5 hereof and which does not constitute a breach of the other terms of this Warrant will not be deemed to constitute a breach of the foregoing provisions or an impairment of this Warrant. 3. TRANSFERS 3.1 Transfers. This Warrant and all rights hereunder are not transferable in whole or in part by the Holder; provided, however, that the Holder may transfer this Warrant and all rights hereunder to its Affiliate. The transfer shall be recorded on the books of the Company upon the surrender of this Warrant, properly endorsed, to the Chief Financial Officer of the Company at the Company's Scottsdale, Arizona office and the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer. In the event of a partial transfer, the Company shall issue to the several Holders one or more appropriate new Warrants. Subject to compliance with applicable securities laws, any Shares 3 acquired upon exercise of this Warrant may not be transferred by the Holder until thirty-five (35) days after the acquisition thereof. 3.2 Registered Holder. The Holder agrees that until such time as any permitted transfer pursuant to subsection 3.1 is recorded on the books of the Company, the Company may treat the registered Holder as the absolute owner; provided that nothing herein affects any requirement that transfer of any Warrant or share of Common Stock issued or issuable upon the exercise thereof by subject to securities law compliance. 3.3 Form of New Warrants. All Warrants issued in connection with transfers of this Warrant shall bear the same date as this Warrant and shall be identical in form and provision to this Warrant, other than such changes as are necessary to reflect actions taken prior to such transfer (e.g., the name of the Holder, the number of Shares then-purchasable thereunder, etc.). 4. FRACTIONAL SHARES Notwithstanding that the number of Shares purchasable upon the exercise of this Warrant may have been adjusted pursuant to the terms hereof, the Company shall nonetheless not be required to issue fractions of Shares upon exercise of this Warrant or to distribute certificates that evidence fractional shares nor shall the Company be required to make any cash payments in lieu thereof upon exercise of this Warrant. Except as contemplated in the following sentence, the Holder hereby waives any right to receive fractional Shares. If a fractional Share shall result from adjustments in the number of Shares purchasable hereunder, the number of Shares purchasable hereunder shall, on an aggregate basis taking into account all adjustments hereunder from the date of issuance of this Warrant, be rounded up to the next whole number. 5. ANTIDILUTION PROVISIONS The provisions of this Section 5 shall apply in the event that any of the events described in this Section 5 shall occur with respect to the shares of Common Stock at any time on or after the Closing Date: 5.1 Stock Splits and Combinations. If the Company shall at any time subdivide or combine its outstanding shares of Common Stock, this Warrant shall, after that subdivision or combination, evidence the right to purchase the number of shares of Common Stock that would have been issuable as a result of that change with respect to the Shares which were purchasable under this Warrant immediately before that subdivision or combination. If the Company shall at any time subdivide the outstanding shares of Common Stock, the Warrant Price then in effect immediately before that subdivision shall be proportionately decreased, and, if the Company shall at any time combine the outstanding shares of Common Stock, the Warrant Price then in effect immediately before that combination shall be proportionately increased. Any adjustment under this subsection shall become effective at the time that such subdivision or combination becomes effective. 5.2 Reclassification, Exchange and Substitution. If the Shares issuable upon exercise of this Warrant shall be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares provided for in subsection 5.1 above), this Warrant shall represent the right to purchase for the same aggregate consideration, in lieu of the Common Stock which the Holder would have become entitled to purchase but for such change, the number of shares of such other class or classes of stock equivalent to the number of shares of Common Stock that would have been subject to purchase 4 by the Holder on exercise of this Warrant immediately before that change. In such an event, the Warrant Price shall be appropriately adjusted. 5.3 Reorganizations, Mergers, Consolidations or Sale of Assets. If at any time there shall be a capital reorganization, recapitalization, merger, consolidation, sale of all or substantially all assets or similar transaction (other than a combination, reclassification, exchange, or subdivision of shares provided for elsewhere in this Section 5, or a Fundamental Event) (such transaction, an "Organic Change"), then, as a part of such Organic Change, lawful provision shall be made so that the Holder shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified in this Warrant and upon payment of the Warrant Price then in effect, the number of shares of Common Stock or other securities or property of the Company to which a holder of shares of Common Stock deliverable upon exercise of this Warrant would have been entitled in such Organic Change if this Warrant had been exercised immediately before such Organic Change. In any such case, appropriate adjustment (as determined in good faith by the Board, subject to the reasonable approval of the Holder) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder after the Organic Change to the end that the provisions of this Warrant (including adjustment of the Warrant Price then in effect and number of Shares purchasable upon exercise of this Warrant) shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant. For the avoidance of any doubt, the foregoing provisions will similarly apply to successive Organic Changes. 5.4 Common Stock Dividends; Distributions. In the event the Company should at any time prior to the expiration of this Warrant fix a record date for the determination of the holders of Common Stock entitled to receive a dividend or other distribution payable in additional shares of Common Stock or other securities or rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock (hereinafter referred to as the "Common Stock Equivalents") without payment of any consideration by such holder for the additional shares of Common Stock or Common Stock Equivalents (including the additional shares of Common Stock issuable upon conversion or exercise thereof), then, as of such record date (or the date of such distribution, split or subdivision if no record date is fixed), the Warrant Price shall be appropriately decreased and the number of shares of Common Stock issuable upon exercise of the Warrant shall be appropriately increased in proportion to such increase of outstanding shares. 5.5 Adjustments of Other Distributions. In the event the Company shall declare a distribution payable in securities of other persons, evidences of indebtedness issued by the Company or other persons, assets (excluding cash dividends) or options or rights not referred to in subsection 5.4, then, in each such case for the purpose of this subsection 5.5, upon exercise of this Warrant the Holder hereof shall be entitled to a proportionate share of any such distribution as though such Holder was the holder of the number of shares of Common Stock into which this Warrant may be exercised as of the record date fixed for the determination of the holders of Common Stock entitled to receive such distribution. 5.6 Certificate as to Adjustments. In the case of each adjustment or readjustment of the Warrant Price pursuant to this Section 5, the Company will promptly compute such adjustment or readjustment in accordance with the terms hereof and cause a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, to be delivered to the Holder. The Company will, upon the written request at any time of the Holder, furnish or cause to be furnished to such Holder a certificate setting forth: (a) such adjustments and readjustments; (b) the Warrant Price at the time in effect; and (c) the number of shares of Common Stock issuable upon exercise of the Warrant and the amount, if any, of other property at the time receivable upon the exercise of the Warrant. 5 5.7 Reservation of Stock Issuable Upon Exercise. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the exercise of this Warrant such number of shares of Common Stock as shall from time to time be sufficient to effect the exercise of this Warrant and, if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the exercise of this Warrant, in addition to such other remedies as shall be available to the Holder, the Company will use its best efforts to take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes. 6. RIGHTS PRIOR TO EXERCISE OF WARRANT This Warrant does not entitle the Holder to any of the rights of a stockholder of the Company. If, however, at any time prior to the expiration of this Warrant and prior to its exercise, any of the following events shall occur: (a) the Company shall declare any dividend payable in any securities upon the shares of Common Stock or make any distribution (other than a cash dividend) to the holders of shares of Common Stock; (b) the Company shall offer to all of the holders of shares of Common Stock any additional shares of Common Stock or securities convertible into or exchangeable for shares of Common Stock or any right to subscribe for or purchase any thereof; or (c) a dissolution, liquidation or winding up of the Company (other than in connection with an Organic Change) shall be proposed and action by the Company with respect thereto has been approved by the Board (each, a "Material Action"); Then the Company shall give notice in writing of such Material Action to the Holder at its last address as it shall appear on the Company's records at least twenty (20) days' prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to such dividends, distribution, or subscription rights, or for the determination of stockholders entitled to vote on the Material Action. Such notice shall specify such record date or the date of closing the transfer books, as the case may be. Failure to publish, mail or receive such notice or any defect therein or in the publication or mailing thereof shall not affect the validity of the Material Action. Each person in whose name any certificate for Shares is to be issued shall for all purposes be deemed to have become the holder of record of such Shares on the date on which this instrument was surrendered and payment of the Warrant Price was made, irrespective of the date of delivery of such stock certificate, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such Shares at the close of business on the next succeeding date on which the stock transfer books are open. 7. SUCCESSORS AND ASSIGNS; TRANSFEREES The terms and provisions of this Warrant shall inure to the benefit of, and be binding upon, the Company and the Holder and their respective successors and permitted assigns and other transferees. Any successor, assign or other transferee of this Warrant, by its acceptance thereof, agrees to be bound by the terms of this Warrant with the same force and effect as if a signatory thereto. 8. RESTRICTED SECURITIES 6 In order to enable the Company to comply with the Securities Act and applicable state laws, the Company may require the Holder as a condition of the transfer or exercise of this Warrant, to give written assurance satisfactory to the Company that the Warrant, or in the case of an exercise hereof the Shares subject to this Warrant, are being acquired for his or her own account, for investment only, with no view to the distribution of the same, and that any disposition of all or any portion of this Warrant or the Shares issuable upon the due exercise of this Warrant shall not be made, unless made in compliance with the requirements of the Securities Act and applicable securities laws of any State or other jurisdiction. Holder acknowledges that this Warrant is, and each of the shares of Common Stock issuable upon the due exercise hereof will be, a restricted security, and that the certificates evidencing securities issued to the Holder upon exercise of this Warrant will bear a legend substantially similar to the legend set forth on the front page of this Warrant. 9. LOSS OR MUTILATION Upon receipt by the Company of satisfactory evidence of the ownership, and the loss, theft, destruction, or mutilation, of any Warrant, and (i) in the case of loss, theft, or destruction, upon receipt by the Company of indemnity satisfactory to it, or (ii) in the case of mutilation, upon receipt of such Warrant and upon surrender and cancellation of such Warrant, the Company shall execute and deliver in lieu thereof a new Warrant representing the right to purchase an equal number of shares of Common Stock. 10. CERTAIN COVENANTS 10.1 Further Assurances. The Company acknowledges that the issuance of the Warrant pursuant to the Investment Agreement is a material inducement to the Holder to (i) enter into the Investment Agreement, (ii) to purchase the Shares thereunder and (iii) to enter into commercial relationships with the Company. In connection therewith and in order to ensure that the intent of the parties with respect to this Warrant are realized in full, the Company (on behalf of itself and its Subsidiaries) hereby agrees to act in good faith and in the spirit of the Investment Agreement, the commercial agreements to be entered into by the parties and the Warrant and shall at all times comply with its obligations hereunder in a manner consistent with the performance standards described in the Sales Rep Agreements as such standards relate to the Sales Rep (as such term is defined therein). 10.2 Reports. On or before the thirtieth (30th) day following each fiscal quarter, the Company will inform the Holder in writing of the Division EBIT for the prior quarter and any adjustments to the Division EBIT as reported to the Holder during any prior quarter. Such reports will be prepared from the books and records of the Company in good faith. 10.3 Meetings. The Company agrees that, if requested by the Holder, it will meet with the Holder once each fiscal quarter at the principal executive offices of the Company to discuss the level of sales of the iTip Products. The Company agrees that it will cause such executives and managers as the Holder may reasonably request to attend such meeting. 10.4 Audit Right. The Holder will have the right, at its sole expense, to audit the books and records of the Company (including, without limitation, the books and records relating to the Division's financial performance) in the event that the Holder reasonably believes that the EBIT Hurdle has been achieved during a prior fiscal year; provided, however, that no more than one audit may be conducted each calendar year. Any audit conducted pursuant to Section 3(d) of the Sales Rep Agreement will also be considered an audit for purposes of this limitation. This audit right may be exercised by written notice to the Company and will be conducted in manner so as not to unreasonably interfere with the conduct of the business of the Company. The Holder agrees to execute, and will cause its accountants to execute, 7 customary and appropriate documentation to assure the Company that any information obtained in the course of such audit will be treated as confidential information. 11. MISCELLANEOUS 11.1 Entire Agreement. This Warrant, together with the Investment Agreement and the other agreements and instruments contemplated thereby constitute the entire agreement of the parties regarding the subject matter hereof, and supersede all prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. 11.2 Amendment. No supplement, modification or amendment of this Agreement shall be binding, unless executed in writing by the Company and the Holder. 11.3 Remedies in General. No delay or omission on the part of any party in exercising any right or remedy shall operate as a waiver of said right or remedy or any other right or remedy. A waiver on any one occasion shall not be construed as a bar to or a waiver of any right on any future occasion. Every right and remedy of a party shall be cumulative and in addition to every other right and remedy expressed in this Agreement or allowed by law or equity, and may be exercised singularly or concurrently. 11.4 Governing Law. This Warrant and any dispute, disagreement or issue of construction of interpretation arising hereunder whether relating to its execution, its validity, the obligations provided herein or performance shall be governed or interpreted according to the internal laws of the State of Delaware without regard to conflicts of law. 11.5 Notices. All notices, requests, demands and other communications under this Warrant shall be in writing and shall be deemed to have been duly given on the date of service if served personally on the party to whom notice is to be given, or on the date of mailing if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and properly addressed as follows: if to the Holder, at its address set forth in Section 8.9 of the Investment Agreement or as otherwise shown in the Company records; and if to the Company, at its Scottsdale, Arizona office, attention: Chief Financial Officer. Any party may change its address for purposes of this Section by giving the other party written notice of the new address in the manner set forth above. 11.6 Severability. If for any reason any clause or provision of this Agreement, or the application of any such clause or provision in a particular context or to a particular situation, circumstance, or Person, should be held unenforceable, invalid or in violation of law by any court or other tribunal, then the application of such clause or provision in contexts or to situations, circumstances or Persons other than that in or to which it is held unenforceable, invalid or in violation of law shall not be affected thereby, and the remaining clauses and provisions hereof shall nevertheless remain in full force and effect. In lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be legal, valid and enforceable. Further, where state or federal law governs any aspect of matters or services covered by this Agreement, such state or federal law shall prevail over inconsistent provisions in this Agreement. 11.7 Expenses. If any action at law or in equity is necessary to enforce or interpret the terms of this Warrant, the prevailing party will be entitled to reasonable attorneys' fees, costs and necessary disbursements, in addition to any other relief to which such party may be entitled. 8 11.8 Captions. The captions included in this Agreement have been inserted as a matter of convenience only and in no way are intended to define, limit or to be used in connection with the interpretation of this Agreement. (This space intentionally left blank) 9 IN WITNESS WHEREOF, the undersigned has caused this Warrant to be executed as of the date first set forth above. MOBILITY ELECTRONICS, INC. By: /s/ Charles R. Mollo -------------------- Charles R. Mollo, Chief Executive Officer 10 SUBSCRIPTION MOBILITY ELECTRONICS, INC. Attn: Chief Financial Officer 17800 N. Perimeter Drive, Suite 200 Scottsdale, Arizona 85255 Ladies and Gentlemen: The undersigned,_________________________________________ , hereby elects to purchase, pursuant to the provisions of the foregoing Warrant held by the undersigned, ____________ shares (the "Shares") of the common stock, par value $0.01 per share (the "Common Stock"), of Mobility Electronics, Inc., a Delaware corporation. Payment of the purchase price for the Shares being purchased, as required under such Warrant, accompanies this subscription. The undersigned hereby represents and warrants that the undersigned is acquiring the Shares for the account of the undersigned and not for resale or with a view to distribution of such Shares or any part hereof; that the undersigned is fully aware of the transfer restrictions affecting restricted securities under the pertinent securities laws; and the undersigned understands that the Shares purchased hereby are restricted securities and that the certificate or certificates evidencing the same will bear a legend to that effect. DATED: ________________. Signature:_____________________________ Printed:_______________________________ Address: ______________________________ ______________________________ EXHIBIT A ITIP TECHNOLOGY ISSUED POWER PATENTS
ISSUED PATENT # TITLE 5,347,211 Selectable Output Power Converter 6,643,158 Dual input AC/DC to Programmable DC Output Converter 6,700,808 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing A Secondary Buck Converter 6,650,560 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing Single-Loop Optical Feedback 6,751,109 Dual Input AC/DC Battery Operated Power Supply 6,064,177 Two-Part Battery Charger/Power Cable Article with Multiple Device Capability 6,433,274 Power Converter Device 6,775,163 Dual Input AC/DC to Programmable DC Output Converter 6,791,853 Dual Input AC/DC Power Converter Having a Programmable Peripheral Power Hub Module D2004/1351/A Singapore - 5 Watt Connector Solid Lines D2004/1352/H Singapore - 5 Watt Receptacle Solid Lines D2004/1353/D Singapore - 15 Watt Connector Solid Lines D2004/1354/J Singapore - 15 Watt Receptacle Solid Lines D2004/1355/G Singapore - 25 Watt Connector Solid Lines D2004/1356/C Singapore - 25 Watt Receptacle Solid Lines D2004/1357/Z Singapore - 35 Watt Connector Solid Lines D2004/1358/F Singapore - 35 Watt Receptacle Solid Lines 157405 Australia - 15 Watt Connector Solid Lines 157401 Australia - 15 Watt Receptacle Solid Lines 157404 Australia - 15 Watt Connector Solid Lines 157507 Australia - 15 Watt Receptacle Solid Lines 157403 Australia - 15 Watt Plug only 157400 Australia - 25 Watt Receptacle Solid Lines 157406 Australia - 25 Watt Connector Solid Lines 157503 Australia - 25 Watt Receptacle Solid Lines 157506 Australia - 25 Watt Plug only 157402 Australia - 35 Watt Receptacle Solid Lines 157399 Australia - 35 Watt Connector Solid Lines 157505 Australia - 35 Watt Receptacle Solid Lines 157502 Australia - 35 Watt Connector Solid Lines 157508 Australia - 35 Watt Plug only
A-1 PENDING POWER PATENT APPLICATIONS
SERIAL # TITLE 10/790,654 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing A Secondary Buck Converter 10/715,259 Dual Input AC and DC Power Supply Having A Programmable DC Output Utilizing Single-Loop Optical Feedback US02/03542 PCT Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing A Secondary Buck Converter US02/34766 PCT Dual Input AC/DC Battery Operated Power Supply US02/34749 PCT Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing Single-Loop Optical Feedback US02/34748 PCT Dual Input AC/DC to Programmable DC Output Converter 10/623,060 Programmable Power Converter 60/494,860 Dual Input AC/DC Fuel Cell Operated Power Supply 10/663,868 Compact Electronics Plenum 60/525,857 Retractable Cable System For Power Converter 02707726.2 Dual Input AC and DC Power Supply Having a Programmable DC Output (Europe) 02815764.8 Dual Input AC and DC Power Supply Having a Programmable DC Output (China) 10-2004-7002345 Dual Input AC and DC Power Supply Having a Programmable DC Output (South Korea) 2003-541,122 Dual Input AC and DC Power Supply Having a Programmable DC Output (Japan) 2004104345 Dual Input AC and DC Power Supply Having a Programmable DC Output (Russia) 2002242115 Dual Input AC and DC Power Supply Having a Programmable DC Output (Australia) 160167 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing a Secondary Buck Converter (Israel) 2004/0930 Dual Input AC and DC Power Supply Having a Programmable DC Output (South Africa) 00315/DELNP/2004 Dual Input AC and DC Power Supply Having a Programmable DC Output (India) 2004 0455 Dual Input AC and DC Power Supply Having a Programmable DC Output (Norway) 200400703-5 Dual Input AC and DC Power Supply Having a Programmable DC Output (Singapore) 2,454,044 Dual Input AC and DC Power Supply Having a Programmable DC Output (Canada) 10/790,877 Key Universal Power Tip and Power Source Connectors
A-2 US2004/007084 PCT Dual Input AC/DC Power Converter Having A Programmable Peripheral Power Hub Module US04/16292 PCT Key Universal Power Tip and Power Source Connectors 10-2004-7006621 Dual Input AC/DC Battery Operated Power Supply (South Korea) 2003-541,121 Dual Input AC/DC Battery Operated Power Supply (Japan) 2002342210 Dual Input AC/DC Battery Operated Power Supply (Australia) US02/34766 Dual Input AC/DC Battery Operated Power Supply ( China) 02776371.3 Dual Input AC/DC Battery Operated Power Supply (Europe) 2,466,162 Dual Input AC/DC Battery Operated Power Supply (Canada) 01172/DELNP/200 Dual Input AC/DC Battery Operated Power Supply (India) US04/19301 PCT Programmable Power Converter US04/16292 Key Universal Power Tip and Power Source Connectors (China) 10-2004-7013263 Key Universal Power Tip and Power Source Connectors (South Korea) US04/16292 Key Universal Power Tip and Power Source Connectors (Japan) US04/16292 Key Universal Power Tip and Power Source Connectors (Russia) 2004208705 Key Universal Power Tip and Power Source Connectors (Australia) US04/16292 Key Universal Power Tip and Power Source Connectors (Israel) 2004/6728 Key Universal Power Tip and Power Source Connectors (South Africa) US04/16292 Key Universal Power Tip and Power Source Connectors (India) US04/16292 Key Universal Power Tip and Power Source Connectors (Norway) US04/16292 Key Universal Power Tip and Power Source Connectors (Singapore) 2,475,060 Key Universal Power Tip and Power Source Connectors (Canada) 29/198,752 CONNECTOR ( 5 Watt Connector TIP) 29/198,801 CONNECTOR (15 Watt Connector TIP) 29/198,777 CONNECTOR (25 Watt Connector TIP) 29/198,775 CONNECTOR (35 Watt Connector TIP) 29/198,754 CONNECTOR ( 5 Watt Receptacle) 29/198,776 CONNECTOR (15 Watt Receptacle) 29/198,755 CONNECTOR (25 Watt Receptacle) 29/198,756 CONNECTOR (35 Watt Receptacle) 29/206,090 CONNECTOR (5 Watt Connector-Revised)

A-3 29/206,089 CONNECTOR (5 Watt Receptacle-Revised) CANADA 08-901134CA 5 Watt Connector Dashed/Solid Lines 08-901135CA 5 Watt Receptacle Dashed/Solid Lines 08-901136CA 15 Watt Connector Dashed/Solid Lines 08-901137CA 15 Watt Receptacle Dashed/Solid Lines 08-901138CA 25 Watt Connector Dashed/Solid Lines 08-901139CA 25 Watt Receptacle Dashed/Solid Lines 08-901140CA 35 Watt Connector Dashed/Solid Lines 08-901141CA 35 Watt Receptacle Dashed/Solid Lines CHINA DIM040859 5 Watt Connector/Receptacle Solid Lines DIM040860 15 Watt Connector/Receptacle Solid Lines DIM040869 25 Watt Connector/Receptacle Solid Lines DIM040870 35 Watt Connector/Receptacle Solid Lines EUROPE 000213889 5 Watt Connector/Receptacle (Revised) 000188958 15,25,35 Watt Connector/Receptacle INDIA TBD 5 Watt Connector Solid Lines TBD 5 Watt Receptacle Solid Lines TBD 15 Watt Connector Solid Lines TBD 15 Watt Receptacle Solid Lines TBD 25 Watt Connector Solid Lines TBD 25 Watt Receptacle Solid Lines TBD 35 Watt Connector Solid Lines TBD 35 Watt Receptacle Solid Lines ISRAEL 39540 5-35 Watt Connector/Receptacle Dashed/Solid JAPAN 2004-023,370 5 Watt Connector Dashed/Solid Lines 2004-023,371 5 Watt Receptacle Dashed/Solid Lines 2004-023,377 15 Watt Connector Dashed/Solid Lines 2004-023,378 15 Watt Receptacle Dashed/Solid Lines 2004-023,379 25 Watt Connector Dashed/Solid Lines 2004-023,381 25 Watt Receptacle Dashed/Solid Lines 2004-023,383 35 Watt Connector Dashed/Solid Lines 2004-023,384 35 Watt Receptacle Dashed/Solid Lines NORWAY TBD 5-35 Watt Connector/Receptacle RUSSIA 2004502018 5-35 Watt Connectors - Solid Lines 2004502019 5-35 Watt Receptacle - Solid Lines SOUTH AFRICA 2004/1001 5 Watt Connector Dashed/Solid Lines 2004/1000 5 Watt Receptacle Dashed/Solid Lines 2004/1003 15 Watt Connector Dashed/Solid Lines 2004/1002 15 Watt Receptacle Dashed/Solid Lines 2004/1005 25 Watt Connector Dashed/Solid Lines

A-4 2004/1004 25 Watt Receptacle Dashed/Solid Lines 2004/1007 35 Watt Connector Dashed/Solid Lines 2004/1006 35 Watt Receptacle Dashed/Solid Lines SOUTH KOREA 30-2004-0023709 5 Watt Connector Dashed Lines 30-2004-0023710 5 Watt Receptacle Dashed Lines 30-2004-0023711 15 Watt Connector Dashed Lines 30-2004-0023712 15 Watt Receptacle Dashed Lines 30-2004-0023713 25 Watt Connector Dashed Lines 30-2004-0023714 25 Watt Receptacle Dashed Lines 30-2004-0023715 35 Watt Connector Dashed Lines 30-2004-0023716 35 Watt Receptacle Dashed Lines TAIWAN 93304600 5 Watt Connector Dashed/Solid Lines 93304601 5 Watt Receptacle Dashed/Solid Lines 93304602 15 Watt Connector Dashed/Solid Lines 93304603 15 Watt Receptacle Dashed/Solid Lines 93304604 25 Watt Connector Dashed/Solid Lines 93304605 25 Watt Receptacle Dashed/Solid Lines 93304606 35 Watt Connector Dashed/Solid Lines 93304607 35 Watt Receptacle Dashed/Solid Lines

~~A-5~~ EX-4.5 6 p70452exv4w5.txt EXHIBIT 4.5 STRATEGIC PARTNERS INVESTMENT AGREEMENT This Strategic Partners Investment Agreement (this "Agreement"), dated as of March 31, 2005 (the "Effective Date"), is entered into by and among Mobility Electronics, Inc., a Delaware corporation ("Mobility"), RadioShack Corporation, a Delaware corporation ("RadioShack"), and Motorola, Inc., a Delaware corporation ("Motorola"). RadioShack and Motorola are sometimes each referred to herein as an "Investor" and collectively, as the "Investors". Mobility, RadioShack and Motorola are sometimes each referred to herein as a "Party" and collectively, as the "Parties". RECITALS WHEREAS, Investors are interested in making an investment in Mobility on the terms and conditions provided herein, and Mobility is agreeable to such investment. NOW, THEREFORE, in consideration of the foregoing, and for other adequate consideration, the receipt and sufficiency of which is hereby acknowledged and agreed, the parties hereto hereby agree as follows: 1. DEFINITIONS 1.1 As used in this Agreement, certain terms used but not otherwise defined herein shall have the meanings ascribed thereto in Exhibit A attached hereto. 2. PURCHASE AND SALE 2.1 The Securities. Subject to all of the terms and conditions of this Agreement, at the Closing (as defined herein), Mobility agrees to issue and sell to each Investor, and each Investor agrees to purchase from Mobility: (a) 689,656 shares (the "Shares") of common stock, par value $0.01 per share, of Mobility (the "Common Stock"), at a purchase price of $7.25 per share (the "Per Share Price") ($5,000,006 in the aggregate); (b) a warrant to purchase up to 595,238 shares of Common Stock, at an exercise price of $8.40 per share ($4,999,999.20 in the aggregate), in the form of Exhibit B attached hereto (the "First Level Warrant"); and (c) an additional warrant to purchase up to 595,238 shares of Common Stock, at an exercise price of $8.40 per share ($4,999,999.20 in the aggregate), in the form of Exhibit C attached hereto (the "Second Level Warrant"). The First Level Warrant and the Second Level Warrant to be issued to each Investor hereunder are sometimes collectively referred to herein as the "Warrants;" the Shares, the First Level Warrant and the Second Level Warrant to be issued to each Investor hereunder are sometimes collectively referred to herein as the "Securities;" and the shares of Common Stock issuable upon exercise of the Warrants are sometimes collectively referred to herein as the "Underlying Shares." 1 2.2 Closing. The closing of the purchase and sale of the Securities pursuant to this Agreement (the "Closing") shall take place at the executive offices of Mobility, 17800 North Perimeter Dr., Suite 400, Scottsdale, Arizona, on the date hereof (the "Closing Date"). At the Closing: (a) Mobility shall deliver to each Investor: (i) a copy of the irrevocable instruction letter to Mobility's transfer agent instructing such transfer agent to register the issuance and ownership of the Shares to each Investor in the stockholders' registry and records of Mobility, and issue to each Investor a certificate evidencing ownership of such Shares; (ii) the First Level Warrant, duly executed by Mobility; (iii) the Second Level Warrant, duly executed by Mobility; and (iv) an opinion of counsel to Mobility in the form appended hereto as Exhibit D; and (b) each Investor shall deliver to Mobility the aggregate purchase price for the Shares purchased by such Investor, payable by wire transfer of immediately available funds to an account designated by Mobility. 3. OTHER COVENANTS AND AGREEMENTS 3.1 Lock-Up Agreements. Each Investor hereby agrees that during the Lock-Up Period, such Investor will not, and will not cause or permit an Affiliate of such Investor to, without the prior written approval of Mobility (which consent may be withheld or delayed in the sole discretion of Mobility), directly or indirectly, sell, offer to sell, contract to sell (including without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of any Shares (it being understood that the term "Shares" specifically excludes the Underlying Shares). 3.2 Restrictions on Certain Activities. As long as an Investor or its Affiliates owns any Shares, Warrants or Underlying Shares, such Investor hereby agrees that, without the prior written approval of Mobility, which approval may be withheld or delayed in the sole discretion of Mobility, such Investor will not, and will not cause or permit an Affiliate of such Investor to (i) acquire any securities of Mobility (other than the acquisition of any Underlying Shares upon exercise of the Warrants); and (ii) directly or indirectly lead or initiate a Change of Control of Mobility. 3.3 Registration Rights. (a) Shelf Registration. (i) Prior to the expiration of the Lock-Up Period, Mobility will prepare and file or cause to be prepared and filed with the SEC a Registration Statement for an offering to be made on a delayed or continuous basis pursuant to Rule 415 of the Securities Act registering the resale from time to time by the Investors of the Registrable Securities. Mobility shall use its best efforts to cause the Registration Statement to be declared effective under the Securities Act as of the first anniversary of the Closing Date (the "Effectiveness Date"), and to keep such Registration Statement continuously effective under the Securities Act until the earlier of (A) the date that is the later of (I) the second anniversary of the Effectiveness Date and (II) with respect to a particular Investor, the date that neither such Investor nor any of its Affiliates is an Affiliate of Mobility, (B) such date as all unsold securities held by the Investors and registered on such Registration Statement may be sold in a single three-month period in accordance with Rule 144 under the Securities Act or (C) such date as all securities registered on such Registration Statement have been resold (the earlier to occur of (A), (B) and (C) is the "Effectiveness Termination Date"). At the time the Registration Statement is declared effective, each Investor shall be named as a selling securityholder in the Registration Statement and the related prospectus 2 in such a manner as to permit such Investor to deliver such prospectus to purchasers of registered securities in accordance with applicable law. (ii) In the event that the Registration Statement is not declared effective by the SEC under the Securities Act by the Effectiveness Date, Mobility shall pay to each Investor an amount in cash equal to one-half of a percent (0.5%) of the aggregate purchase price paid by such Investor for the Shares pursuant to Section 2.1(a) hereof for each 30-day period thereafter until the Registration Statement is declared effective. (b) Selling Procedure. (i) Following the date that the Registration Statement is declared effective by the SEC, each Investor shall be permitted, subject to the other provisions hereof, to offer and sell the Registrable Securities included thereon in the manner described in such Registration Statement during the period of its effectiveness; provided, however, that such Investor arranges for delivery of a current prospectus to the transferee of the Registrable Securities. (ii) Notwithstanding the foregoing, or anything contained in this Agreement to the contrary, Mobility may suspend offers and sales of Registrable Securities pursuant to such Registration Statement if in the good faith judgment of the Board after consultation with counsel, (A)(I)(a) such registration would be substantially contrary to the best interests of Mobility because (1) it would materially interfere with a material financing plan or other material transaction or negotiations relating thereto then pending, or (2) it would require the disclosure of any material non-public information prior to the time that such information would otherwise be disclosed or be required to be disclosed, if such early disclosure would be substantially contrary to the best interests of Mobility, or (b) such Registration Statement contains or may contain an untrue statement of material fact or omits or may omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (II) the Board concludes, as a result, that it is necessary and appropriate to defer the filing of such Registration Statement at such time, and (B) Mobility shall furnish to the Investor a certificate signed by the President or Chief Executive Officer of Mobility stating the good faith judgment of the Board to such effect, then Mobility shall have the right to defer such filing only for the period during which such filing would be substantially contrary to the best interests of Mobility (a "Suspension"); provided, however, that the aggregate number of days included in such periods of Suspension shall not exceed ninety (90) days in any twelve (12) month period. In the event of any Suspension, each Investor shall discontinue disposition of Registrable Securities covered by the Registration Statement until copies of a supplemented or amended prospectus are distributed to such Investor or until such Investor is advised in writing by Mobility that the use of the applicable prospectus may be resumed. (c) Expenses of Registration. All Registration Expenses incurred in connection with the registrations pursuant to this Section 3.3 shall be borne by Mobility. All Selling Expenses incurred in connection with any registrations hereunder shall be borne by the Investors. (d) Registration Procedures. (i) In the case of a registration, and any qualification or compliance effected by Mobility pursuant to this Section 3.3, Mobility shall keep the Investors advised in writing as to the initiation of such registration, qualification and compliance and as to the completion thereof. Subject to the provisions hereof, and until the Effectiveness Termination Date, Mobility shall take the following actions: 3 (1) Prepare and file with the SEC the Registration Statement in accordance with Section 3.3(a)) above; (2) Furnish to each Investor such reasonable numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as such Investor may reasonably request in order to facilitate the disposition of Registrable Securities owned by it; (3) Use commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by an Investor for the purpose of permitting the offers and sales of the securities in such jurisdictions, provided that Mobility shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions; (4) Notify, as soon as reasonably practicable after Mobility becomes aware, each Investor at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing; (5) If for any reason it shall be necessary to amend or supplement the Registration Statement or the prospectus used in connection with such Registration Statement in order to correct any untrue statements, ensure that the Registration Statement is not misleading or otherwise to comply with the Securities Act, as promptly as reasonably practicable, prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus as may be necessary to correct such untrue statements, ensure that such Registration Statement is not misleading or to comply with the provisions of the Securities Act, provided, that to the extent that any statements to be corrected relate to any information provided by an Investor, Mobility shall not be obligated to amend the Registration Statement until Mobility has received such corrected information from such Investor and has had a reasonable opportunity to amend or supplement such Registration Statement or prospectus; (6) If the Registration Statement ceases to be effective for any reason at any time prior to the Effectiveness Termination Date (other than because all securities registered thereunder have been resold pursuant thereto), use its best efforts to obtain the prompt withdrawal of any order suspending the effectiveness thereof; (7) Cause all such Registrable Securities registered hereunder to be listed or included on each securities exchange or automated quotation system on which similar securities issued by Mobility are then listed or included; and (8) Provide a transfer agent and registrar for all Registrable Securities registered hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration. 4 In addition, in the event of any underwritten public offering, Mobility shall (I) enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering, provided that each Investor shall also enter into and perform its obligations under such an agreement, and (II) use its best efforts to furnish, at the request of an Investor, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Section 3.3, (a) an opinion, dated as of the date of the Registration Statement with respect to such securities becomes effective, of the counsel representing Mobility for the purposes of such registration, in form and substance as is customarily given in an underwritten public offering (and reasonably acceptable to the counsel for the Investors), addressed to the underwriters, if any, and to the Investors, and (b) a letter dated such date, from the independent certified public accountants of Mobility, in form and substance as is customarily given by independent certified public accountants in an underwritten public offering (and reasonably acceptable to the counsel for the Investor), addressed to the underwriters, to the extent such letter is permitted under generally recognized accounting practice. (ii) Mobility shall reasonably cooperate with the Investors in performing Mobility's obligations under this Section 3.3 and shall: (A) permit the Investors to review and comment upon any offering pursuant to this Section 3.3 and to review and comment upon (I) the Registration Statement prior to its filing with the SEC and (II) all amendments and supplements thereto (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and any similar or successor reports) prior to their filing with the SEC; and (B) furnish to each Investor, in accordance with Section 8.9 hereof and without charge, (1) any correspondence from the SEC or the staff of the SEC to Mobility or its representatives relating to any Registration Statement, (2) promptly after the same is prepared and filed with the SEC, one copy of any Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits, and (3) upon the effectiveness of any Registration Statement, one copy of the prospectus included in such Registration Statement and all amendments and supplements thereto. (e) Indemnification. (i) Mobility shall indemnify each Investor, its respective officers, directors, employees, partners, affiliates, agents, representatives and legal counsel (including Investor Counsel), and each person controlling (or deemed controlling) such Investor within the meaning of the Securities Act, (collectively, the "Investor's Agents") with respect to which registration, qualification or compliance has been effected pursuant to this Section 3.3, against all claims, losses, damages and liabilities (or actions in respect thereof), joint or several, arising out of or based on (A) any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other similar document or any amendments or supplements thereto (including any related registration statement and amendments or supplements thereto, notification or the like) incident to any such registration, qualification or compliance, (B) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made, or (C) any violation by Mobility of the Securities Act, the Exchange Act or any rule or regulation promulgated thereunder applicable to Mobility in connection with any such registration, qualification or compliance, and shall reimburse each Investor, and such Investor's Agents, for any legal and any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, as incurred; provided, however, that Mobility shall not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission based upon written information furnished to Mobility by an instrument duly executed by such Investor and stated to be specifically for use therein or furnished in writing by such Investor to Mobility in 5 response to a request by Mobility stating specifically that such information shall be used by Mobility therein; provided further, however, that the indemnity agreement provided in this Section 3.3(e)(i) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the prior written consent of Mobility, which consent shall not be unreasonably withheld, unless such consent is obtained in accordance with subsection (iii) hereof. (ii) Each Investor shall, severally and not jointly, indemnify Mobility, its officers, directors, employees, affiliates, agents, representatives, and each person controlling Mobility within the meaning of the Securities Act (collectively, the "Mobility's Agents"), against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on (A) any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other similar document or any amendments or supplements thereto (including any related registration statements and any amendments or supplements thereto, notification and the like) incident to any such registration, qualification or compliance, or (B) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made, or (C) any violation by Investor of the Securities Act, the Exchange Act or any rule or regulation promulgated thereunder applicable to Investor in connection with any such registration, qualification or compliance, and shall reimburse Mobility and Mobility's Agents for any legal and any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, as incurred, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such prospectus, offering circular or other similar document or any amendments or supplements thereto (including any related registration statements and any amendments or supplements thereto, notification and the like) in reliance upon and in conformity with written information furnished in writing to Mobility by an instrument duly executed by such Investor and stated to be specifically for use therein or furnished by such Investor to Mobility in response to a request by Mobility stating specifically that such information shall be used by Mobility therein; provided, however, that the indemnity agreement provided in this Section 3.3(e)(ii) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld, unless such consent is obtained in accordance with subsection (iii) hereof. In no event shall an Investor's indemnification obligation exceed the net proceeds received from its sale of Registrable Securities in such offering. (iii) Each party entitled to indemnification under this Section 3.3(e) (the "Indemnified Party") shall give written notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has received written notice of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided, however, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld). The Indemnified Party may participate in such defense at such party's expense; provided, however, that the Indemnifying Party shall bear the expense of such defense of the Indemnified Party if representation of both parties by the same counsel would be inappropriate due to actual or potential conflicts of interest. The failure of any Indemnified Party to give notice within a reasonable period of time as provided herein shall relieve the Indemnifying Party of its obligations under this Section 3.3(e), but only to the extent that such failure to give notice shall materially adversely prejudice the Indemnifying Party in the defense of any such claim or any such litigation. No Indemnifying Party, in the defense of any such claim or litigation, shall, 6 except with the written consent of each Indemnified Party (which shall not be unreasonably withheld), consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. (iv) If the indemnification provided for in this Section 3.3(e) is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage or expense referred to therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations; provided, however, that in no event shall any contribution by an Investor under this Section 3.3(e) exceed the net proceeds from the offering received by such Investor. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. (v) The obligations of Mobility and the Investors under this Section 3.3 shall survive the completion of any offering of the Registrable Securities in a Registration Statement under this Section 3.3, any investigation made by or on behalf of the Indemnified Party or any officer, director or controlling Person of such Indemnified Party and shall survive the transfer of securities. (f) Information by the Investor. As a condition precedent to the obligations of Mobility under this Section 3.3, each Investor shall furnish to Mobility all such information and materials regarding such Investor and the distribution proposed by such Investor as Mobility may reasonably request in writing in connection with any registration, qualification or compliance referred to in this Section 3.3. Each Investor will promptly notify Mobility in writing of any changes in the information set forth in the Registration Statement after it is prepared regarding the Investor or its plan of distribution to the extent required by applicable law. (g) Inclusion of Additional Securities. Mobility may include additional Mobility securities in any registration pursuant to this Section 3.3 for its own account and by other parties in amounts as determined by the Board, provided that any such inclusion does not (i) reduce the number of Registrable Securities (or other securities of the Investors) which are included in the registration statement filed pursuant to this Section 3.3 or otherwise materially and adversely affect the rights of the Investors hereunder, or (ii) cause Form S-3 to be unavailable under the Securities Act for such registration due to the nature of the additional securities to be so included. (h) Termination of Registration Rights. All rights and obligations provided for in this Section 3.3 (except for in Section 3.3(e), which rights and obligations shall survive) shall terminate on the date on which Mobility has no obligation to maintain the effectiveness of the Registration Statement. 3.4 Reports Under Securities Exchange Act of 1934. With a view to making available to the Investors the benefits of Rule 144 promulgated under the Securities Act ("SEC Rule 144") and any other 7 rule or regulation of the SEC that may at any time permit an Investor to sell securities of Mobility to the public without registration or pursuant to a registration on Form S-3, Mobility agrees to: (a) make and keep public information available, as those terms are understood and defined in SEC Rule 144, at all times so long as Mobility remains subject to the periodic reporting requirements under Sections 13 or 15(d) of the Exchange Act; (b) use its best efforts to take such action as is necessary to enable each Investor to utilize a Registration Statement for the sale of its Registrable Securities; (c) file with the SEC in a timely manner all reports and other documents required of Mobility under the Securities Act and the Exchange Act; and (d) furnish to each Investor, so long as such Investor owns any Registrable Securities, forthwith upon request (i) a written statement by Mobility that it has complied with the reporting requirements of the Securities Act and the Exchange Act, or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3, (ii) a copy of the most recent annual or quarterly report of Mobility and such other reports and documents so filed by Mobility, and (iii) such other information as may be reasonably requested in availing any Investor of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form. 3.5 Assignment of Rights. The rights to cause Mobility to register Registrable Securities pursuant to Section 3.3 may be assigned by an Investor only to its Affiliates. In the event of such assignment, the transferee shall furnish to Mobility written notice of such assignment and agree in writing to be bound by the obligations of such Investor hereunder. 3.6 Nasdaq Listing. Mobility shall file a listing application with Nasdaq for the Registrable Securities and use its best efforts to maintain the listing of its Common Stock on Nasdaq (or a comparable system then in use) or the New York Stock Exchange or other national exchange for a period of not less than three years from the date of original issuance. 3.7 Reasonable Efforts; Notification; Representations. Subject to the other terms and conditions of this Agreement, each Party shall use reasonable efforts to take promptly, or cause to be taken, all actions, and to do promptly, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the Transactions. Each Party shall give prompt notice to each other Party upon becoming aware that any representation or warranty made by such party in this Agreement has become untrue or inaccurate or that such party has failed to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by such party under this Agreement. 4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF MOBILITY As an inducement to the Investors to enter into this Agreement and to consummate the Transactions, Mobility represents, warrants and agrees that: 4.1 Organization and Authority. Mobility has all required corporate power and authority to own its own properties and to carry on its business as presently conducted. Mobility has all required power and authority to execute and deliver this Agreement, to issue and sell the Securities (and the Underlying Shares), and to carry out the Transactions. Mobility is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and is duly licensed or qualified and in good 8 standing as a foreign corporation in each jurisdiction where the properties owned, leased, used or operated by it or the nature of the business conducted by it require it to be so qualified. 4.2 Authority. Mobility has all requisite corporate power and authority to execute and deliver this Agreement and the Warrants, to perform its obligations under this Agreement, and to consummate the Transactions. The execution and delivery of this Agreement and the Warrants by Mobility and the performance by Mobility of its obligations hereunder and thereunder and the consummation by Mobility of the Transactions, have been duly authorized by Mobility's board of directors and no other corporate action on the part of Mobility or its stockholders is necessary to authorize the execution and delivery by Mobility of this Agreement or the consummation by it of the Transactions (including, for such purpose, the issuance of the Underlying Shares). This Agreement and the Warrants have been duly executed and delivered by Mobility and constitute the legal, valid and binding obligations of Mobility, enforceable in accordance with their terms, except to the extent that the enforceability hereof and thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally or by general principles of equity. None of the execution or delivery of this Agreement or the Warrants, the performance by Mobility of the terms hereof or thereof, or the consummation of the Transactions (including, for such purpose, the issuance of the Underlying Shares) (a) will result (upon notice, with lapse of time or otherwise) in a breach of the terms or conditions of, a default under, a conflict with, or the acceleration of (or the creation in any Person of any right to cause the acceleration of) any performance or any increase in any payment required by, or the termination, suspension, modification, impairment or forfeiture (or the creation in any Person of any right to cause the termination, suspension, modification, impairment or forfeiture) of any rights or privileges of Mobility under its Certificate of Incorporation or Bylaws (each as amended to date), any material agreement, instrument or undertaking (collectively, the "Material Agreements") or any award, order, writ, decree, injunction or judgment of, or any stipulation entered into in connection with any action or proceeding before, any Governmental Authority (collectively, "Judgments") or regulatory or other restriction or obligation to which Mobility or any of its Subsidiaries is a party or by which Mobility, its Subsidiaries or their respective properties, assets or business may be bound or affected, (b) will result (upon notice, with the lapse of time or otherwise) in the creation, imposition or right to exercise or foreclosure of a lien, charge, security interest, option, equity, claim or other encumbrance of any nature whatsoever (collectively, "Liens") upon or in any of the Securities or the Underlying Shares, or Lien upon any of the assets or properties of Mobility or its Subsidiaries, (c) does or will conflict in any respect with, or result in any violation of, any material ordinance, statute, law, rule or regulation including, without limitation, the NASD Rules (collectively "Laws") applicable to Mobility or its Subsidiaries or by which Mobility, its Subsidiaries or their respective properties, assets or business may be bound or affected, or (d) give rise to any rights of any holder of Mobility capital stock or any other Person under that certain Rights Agreement dated as of June 11, 2003, by and between Mobility and Computershare Trust Company. 4.3 Capitalization. The authorized capital stock of Mobility consists of 90,000,000 shares of Common Stock and 15,000,000 shares of preferred stock, par value $0.01 per share, of which 2,500 shares have been designated as Series A Preferred Stock, 4,186 shares have been designated as Series B Preferred Stock, 4,500,000 have been designated as Series C Preferred Stock, 500,000 shares have been designated as Series D Preferred Stock, 1,400,000 shares have been designated as Series E Preferred Stock, 1,000,000 shares have been designated as Series F Preferred Stock, and 50,000 shares have been designated as Series G Junior Participating Preferred Stock. As of March 24, 2005, (i) 28,732,545 shares of Common Stock were issued and outstanding, (ii) no shares of Common Stock were issued and held in the treasury of Mobility, (iii) 266,041 shares of Series C Preferred Stock were issued and outstanding, (iv) 5,750,000 shares of Common Stock were reserved for issuance upon exercise of Options under the Mobility Option Plans, (v) 144,370 shares of Common Stock were reserved for the exercise of options or similar rights granted outside the Mobility Option Plans, and (vi) 2,000,000 shares of Common Stock were reserved for issuance pursuant to the Mobility ESPP. All the outstanding shares of Mobility's 9 capital stock are, and all shares of Common Stock which may be issued pursuant to the exercise of outstanding Options shall be, when issued in accordance with the respective terms thereof, duly authorized, validly issued, fully paid and nonassessable. 4.4 Validity of Shares and Underlying Shares. The Securities, when issued, sold and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable and will be free of restrictions on transfer, other than restrictions set forth herein and under applicable federal and state securities laws. The Underlying Shares, when issued, sold and delivered in accordance with the terms of the Warrants for the consideration expressed therein, will be duly and validly issued, fully paid and nonassessable and will be free of restrictions on transfer, other than restrictions set forth herein and under applicable federal and state securities laws. 4.5 Offering. Subject in part to the truth and accuracy of each Investor's representations set forth in Section 4 hereof, the offer, sale and issuance of the Securities as contemplated hereby are exempt from the registration requirements of the Securities Act, and the qualification or registration requirements of the applicable blue sky laws. Neither Mobility nor any authorized agent acting on its behalf shall take any action hereafter that would cause the loss of such exemptions. 4.6 No Conflicting Rights. The holders of the outstanding capital stock of Mobility are not entitled to pre-emptive or other rights to subscribe for the Securities or the Underlying Shares. 4.7 Legal Proceedings. Except as disclosed in SEC Reports, there is no Legal Proceeding by or before any Governmental Authority or, to the knowledge of Mobility, threatened in writing against or involving Mobility or its Subsidiaries which either (a) is reasonably likely to result in material damages to or any material injunctive relief against Mobility or its Subsidiaries or (b) questions or challenges the validity of this Agreement, the Transactions or any action taken or to be taken by Mobility or any of its Subsidiaries pursuant hereto or in connection with the Transactions. Neither Mobility nor any of its Subsidiaries is in, or has received written notice of, default under or in violation of any Material Agreement, except as would not otherwise have a Material Adverse Effect. Neither Mobility nor any of its Subsidiaries is subject to any Judgment that materially restricts its business practices or its ability to acquire any property or conduct its business as currently conducted. 4.8 Government Authorizations and Filings. Except for filings, permits, authorizations, consents, notices and approvals as may be required under, and other applicable requirements of, the Exchange Act, state securities laws or blue sky laws, none of the execution or delivery of this Agreement or the Warrants, the performance by Mobility of the terms hereof or thereof, or the consummation of the Transactions requires (a) any material filing with, or material permit, authorization, consent or approval of, any Governmental Authority, or (b) any consent or approval of Mobility's stockholders including, without limitation, under the NASD Rules. 4.9 Compliance with Laws. Mobility and each of its Subsidiaries are in compliance in all material respects with, and have not violated in any material respect any applicable law, rule or regulation of any United States federal, state, local, or foreign Governmental Authority applicable to Mobility or any of its Subsidiaries, except as would not otherwise have a Material Adverse Effect. No written notice has been received by Mobility or any of its Subsidiaries or has been filed, commenced or, to the knowledge of Mobility, threatened against Mobility or any of its Subsidiaries alleging any such violation. All licenses, permits and approvals required under such laws, rules and regulations are in full force and effect except where the failure to be in full force and effect would not reasonably be expected to result in a Material Adverse Effect. 10 4.10 SEC Reports. Mobility has timely filed with the SEC the SEC Reports. As of their respective dates (or, if amended or superseded, as of the date of the last such amendment or superseding report filed prior to the date hereof), the SEC Reports, including any financial statements or schedules included therein (a) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading and (b) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as the case may be, and the applicable rules and regulations of the SEC thereunder. The Chief Executive Officer and the Chief Financial Officer of Mobility have signed, and Mobility has furnished to the SEC, all certifications required by Section 906 of the Sarbanes-Oxley Act of 2002; such certifications contain no qualifications or exceptions to the matters certified therein and have not been modified or withdrawn; and neither Mobility nor any of it officers has received notice from any Governmental Authority questioning or challenging the accuracy, completeness, form or manner of filing or submission of such certifications. None of Mobility's Subsidiaries is required to file any forms, reports or other documents with the SEC. 4.11 Financial Statements. Each of the Financial Statements has been prepared from, and are in accordance with, the books and records of Mobility and its Subsidiaries. The Financial Statements complied, as of their respective dates, in all material respects with applicable accounting requirements and published rules and regulations of the SEC. The Financial Statements have been prepared in accordance with generally accepted accounting principles ("GAAP"), applied on a consistent basis (except as may be indicated in the notes thereto and subject, in the case of interim condensed consolidated financial statements, to normal, recurring and year-end adjustments which were not and are not expected to be material in amount and the absence of certain notes) and fairly present in all material respects as of their respective dates (i) the consolidated financial position of Mobility and its Subsidiaries as of the dates thereof and (ii) the consolidated results of operations, changes in stockholders' equity and cash flows of Mobility and its Subsidiaries for the periods presented therein (except as may be indicated in the notes thereto and subject, in the case of interim condensed consolidated financial statements, to normal, recurring and year-end adjustments which were not and are not expected to be material in amount and the absence of certain notes). 4.12 No Undisclosed Liabilities. Except (a) as disclosed in the Financial Statements, (b) for liabilities disclosed in SEC Reports, and (c) for liabilities and obligations incurred in the ordinary course of business and consistent with past practice since the Balance Sheet Date, neither Mobility nor any of its Subsidiaries has any liability or obligation of any nature, whether or not accrued, contingent or otherwise that would be required by GAAP to be disclosed on a consolidated balance sheet of Mobility or in the notes thereto and which, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect. Mobility has not created any entities or entered into any transactions or created any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, for the purpose of avoiding disclosure required by GAAP. 4.13 Absence of Changes. Except as set forth on Schedule 4.13, since the Balance Sheet Date, (a) no event or development has occurred which has had, or could reasonably be expected to have, a Material Adverse Effect, and (b) the business and operations of Mobility and each of its Subsidiaries have been conducted in the ordinary course consistent with past practice. 4.14 Finder's Fees. Except for the reasonable fees and expenses payable by Mobility to Needham & Company, no agent, broker, investment banker, financial advisor or other firm or Person is or shall be entitled to any brokers' or finder's fee or any other commission or similar fee in connection with any of the Transactions. 11 4.15 Employee Benefit Plans. No Legal Proceeding is currently pending or, to Mobility's knowledge, threatened in writing against or with respect to any Mobility Benefit Plan (other than routine benefits claims) and there is no pending audit or inquiry by the Internal Revenue Service or United States Department of Labor with respect to any Mobility Benefit Plan. To the knowledge of Mobility or any of its Subsidiaries, there exists no violations of any Mobility Benefit Plan, nor has Mobility or any of its Subsidiaries received written notice of any such violation, that could subject Mobility or any of its Subsidiaries to any liability relating in any way to any Mobility Benefit Plan, except as would not otherwise have a Material Adverse Effect. 4.16 Tax Matters. Mobility and each of its Subsidiaries have duly filed all Tax Returns that are required to be filed and for which taxes are due and owing, and have duly paid, caused to be duly paid in full, or accrued for all Taxes reflected on such Tax Returns. All such Tax Returns are correct and complete in all material respects and accurately reflect all liability for Taxes for the periods covered thereby. All material unpaid Taxes owed by Mobility and all of its Subsidiaries relating to periods or portions of periods through the Balance Sheet Date (whether or not shown on any Tax Return) are reflected on the Financial Statements. Since the Balance Sheet Date, Mobility and its Subsidiaries have not incurred any liability for any Taxes other than in the ordinary course of business. Neither Mobility nor any of its Subsidiaries has received written notice of any claim made by an authority in a jurisdiction where Mobility or such Subsidiary, as the case may be, does not file Tax Returns, that Mobility or such Subsidiary is or may be subject to taxation by that jurisdiction. 4.17 Title to Properties; Encumbrances. Except as set forth in Schedule 4.13, each of Mobility and each of its Subsidiaries has good, valid and marketable title to all the material properties and assets which it purports to own (real, personal and mixed, tangible and intangible) and which are reflected in the Balance Sheet, and all the material properties and assets purchased by Mobility and its Subsidiaries since the Balance Sheet Date, in each case free and clear of all mortgages, title defects or objections, liens, claims, charges, security interests or other encumbrances of any nature whatsoever including, leases, chattel mortgages, conditional sales contracts, collateral security arrangements and other title or interest retention arrangements, except, with respect to all such properties and assets: (a) liens shown on the Balance Sheet as securing specified liabilities or obligations, with respect to which no default exists; (b) minor imperfections of title, if any, none of which are substantial in amount, materially detract from the value or impair the use of the property subject thereto, or impair the operations of Mobility or any of its Subsidiaries and which have arisen only in the ordinary course of business and consistent with past practice since the date of the Balance Sheet; and (c) liens for current Taxes not yet due (collectively, "Permitted Liens"). Except as set forth in Schedule 4.13, the rights, properties and other assets presently owned, leased or licensed by Mobility and its Subsidiaries include all rights, properties and other assets necessary to permit Mobility and its Subsidiaries to conduct their businesses in all material respects in the same manner as their businesses have been conducted prior to the date hereof. 4.18 Intellectual Property. (a) Ownership; Sufficiency of IP Assets. Except as set forth in Schedule 4.18, Mobility or one of its Subsidiaries owns or possesses adequate licenses or other rights to use, free and clear of liens (other than Permitted Liens), all of the Intellectual Property used in, and material to, its respective businesses. The Mobility Intellectual Property, together with rights under the licenses granted to Mobility and/or its Subsidiaries with respect to any Intellectual Property of any Person (other than Mobility or its Subsidiaries), constitutes all the Intellectual Property rights used in the operation of Mobility's and its Subsidiaries' businesses as they are currently conducted and are all the Intellectual Property rights necessary to operate such businesses after the Closing in substantially the same manner as such businesses have been operated by Mobility and its Subsidiaries prior thereto; provided, however, that the foregoing representation, as it relates 12 solely to Intellectual Property rights with respect to patents owned by any Person (other than Mobility and its Subsidiaries), is made only to the knowledge of Mobility. (b) Infringement. (i) By Mobility. None of Mobility's products or Intellectual Property used, sold or manufactured by Mobility or its Subsidiaries in the conduct of Mobility's or its Subsidiaries' businesses as currently conducted, infringes upon, violates or constitutes the unauthorized use of any trade secret, copyright or mask work owned or controlled by any Person (other than Mobility or its Subsidiaries), and to the knowledge of Mobility, none of Mobility's products or Intellectual Property used, sold, or manufactured by Mobility or its Subsidiaries in the conduct of Mobility's or its Subsidiaries' businesses as currently conducted, infringes upon any patent rights or other intellectual property rights owned or controlled by any Person (other than Mobility or its Subsidiaries). Except as disclosed in the SEC Reports and as set forth on Schedule 4.18(b)(i) hereto, no Legal Proceeding to which Mobility is a party is now pending and, to the knowledge of Mobility, no notice or claim in writing has been received by Mobility or any of its Subsidiaries within the six (6) years prior to the date hereof (A) alleging that Mobility or any of its Subsidiaries has engaged in any activity or conduct that infringes upon, violates or constitutes the unauthorized use of the Intellectual Property rights of any Person (other than Mobility or its subsidiaries) or (B) challenging the ownership, use, validity or enforceability of any Intellectual Property owned by or exclusively licensed to or by Mobility. (ii) By Third Parties. Except as set forth on Schedule 4.18(b)(ii) hereto, no Person is misappropriating, infringing or violating any Mobility Intellectual Property (other than Mobility patents) other than instances that, either individually or in the aggregate, would not result in a Material Adverse Effect, and, to the knowledge of Mobility, no Person is infringing or violating any Mobility patents. Except as set forth on Schedule 4.18(ii) hereto, no claims have been asserted against any Person by Mobility or any of its Subsidiaries based upon any Mobility Intellectual Property. 4.19 Employment Matters. Mobility and each of its Subsidiaries are in compliance in all material respects with all currently applicable laws and regulations respecting employment, discrimination in employment, terms and conditions of employment, wages, hours and occupational safety and health and employment practices, and is not engaged in any unfair labor practice except as would not otherwise have a Material Adverse Effect. There is no controversy pending or, to the knowledge of Mobility, threatened, between Mobility or any of its Subsidiaries, on the one hand, and any of their respective employees, on the other hand, which controversies have resulted, or could reasonably be expected to result, in a Legal Proceeding before any Governmental Authority in which an adverse decision would result in a Material Adverse Effect except as disclosed in the SEC Reports. To the knowledge of Mobility, no officer or key employee of Mobility is in violation of any material term of any employment contract, patent disclosure agreement, noncompetition agreement, or any restrictive covenant to a former employer relating to the right of any such employee to be employed by Mobility or a Subsidiary of Mobility because of the nature of the business conducted by Mobility or any of its Subsidiaries or to the use of trade secrets or proprietary information of others. 4.20 Certain Corporate Matters. (a) No state takeover, antitakeover, moratorium, fair price, interested stockholder, business combination or similar statute or rule is applicable to the Transactions. If any state takeover statute becomes or is deemed to become applicable to this Agreement or the 13 Transactions, Mobility shall (and shall cause each of its applicable Subsidiaries to) take all reasonable action necessary to render such statute inapplicable to all of the foregoing. (b) None of Mobility, its Subsidiaries or, to Mobility's knowledge, any director, officer, agent, employee or other Person acting on behalf of Mobility or any of its Subsidiaries, has used any corporate or other funds for any unlawful contribution, payment, gift, or entertainment, or made any unlawful expenditure relating to political activity to government officials or others or established or maintained any unlawful or unrecorded funds in violation of Section 30A of the Exchange Act. None of Mobility, its Subsidiaries or, to Mobility's knowledge, any current director, officer, agent, employee or other Person acting on behalf of Mobility or any of its Subsidiaries, has accepted or received any unlawful contribution, payment, gift or expenditure. Mobility and each of its Subsidiaries which is required to file reports pursuant to Section 12 or 15(d) of the Exchange Act is in compliance in all material respects with the provisions of Section 13(b) of the Exchange Act. (c) Except as disclosed in SEC Reports, to Mobility's knowledge, no executive officer or director of Mobility or any of its Subsidiaries has any material interest in any material property, real or personal, tangible or intangible, including any Intellectual Property used in or pertaining to the business of Mobility or any of its Subsidiaries. 4.21 Disclosure. To the knowledge of Mobility, neither the Agreement nor the Warrants (including all exhibits and schedules hereto or thereto) nor any other statements or certificates made or delivered in writing in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements herein or therein not misleading in light of the circumstances under which they were made. 5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY INVESTOR Each Investor, severally as to itself, hereby represents, warrants and agrees that: 5.1 Authority. Such Investor has the full power and authority to enter into this Agreement and it constitutes such Investor's legal, valid and binding obligation, enforceable in accordance with its terms, except to the extent that the enforceability hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally or by general principles of equity. 5.2 Purchase For Own Account. Such Investor is acquiring the Securities for such Investor's own account, for investment purposes and not for resale or with a view to any distribution, or in connection with any distribution thereof. Such Investor is able to (i) bear the economic risk of its investment in the Securities, (ii) hold the Shares and Underlying Shares for an indefinite period of time, and (iii) afford a complete loss of its investment. 5.3 Investment Experience. Such Investor has the requisite knowledge and experience in financial and business matters, including investments of this type, to be capable of evaluating the merits and risks of an investment in the Securities and of making an informed investment decision with respect thereto. Such Investor acknowledges that the Securities are unregistered and may not be sold or transferred in the absence of registration under the Securities Act and applicable state securities laws, unless an exemption exists therefor. 5.4 Accredited Investor. Such Investor is an "Accredited Investor" as that term is defined in Section 501(a) of Regulation D promulgated under the Act. 14 6. FURTHER AGREEMENTS Each Investor acknowledges and agrees that: 6.1 Legends. Legends in substantially the following form will be placed on all documents or certificates evidencing the Shares: "THE SECURITIES EVIDENCED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAW OF ANY STATE OR OTHER JURISDICTION AND SUCH SECURITIES MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE ACT, AND APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO MOBILITY THAT SUCH REGISTRATION IS NOT REQUIRED." 7. SURVIVAL; INDEMNIFICATION 7.1 Survival of Representations, Warranties and Covenants. The representations and warranties contained herein shall survive the Closing and all statements contained in any certificate, exhibit or other instrument delivered by or on behalf of any Party pursuant to this Agreement shall be deemed to have been representations and warranties by such Party, and, notwithstanding any provision in this Agreement to the contrary, shall survive the Closing until the later of (i) the second anniversary of the Closing, or (ii) the date on which the Warrants are no longer outstanding (i.e., terminated or exercised in full), and shall in no way be affected by any investigation of the subject matter thereof by or on behalf of any Investor. The covenants in this Agreement shall continue until they expire by their express terms. 7.2 Indemnification by Mobility. Mobility agrees to indemnify and hold harmless each Investor and its respective officers, directors, stockholders, employees, and agents (collectively, the "Investor Indemnitees"), against any claims, Legal Proceedings and for any expenses, damages, liabilities or losses (joint or several) arising out of such claims, Legal Proceedings, to which the Investor Indemnitee may become subject under the Securities Act, the Exchange Act and any rules or regulations promulgated thereunder, the NASD Rules, or any state law or regulation, or common law, arising out of, related to or in any way attributable to any breach of any representation, warranty, agreement or covenant of Mobility contained herein. Upon written request, Mobility agrees to reimburse the Investor Indemnitees for any legal or other expenses reasonably incurred in connection with investigating or defending any such claims, Legal Proceedings, as such expenses or other costs are incurred. The Investor Indemnitees may select one, joint counsel. The foregoing indemnity shall extend upon the same terms and conditions to, and shall inure to the benefit of, each Person, if any, who controls any Investor Indemnitee within the meaning of the Securities Act or the Exchange Act. This indemnity shall be in addition to any obligations that Mobility may otherwise have with respect to an Investor. 7.3 Confidentiality. The Parties have entered into that certain Nondisclosure Agreement dated as of January 1, 2005, the terms of which are incorporated by reference herein. 15 8. GENERAL AND MISCELLANEOUS 8.1 Publicity. Except for legally mandated disclosures, any press releases or public announcements relating to this Agreement or the terms of the Agreement shall be mutually agreed upon by the Parties in writing prior to being made or issued by any Party. The Parties hereby acknowledge and agree that (i) upon execution and delivery of this Agreement by the Parties, the Parties will use commercially reasonable efforts to issue a mutually agreeable press release after the close of business on Monday, April 4, 2005; and (ii) this Agreement and the Warrants may be required to be filed with the SEC as an Exhibit under the Exchange Act. 8.2 Independent Contractors. Nothing contained in this Agreement is intended nor shall be construed to create or establish any agency, partnership, joint venture or similar arrangement or relationship between the Parties. It is understood and agreed that the Parties are, and at all times shall remain, independent contractors. Except as otherwise expressly permitted in this Agreement, no Party shall have any authority, express or implied, to create or assume any obligation, enter into any agreement, make any representation or warranty, file any document with any governmental body, or serve or accept legal process on behalf of the other Party(ies), settle any claim by or against the other Party(ies), or to bind or otherwise render the other Party(ies) liable in any way to any other Person, without the prior express written consent of the other Party(ies). Each Party shall be solely responsible for all of its employees' salaries, benefits, and any applicable taxes, and in no event shall the employees of a Party be considered common law employees of any other Party. 8.3 Entire Agreement. This Agreement, the Warrants and the agreements contemplated hereby constitute the entire agreement of the parties regarding the subject matter hereof, and supersede all prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. 8.4 Parties In Interest; No Third Party Beneficiaries. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective heirs, legal representatives, successors and assigns of the parties hereto. Neither this Agreement nor any other agreement contemplated hereby shall be deemed to confer upon any person not a party hereto or thereto any rights or remedies hereunder or thereunder. 8.5 Assignment. A Party shall not assign or in any other way transfer this Agreement or any right or obligation hereunder, whether by operation of law or otherwise, without the prior written consent of the other Parties; provided, however, such consent shall not be required in the event this Agreement, or any rights or obligations hereunder, is assigned (i) by an Investor to a Person that is an Affiliate of such Party provided the assigning Party is not released in any way and such Affiliate agrees to be bound by all of the terms of this Agreement, (ii) by any Party to a Person with which such Party merges or consolidates provided such Person agrees to be bound by all of the terms of this Agreement, or (iii) by any Party to a Person which purchases all or substantially all of such Party's business or assets provided such Person agrees to be bound by all of the terms of this Agreement. 8.6 Amendment. No supplement, modification or amendment of this Agreement shall be binding, unless executed in writing by the Parties. 8.7 Remedies in General. No delay or omission on the part of any Party in exercising any right or remedy shall operate as a waiver of said right or remedy or any other right or remedy. A waiver on any one occasion shall not be construed as a bar to or a waiver of any right on any future occasion. Every right and remedy of a Party shall be cumulative and in addition to every other right and remedy expressed in this Agreement or allowed by law or equity, and may be exercised singularly or concurrently. 16 8.8 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES GOVERNING CONFLICTS OF LAWS) OF THE STATE OF DELAWARE. 8.9 Notices. Any notice, demand or other communication required or permitted to be given under this Agreement must be in writing and shall be deemed to be duly given and received: (i) if delivered personally, on the next business day after the date of such delivery; (ii) if sent by reputable overnight courier service, on the next business day after such courier service delivers the communication; (iii) if sent by electronic means (i.e., by telecopier or e-mail), on the date of transmission if made during normal business hours (9:00 a.m. to 5:00 p.m. of the Party receiving the communication) at the recipient's address listed below or the following business day if made after normal business hours, provided that written confirmation of receipt is obtained by the noticing Party; or (iv) if mailed postage prepaid, by certified mail, return receipt requested, the earlier of the date of actual receipt by the other Party(ies) or five (5) business days following deposit in the United States Mail, addressed to the appropriate Party(ies) as follows: RadioShack Mobility RadioShack Corporation Mobility Electronics, Inc. 300 RadioShack Circle 17800 N. Perimeter Drive, Suite Mail Stop CF3-203 200 Fort Worth, Texas 76102 Scottsdale, Arizona 85255 Tel: 817-415-5400 Tel: 800-311-3274 Fax: 817-415-2624 Fax: 480-477-3639 With a copy (only of claims, With a copy to: indemnity matters, notices of default and termination) to: Richard F. Dahlson Jackson Walker L.L.P. David S. Goldberg 2435 N. Central Expressway, Suite Vice President-Law and Assistant 600 Corporate Secretary Richardson, Texas 75080 RadioShack Corporation Tel: 972-744-2996 300 RadioShack Circle Fax: 972-744-2990 Mail Stop CF3-203 Fort Worth, Texas 76102 Tel: 817-415-2181 Fax: 817-415-6593 Motorola Motorola, Inc. 1303 East Algonquin Rd. Schaumburg, IL 60196 Attn: Corporate Business Development Tel: 847-576-0267 Fax: 847-576-8890 17 With a copy to: Motorola, Inc. 1303 East Algonquin Rd. Schaumburg, IL 60196 Attn: General Counsel Tel: 847-576-5008 Fax: 847-576-6301 or to such other address as the Party(ies) to receive the notices shall from time to time designate in writing to the other Parties. 8.10 Severability. If for any reason any clause or provision of this Agreement, or the application of any such clause or provision in a particular context or to a particular situation, circumstance, or Person, should be held unenforceable, invalid or in violation of law by any court or other tribunal, then the application of such clause or provision in contexts or to situations, circumstances or Persons other than that in or to which it is held unenforceable, invalid or in violation of law shall not be affected thereby, and the remaining clauses and provisions hereof shall nevertheless remain in full force and effect. In lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be legal, valid and enforceable. Further, where state or federal law governs any aspect of matters or services covered by this Agreement, such state or federal law shall prevail over inconsistent provisions in this Agreement. 8.11 Expenses. Each Party shall bear its own expenses incurred by such Party in the negotiation and preparation of this Agreement. 8.12 Captions. The captions included in this Agreement have been inserted as a matter of convenience only and in no way are intended to define, limit or to be used in connection with the interpretation of this Agreement. 8.13 Counterparts. This Agreement may be executed in two or more counterparts, including counterparts transmitted by facsimile or electronic transmission, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (This space intentionally left blank) 18 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth above. MOBILITY ELECTRONICS, INC. RADIOSHACK CORPORATION By: /s/ Charles R. Mollo By: /s/ David J. Edmondson Charles R. Mollo, David J. Edmondson, President and C.E.O. President and Chief Operating Officer MOTOROLA, INC. By: /s/ Susan M. Fullman Sue Fullman Corporate Vice President, General Manager, Consumer Solutions & Accessories, Mobile Devices 19 EXHIBIT A DEFINITIONS "AFFILIATE" means a Person, however organized, that, directly or indirectly, Controls, is Controlled by, or is under common Control with another Person. "BALANCE SHEET" means the most recent audited consolidated balance sheet of Mobility and its Subsidiaries included in the Financial Statements. "BALANCE SHEET DATE" means the date of the Balance Sheet. "CHANGE OF CONTROL" shall mean (a) the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of any Party; or (b) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than fifty percent (50%) of either: (i) the then outstanding shares of common stock of any Party hereto; (ii) the combined voting power of the then outstanding voting securities of any Party hereto entitled to vote generally in the election of directors; or (iii) the income and profits interest of the general partners or limited partners where the entity is a limited partnership. "Change of Control" shall not include any transaction solely involving a Party and any one or more of its parent or subsidiary entities, or any Affiliate of the foregoing. "CONTROL" shall be defined as (i) ownership of a majority of the voting power of those classes of voting stock entitled to vote in the election of directors, (ii) ownership of a majority of the beneficial interests in income and capital of an entity other than a corporation, or (iii) the power, directly or indirectly, either to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities or equity interests, by membership or involvement in the board of directors, management committee or other management structure of such Person, by contract or otherwise. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "FINANCIAL STATEMENTS" means each of the audited consolidated financial statements and unaudited condensed consolidated interim financial statements of Mobility (including any related notes and schedules) included (or incorporated by reference) in the SEC Reports. "GOVERNMENTAL AUTHORITY" means any nation or government, any state or political subdivision thereof, any federal or state court and any other agency, body, authority or entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government including, without limitation, the SEC and the National Association of Securities Dealers, Inc. "INTELLECTUAL PROPERTY" mean all of the following: (i) U.S. and foreign registered and unregistered trademarks, trade dress, service marks, logos, trade names, corporate names and all registrations and applications to register the same; (ii) issued U.S. and foreign patents and pending patent applications, patent disclosures, and any and all divisions, continuations, continuations-in-part, reissues, reexaminations, and extension thereof, any counterparts claiming priority therefrom, utility models, patents of importation/confirmation, certificates of invention and like statutory rights; (iii) U.S. and foreign registered and unregistered copyrights (including those in computer software and databases), moral rights, rights of publicity and all registrations and applications to register the same; and (iv) all trade secrets; and, to the extent actually protected as a trade secret under the law, computer software, A-1 databases, other confidential information, technology, know-how, proprietary processes, formulae, algorithms, models, user interfaces, customer lists, inventions, discoveries, concepts, ideas, techniques, methods, source codes, object codes, methodologies and, with respect to all of the foregoing, related confidential data or information. "LEGAL PROCEEDING" means any action, suit, litigation, proceeding, mediation, arbitration or investigation or audit (other than activities performed in the ordinary course by Mobility's independent auditors) by any Person. "LOCK-UP PERIOD" means the period from the Closing Date until the first anniversary thereof. "MATERIAL ADVERSE EFFECT" means any circumstance affecting, change in, or effect on Mobility and its Subsidiaries that is, or imminently shall be, materially adverse to the business, properties, assets, prospects, financial condition, liabilities (absolute, accrued, or contingent), operations, or results of operation of Mobility and its Subsidiaries, taking Mobility together with its Subsidiaries as a whole. "MOBILITY BENEFIT PLAN" means any employee benefit fund, plan, program, arrangement or contract (including any "pension" plan, fund or program, as defined in Section 3(2) of ERISA, and any "employee benefit plan", as defined in Section 3(3) of ERISA and any plan, program, arrangement or contract providing for severance; medical, dental or vision benefits; life insurance or death benefits; disability benefits, sick pay or other wage replacement; vacation, holiday or sabbatical; pension or profit-sharing benefits; stock options or other equity compensation; bonus or incentive pay or other material fringe benefits), whether written or not, of Mobility and its Subsidiaries. "MOBILITY ESPP" means Mobility's Employee Stock Purchase Plan. "MOBILITY INTELLECTUAL PROPERTY" means all Intellectual Property owned by Mobility or any of its Subsidiaries as of the date hereof. "MOBILITY OPTION PLANS" means Mobility's 1996 stock option plan, the Mobility Electronics, Inc. Omnibus Long-Term Incentive Plan, and the Mobility Electronics, Inc. Non-Employee Director Long-Term Incentive Plan. "NASD RULES" means the rules, regulations policies adopted by the National Association of Securities Dealers, Inc. concerning companies listed on the Nasdaq Stock Market. "OPTION" means any right or option to purchase shares of Common Stock which is granted by the Board and is outstanding as of the date hereof. "PERSON" means any individual, corporation, limited liability company, partnership, association, trust or any other entity or organization of any kind or character, including any Governmental Authority. "REGISTRATION EXPENSES" means all expenses incurred by Mobility in complying with Section 3.3 hereof including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of one counsel for Mobility and all reasonable fees and disbursements of Investor Counsel not to exceed $15,000, blue sky fees and expenses, and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of Mobility which shall be paid in any event by Mobility and Selling Expenses). "REGISTRABLE SECURITIES" means the Shares, the Underlying Shares and any other shares of Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right or other A-2 security which is issued as) a dividend or other distribution with respect to, or in exchange for, or in replacement of, any Shares or Underlying Shares. "REGISTRATION STATEMENT" means a registration statement on Form S-3 under the Securities Act or any registration form under the Securities Act subsequently adopted by the SEC which similarly permits the inclusion or incorporation of substantial information by reference to other documents filed by Mobility with the SEC, including the prospectus, amendments and supplements to such registration statements, including post-effective amendments, all exhibits and all materials incorporated by reference or explicitly deemed to be incorporated by reference in such registration statements, and/or as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered thereby; provided, however, that the term "REGISTRATION STATEMENT" shall refer to any other registration form under the Securities Act available to Mobility including, without limitation, a Form S-1 (or any successor form thereto) if Mobility is not eligible to register securities on Form S-3 or such similar registration form. "SEC" means the United States Securities and Exchange Commission. "SEC REPORTS" shall mean each form, report, schedule, statement and other document filed or required to be filed by Mobility since January 1, 2004 through the date hereof under the Exchange Act or the Securities Act, including any filed amendment to such document, whether or not such amendment is required to be so filed. "SECURITIES ACT" means the Securities Act of 1933, as amended. "SELLING EXPENSES" means all underwriting discounts, selling commissions and other similar expenses incurred by Investors applicable to a sale of the Registrable Securities. "SUBSIDIARY" means, with respect to any Person, (i) any corporation, partnership or other entity of which shares of capital stock or other ownership interests having ordinary voting power to elect a majority of the board of directors or other similar managing body of such corporation, partnership or other entity are at the time owned by such Person, or (ii) the management of which is otherwise Controlled, directly or indirectly, through one or more intermediaries by such Person. "TRANSACTIONS" means each of the transactions contemplated by this Agreement including, without limitation, (i) the execution and delivery of this Agreement, (ii) the purchase and sale of the Securities, and (ii) the execution and delivery of the Warrants. A-3 EXHIBIT B Form of First Level Warrant B-1 EXHIBIT C Form of Second Level Warrant C-1 EXHIBIT D Legal Opinion of Mobility Counsel EX-10.1 7 p70452exv10w1.txt EXHIBIT 10.1 EXHIBIT 10.1 SALES REPRESENTATIVE AGREEMENT This Sales Representative Agreement (the "Agreement") is made and entered into as of March 31, 2005 (the "Effective Date"), by and between MOBILITY ELECTRONICS, INC., a Delaware corporation and its affiliates having its principal office at 17800 N. Perimeter Dr., Suite 200, Scottsdale, Arizona 85255 ("Mobility") and MOTOROLA, INC., a Delaware corporation, and its affiliates having its principal office at 600 North US Highway 45, Libertyville, Illinois 60048 ("Sales Rep"). Mobility and Sales Rep are sometimes each referred to herein as a "Party" and collectively, as the "Parties". 1. FORMATION OF DIVISION. (a) Formation. Effective as of the Effective Date, Mobility will, for purposes of this Agreement, form a division of Mobility for the purpose of designing, developing, manufacturing, marketing and selling iTip Products (the "Division"). The Parties acknowledge and agree that the Division will not be a separate legal entity, but will be part of Mobility. (b) Resources and Expenses. The Division will utilize employees and resources of Mobility, but will maintain its own accounting records. The Division will be allocated the cost of dedicated personnel, resources and expenses (the "Direct Expenses"), a percentage of the cost of intellectual property filings, defense, enforcement and protection that is related to iTip Technology (the "IP Expenses") as provided below and a reasonable portion of any Mobility shared personnel, resources and expenses incurred on behalf of the Division (the "Indirect Expenses"); it being agreed and understood that: (i) all Permitted Sales Revenues (as defined below), cost of goods sold, and Direct Expenses shall be determined in accordance with generally accepted accounting principles, consistently applied ("GAAP"); (ii) 50% of the IP Expenses shall be allocated to the Division, and (iii) a reasonable portion of the quarterly Indirect Expenses shall be allocated to the Division; provided, however, that notwithstanding the above, the total sales, marketing, research and development and general and administrative expenses, Indirect Expenses and IP Expenses of the Division (excluding the iTip Products Commission (and any similar commission to any other sales representative of Mobility)) (the "Total Operating Expenses") shall not exceed (1) if the Permitted Sales Revenues of the Division for any calendar year is less than $50 million, thirty percent (30%) of the Permitted Sales Revenue of the Division for such calendar year; (2) if the Permitted Sales Revenue of the Division for any calendar year is at least $50 million but less than $100 million, the lesser of (A) twenty five percent (25%) of the Permitted Sales Revenue of the Division for such calendar year, or (B) the percentage equal to Mobility's overall sales, marketing, research and development, and general and administrative expenses as compared to its overall revenues (net of returns and allowances) for such calendar year (for each calendar year, the "Maximum Overall Operating Expense Percentage"); (3) if the Permitted Sales Revenue of the Division for any calendar year is $100 million or more, the lesser of (A) twenty percent (20%) of the Permitted Sales Revenue of the Division for such calendar year, or (B) the Maximum Overall Operating Expense Percentage for such calendar year. The limitations set forth in (1), (2) and (3) of the previous sentence being collectively referred to as the "Maximum Percentages". 1 (c) Management. The Division will be under the management and control of Mobility. 2. ENGAGEMENT OF SERVICES. (a) Generally. Sales Rep will serve as Mobility's non-exclusive, worldwide representative for the sale of Mobility's Computer Products and Mobility's iTip Products (collectively, the "Mobility Products"). For purposes of this Agreement: (i) "Computer Products" means Mobility's existing line of universal power products for computers (including notebook, laptop, handheld, tablet computers and the like, but excluding personal digital assistants, wireless internet (or e-mail devices), smartphones and the like (the "Portable Computers")) and all future versions (including expanded functionality), modifications, enhancements, and derivatives to such products, and any new universal power product for Portable Computers which is 60 watts or more in power and is offered for sale by Mobility from time to time. Such products may also include features for charging non-computer mobile electronic devices. Some of the current Computer Products currently offered for sale by Mobility are listed in Exhibit B attached hereto. (ii) "iTips" means any tip, cord or removable or interchangeable item that utilizes iTip Technology to remotely program a power product (including the remote programming of any iTip Product) to correctly determine and provide the appropriate voltage, current and/or power requirements for the purpose of operating or charging the battery for an electronic device (e.g., cell phones, PDA's, digital cameras, MP3 players, CD players, and the like). (iii) "iTip Products" means Mobility's existing line of universal power products for use with mobile electronic devices and all future versions (including expanded functionality), modifications, enhancements, and derivatives to such products, and any new universal power products offered for sale by Mobility from time to time, which: (i) are 70 watts or less in power; (ii) utilize iTip Technology; and (iii) cannot be used to power or charge a Portable Computer. Some of the current iTip Products currently offered for sale by Mobility are listed in Exhibit B attached hereto. (iv) "iTip Technology" means the underlying iTip, combination AC/DC, simultaneous charging and other related Intellectual Property Rights (as defined below) of Mobility that are incorporated into the iTips and products of Mobility that utilize iTips, including, but not limited to, the patents and patents pending listed on Exhibit A attached hereto. (b) Sales Channels and Territory. Sales Rep shall have the worldwide right to act as Mobility's sales representative for the sale of Mobility Products; provided, however, that in the event of any channel conflict issues affecting Sales Rep, Mobility shall consult with Sales Rep regarding such issues and give due consideration to the input provided by Sales Rep. Mobility shall then resolve such issues in a manner which considers the interests of all Parties 2 and third parties involved in the channel conflict issue (including, without limitation, consideration of Sales Rep's pre-existing relationships with carrier customers). In the event that Sales Rep does not accept Mobility's resolution of the channel conflict issue, Sales Rep can appeal such decision to the Chief Executive Officer, President or Chief Operating Officer of Mobility, who shall make the final determination of such channel conflict issue. If following such final determination Sales Rep still does not accept such resolution, Sales Rep may terminate this Agreement without liability upon written notice to Mobility, in which event, this Agreement shall be null and void and of no further force or effect. Notwithstanding anything in this Agreement to the contrary, Sales Rep will not have the right to sell Computer Products to the customers identified in Exhibit C attached hereto, except as approved in advance in writing by Mobility from time to time. Sales Rep will use good faith efforts to market iTips Products to its carrier and wireless distributor customers, and to other persons as agreed to by the Parties. In addition, Sales Rep and Mobility agree to work together to develop a plan for including iTips in handset packaging. (c) Sales Policies. All sales activities conducted by Sales Rep pertaining to the Mobility Products will be in accordance with the sales policies of Mobility, which sales policies are attached hereto as Exhibit D (which sales policies may be changed by Mobility from time to time after prior written notice to, and notice and consultation with, Sales Rep). In the event that Sales Rep does not accept any change made by Mobility to its sales policy, Sales Rep can appeal such decision to the Chief Executive Officer, President or Chief Operating Officer of Mobility, who shall make the final determination of such sales policy change. If following such final determination Sales Rep still does not accept such sales policy change, Sales Rep may terminate this Agreement without liability upon written notice to Mobility, in which event, this Agreement shall be null and void and of no further force or effect. All orders for the Mobility Products shall be solicited at prices specified by Mobility. Sales Rep acknowledges specifically that all sales solicitations are to be made on the basis of Mobility's sales policy as provided in Exhibit D, as may be changed as provided above. (d) Sales Orders. All sales orders and agreements relating to the purchase of Mobility Products shall be subject to approval by Mobility, and all contracts and purchase orders shall be executed and placed with Mobility. Mobility's approval of a sales order or agreement relating to the purchase of Mobility Products shall be based primarily on Sales Rep's compliance with Mobility's sales policies. Sales Rep shall promptly notify Mobility with respect to any and all customers who are interested in purchasing Mobility Products, and any and all potential customer issues. If Sales Rep desires pre-approval by Mobility of a sales order for a particular potential customer, Mobility shall, upon the request of Sales Rep, provide Sales Rep certain terms and conditions for such pre-approval (e.g., quantity, price, payment terms and delivery schedule). Notwithstanding anything to the contrary contained in this Agreement, no order for Mobility Products shall be binding unless accepted in writing by an authorized representative of Mobility (except that any pre-approved conditions quoted by Mobility to Sales Rep for a particular potential customer for a specified order shall be binding upon Mobility for that particular customer pertaining to such specified order). (e) Collection Activities. Mobility shall be responsible for the collection of all accounts receivable relating to the sale of Mobility Products, but Sales Rep agrees to provide reasonable assistance to Mobility in this area for customers of Mobility managed by Sales Rep 3 (e.g., making phone calls, requesting payment and/or other communications with the customer) as reasonably requested by Mobility from time to time. (f) Rolling Forecast. Mobility and Sales Rep will work together to formulate, on a monthly basis, a detailed, non-binding, rolling 12-month forecast for: (i) Sales Rep's sales of Mobility Products (broken-down by product, customer and geography) on behalf of Mobility; and (ii) Mobility's manufacturing and delivery schedule and backlog, with the first forecast being completed on or prior to April 30, 2005. (g) Customer Support and Other Product Issues. Except as otherwise specified herein, Mobility shall be responsible for all Mobility Product related issues (and expenses), including, without limitation, technical support and warranty issues. Furthermore, Sales Rep will not hold any inventory under this Agreement nor will Sales Rep be responsible for any costs of distribution programs established by Mobility. Notwithstanding the above, all of the costs and expenses described above in this subsection (g) shall be considered costs and expenses of the Division and shall be paid for by the Division. (h) Representations and Warranties. Mobility represents and warrants that it is under no obligation or restriction, and it will not assume or incur any such obligation or restriction, that does or would in any material way interfere or conflict with the performance of this Agreement by Mobility. Mobility represents and warrants that (i) it has and will have full and sufficient title and/or right and interest to the Mobility Products and underlying technology to grant the rights to Sales Rep that are granted pursuant to this Agreement; and (ii) neither the execution or performance by Mobility of this Agreement, nor the consummation of any transactions contemplated herein does or will (a) violate any law, order, regulation or ruling applicable to Mobility, or (b) infringe any intellectual or other property, personal or contract rights of any third party. To the extent permitted under Regulation FD, Mobility agrees to promptly inform Sales Rep upon the occurrence of: (i) Mobility's receipt of any third party intellectual property infringement claims and any third party material lawsuits, in either case, which affects the Division or the iTip Technology; (ii) any change to the composition of Mobility's senior management team; and (iii) any decision by Mobility to undergo a Change in Control (as defined in Section 8(b)) or to enter into a joint venture, partnership or acquire all or substantially all of the assets of a third party, in any case. which affects the Division or the iTip Technology. (i) Most Favored Sales Representative. Mobility represents and warrants that it will not enter into any sales representative agreement related to iTip Products which provides for a "profits participation" type of sharing arrangement similar to that of Section 3(a) below on terms and conditions more favorable than those set forth in this Agreement. 3. COMMISSIONS. (a) Commissions for iTip Products. Mobility will pay Sales Rep a commission, payable on a calendar quarterly basis, equal to twenty-four and one half percent (24.5%) of the "Pre-Commission EBIT" earned by the Division during each calendar quarter (collectively, the "iTip Products Commission"); provided, however, if Pre-Commission EBIT for any period is a negative number (i.e., a loss for such period) (an "EBIT Loss"), then the EBIT 4 Loss shall be allocated entirely to Mobility, and for any subsequent period(s) in which there is a positive pre-Commission EBIT, Mobility shall be allocated all of such Pre-Commission EBIT until Mobility recovers all EBIT Loss previously allocated to Mobility. For purposes of calculating the Commission, the following terms shall have the following meanings: (i) "Pre-Commission EBIT" means Permitted Sales Revenues of the Division for iTip Products less: (1) returns and allowances for iTip Products; (2) cost of goods sold of the Division for iTip Products (excluding cost of goods sold for products where the revenue is excluded from the definition of Permitted Sales Revenue (as provided in such definition)); (3) the Direct Expenses of the Division; (4) the IP Expenses; and (5) the Indirect Expenses of the Division. (ii) "Permitted Sales Revenues" means all revenues (including without limitation, licensing revenues and sales revenues) of the Division for iTip Products and/or iTip Technology, excluding: (1) the Computer Portion of the sales revenues attributable to any product that is an iTip Product, but is bundled with any one or more Computer Products; and (2) revenues generated from the sale of the products through the RadioShack Channel during the transition period as provided for in Exhibit E attached hereto. As used above, (i) "Computer Portion" shall mean that portion of sales revenue for the bundled product multiplied by a fraction, the numerator of which shall be the manufactured suggested retail price of the Computer Product contained in such bundled product, and the denominator of which shall be the manufactured suggested retail price of the iTip Product portion of the bundled product plus the manufactured suggested retail price of the Computer Product contained in such bundled product (provided, however, that the portion remaining after excluding the Computer Portion must be greater than the manufacturing cost of the iTip Product portion of the bundled product); and (ii) "RadioShack Channels" shall mean RadioShack Corporation's retail stores (including its dealer/franchise stores, but excluding its Sam's Club program, and its Sprint kiosk program) in the United States and its territories and Mexico, and RadioShack.com. (b) Commissions for Computer Products. Mobility will pay Sales Rep a commission, payable on a calendar quarterly basis, equal to three percent (3.0%) of the sales price (net of returns and allowances) for any Computer Product sold by Sales Rep under this Agreement during each calendar quarter; provided, however, for any Computer Product bundled with any iTip Product, such commission shall be reduced by the three percent (3.0%) of the iTip Portion (the "Computer Products Commission", and collectively with the iTip Products Commission, the "Commissions"). As used above, "iTip Portion" shall mean that portion of sales revenue for the bundled product multiplied by a fraction, the numerator of which shall be the manufactured suggested retail price of the iTip Product contained in such bundled product, and the denominator of which shall be the manufactured suggested retail price of the iTip Product portion of the bundled product plus the manufactured suggested retail price of the Computer Product contained in such bundled product. (c) Payments. Within twenty (20) days after the end of each calendar quarter, Mobility shall provide a report to Sales Rep setting forth the Commission due to Sales Rep for 5 such calendar quarter (the "Commission Report"), and shall pay such Commissions concurrent with the delivery of the Commission Report. (d) Audit Rights. Mobility agrees to make and maintain such books, records and accounts as are reasonably necessary to verify the accuracy of the Commissions payments made to Sales Rep. Mobility agrees that it will, at the sole expense of Sales Rep, permit Sales Rep's auditors to have reasonable access to Mobility's business records and books of account, upon at least five (5) business days' prior notice and no more than once during each fiscal year, during Mobility's normal business hours for the purpose of determining whether the appropriate Commissions have been made to Sales Rep for the prior 12-month period. If any such audit discloses that Mobility has underpaid Sales Rep, Mobility agrees to pay any shortfall within thirty (30) days; provided, however, if Mobility disagrees with any underpayment, Mobility will direct its auditors to engage in discussions with Sales Rep's auditors in order to reach a mutually agreeable resolution of the issue. If any such audit discloses an underpayment of over five percent (5%) of amounts otherwise owed to Sales Rep, Mobility shall reimburse Sales Rep for the reasonable costs of the audit. If any audit discloses any overpayment to Sales Rep by Mobility, Sales Rep shall refund the amount of such overpayment within thirty (30) days. Notwithstanding anything to the contrary contained in this subsection (d), if during a calendar year the Total Operating Expenses (expressed as a percentage of the Permitted Sales Revenue of the Division) do not exceed the Maximum Overall Operating Expense Percentage for such calendar year, then in no event may Sales Rep audit or question any determination by Mobility to incur a particular cost or expense or take a particular action (e.g., hire personnel, purchase equipment, develop a product, sue for intellectual property infringement, etc); although Sales Rep may audit whether the allocation was proper. (e) Commissions Adjustments. Returns, allowances, other deductions from the sale price, or any other adjustments to the Commissions calculations shall be debited or credited, as appropriate, during the calendar quarter in which they arise. 4. EXPENSES. Mobility shall have no liability for any expenses that may be incurred by Sales Rep to carry out its obligations under this Agreement. Sales Rep agrees that it shall incur no expense chargeable to Mobility except as may be specifically authorized in advance and in writing by an authorized officer of Mobility. 5. MARKETING MATERIALS. Mobility will provide, without cost to Sales Rep, reasonable supplies of standard advertising literature and samples which Mobility deems to be required to encourage and facilitate the sale of the Mobility Products. In the event that a customer or potential customer desires or requires specialized marketing materials and/or advertising allowances in order to undertake a marketing or advertising program involving Mobility Products, Mobility and Sales Rep shall work together to determine the extent of Mobility's financial commitment thereto, if any; it being the intent of the Parties that Mobility will incur such types of expenses in situations where it is economically justified or "standard practice" (e.g., carrier co-op programs). Such commitments by Mobility will be deemed Direct Expenses of the Division. 6. NON-COMPETITION AND RESTRICTED ACTIVITIES. 6 (a) Sales Rep agrees that during the Term it will cause the Motorola Mobile Devices Business, as the same may be reorganized or restructured from time to time not to manufacture, have manufactured, offer to sell, sell, market or distribute any product that is a "Competitive Functional Equivalent". As used herein, "Competitive Functional Equivalent" shall mean any product that incorporates or utilizes iTip Technology. (b) Only Sales Rep's Mobile Devices Business, and no other part of Sales Rep including any Affiliates, ("Motorola MDB") hereby agrees that so long as Sales Rep owns any securities of Mobility, Motorola MDB will not directly or indirectly: [*]. (c) As used above, an "Affiliate" of any Party means any corporation, entity or person controlling, controlled by , or under common control with such Party. 7. INDEPENDENT CONTRACTOR RELATIONSHIP. The relationship of Sales Rep to Mobility shall be that of special representative for purposes of sales solicitation. Sales Rep shall not be considered the agent or legal representative of Mobility for any purpose, except as provided herein, and no officer, agent or employee of Sales Rep shall be considered as having employee status with Mobility. Sales Rep shall remain, for all purposes, an independent contractor and nothing in this Agreement shall constitute Sales Rep as an agent, representative, subsidiary, joint venture, partner, employee, or servant of Mobility for any purpose whatsoever. Sales Rep is not granted the right of authority to assume, or to create any obligation or responsibility, express or implied, on behalf of, or in the name of, Mobility, except as may be provided herein, or as may specifically be authorized in writing by an authorized official of Mobility. 8. TERM AND TERMINATION. (a) Initial Term. This Agreement shall be effective as of the Effective Date and shall remain in effect for fifteen (15) years following the Effective Date (the "Initial Term"). Thereafter, this Agreement shall automatically renew for subsequent one year periods (each, a "Renewal Term"), unless either Party terminates this Agreement by written notice to the other Party at least one hundred and twenty (120) days prior to the end of the Initial Term or any Renewal Term. The Initial Term and any Renewal Term(s) are collectively referred to herein as the "Term". Notwithstanding anything in this Agreement to the contrary: (i) Sales Rep may terminate this Agreement upon written notice to Mobility at any time after five (5) years following the Effective Date, in which case, all terms and provisions of this Agreement shall terminate and be of no further or effect; and (ii) if this Agreement expires at the end of any Initial Term or Renewal Term or is terminated by Sales Rep after the Initial Term then the provisions of Sections 3(a), (c), (d) and (e) and Section 6, as well as the applicable definitions in this Agreement, shall survive such expiration or termination, unless Sales Rep provides a written notice to Mobility at the time of such expiration or termination that Sales Rep elects to terminate the provisions of Sections 3(a), (c), (d) and (e) above, in which event all terms and provisions of this Agreement shall terminate and be of no further force or effect. - -------------------------------------------------------------------------------- * Confidential information on this page has been omitted and filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Request. 7 (b) Termination. In addition to the other termination rights set forth in this Agreement, a Party will only have the right to terminate this Agreement during the Term if (i) the non-terminating Party is declared or acknowledges that it is insolvent or otherwise unable to pay its debts as they become due or upon the filing of any proceeding (whether voluntary or involuntary) for bankruptcy, insolvency or relief from creditors; (ii) a Change of Control (defined below) of a Party has occurred; and/or (iii) the non-terminating Party has committed (through any act or omission) a material default or breach of any covenant, obligation, representation or warranty under this Agreement, and such default or breach has not been cured within thirty (30) days after receipt of written notice from the other Party specifying such default or breach. Any determination to terminate this Agreement following the expiration of such thirty (30) day notice shall be in writing and delivered to the other Party. Upon any such termination, this Agreement shall be null and void and of no further force or effect. "Change of Control" shall mean (a) the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of any Party; (b) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under such Act) of more than fifty percent (50%) of either: (i) the then outstanding shares of common stock of any Party hereto; (ii) the combined voting power of the then outstanding voting securities of any Party hereto entitled to vote generally in the election of directors; or (iii) the income and profits interest of the general partners or limited partners where the entity is a limited partnership; or (c) in the case of Mobility, the consummation of a reorganization, merger or consolidation or sale or other disposition of the Division. The right to terminate the Agreement as a result of a Change of Control shall lie only with the Party who did not have a Change of Control. (c) Liability Upon Termination. Neither Party shall be liable to the other, because of such termination, for compensation (other than Commission which may become payable as a result of orders accepted by Mobility prior to termination and released for shipment within ninety (90) days after such termination), reimbursement, or damages on account of the loss of prospective profits on anticipated sales, or on account of expenditures, investments, leases, or any type of commitments made in connection with the business of either caused by the termination of this Agreement. (d) Return of Materials. Upon termination, Sales Rep shall immediately return all proprietary and confidential material, including but not limited to price books, customer catalogues, installation drawings, sales manuals, designer guides and owner's manuals. (e) Mitigation of Damages. Upon the occurrence of an event creating grounds for termination under this Section 8, the Parties shall use commercially reasonable efforts to mitigate damages caused by the occurrence of such event. 9. CONFIDENTIALITY AND NON-DISPARAGEMENT. Each Party agrees to identify in writing as confidential or proprietary, or mark as confidential or proprietary, any information that either Party deems to be confidential information. Each Party agrees that information that is disclosed orally shall not be considered confidential information unless it is reduced to writing or to a written summary that identifies the orally-disclosed topics to be considered as confidential information and such writing is provided to the recipient at the time of disclosure or within thirty 8 (30) days thereafter. Each Party agrees to treat such confidential information as strictly confidential and shall take reasonable precautions to safeguard such information, shall not use it for any unauthorized purposes, and shall not disclose it to any third party without the prior written consent of the Party from whom it was obtained; provided, however, that the Party receiving the confidential information may disclose such information to its responsible officers, employees, agents and representatives who require such information for the purposes contemplated by this Agreement, provided that such persons shall be subject to the obligations of confidentiality provided in this Section 9. Notwithstanding this Section 9, confidential information shall not include information that: (i) the recipient can demonstrate by written evidence was lawfully in its possession prior to its first receipt of such information from the deliverer thereof; (ii) is independently developed by the recipient without use of any confidential information of the other Party; (iii) is or becomes available in the public domain at the time of disclosure or thereafter other than as a result of disclosure by the recipient; or (iv) is received from a third party with a legal or contractual right to disclose such information. Each Party agrees to conduct its business in such a way as not to damage the other's valuable reputation, or disparage such Party, its employees, directors, parent, subsidiaries, or affiliates. 10. LIMITATION OF LIABILITY. (a) TO THE EXTENT ALLOWED BY APPLICABLE LAW, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY LOSS OF PROFITS, LOSS OF USE OR DATA, INTERRUPTION OF BUSINESS, OR FOR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. (b) IN NO EVENT SHALL MOBILITY OR ITS SUPPLIERS BE LIABLE TO SALES REP FOR ANY UNAUTHORIZED REPRESENTATION OR WARRANTY MADE TO ANY THIRD PARTY BY SALES REP. 11. INDEMNIFICATION. (a) Indemnity. Subject to the limitations set forth in Section 10(a), each Party (the "Indemnifying Party") agrees to indemnify, defend and hold harmless the other Party and its officers, directors, employees, agents and subsidiaries, and each of its representatives, and its successors and permitted assigns (an "Indemnified Party") at all times from and after the Effective Date from and against Damages that the Indemnified Parties may at any time suffer or incur or become subject to as a direct or indirect result of: (i) any breach of any representation or warranty made by the Indemnifying Party in this Agreement; (ii) any breach or default in the performance by the Indemnifying Party of any of the covenants to be performed by the Indemnifying Party under this Agreement; (iii) any gross negligence, willful misconduct or dishonesty of the Indemnifying Party or its employees, agents, representatives, contractors or any other person under its control; (iv) any infringement of intellectual property rights of any third person resulting from any Party's use of any such intellectual property rights that is provided by the Indemnifying Party; or (v) any acts or omissions of the Indemnifying Party in violation of federal, state or local laws. 9 (b) Damages. For the purposes of this Agreement, the term "Damages" shall include all losses, costs, expenses, damages and liabilities incurred by, and all claims made and amounts finally awarded or charged against any Indemnified Party, including all payments and settlements in discharge thereof, and reasonable professional and attorneys' fees and expenses incurred in investigating or in attempting to avoid the same or oppose the imposition thereof (provided, however, that for claims between the Parties, Damages shall include attorneys' fees only under circumstances of the gross negligence or willful behavior of the Indemnifying Party), together with lawful interest thereon. The term "Damages" shall not include any amounts for which any Indemnified Party actually receives payment under an insurance policy, excluding self-insured amounts and deductible amounts which are deemed "Damages" hereunder. 12. GENERAL. (a) Notices. All notices hereunder given by a Party shall be in writing and shall be hand delivered or sent by U.S. Registered or Certified Mail, postage prepaid, return-receipt requested, or delivered by a courier company, prepaid, to the addresses indicated below. The addresses of the Parties until further written notice to the contrary are: Mobility: Mobility Electronics, Inc. 17800 Perimeter Drive, Suite 200 Scottsdale, Arizona 85255 Attn: Charles R. Mollo, CEO Sales Rep: Motorola, Inc. 600 North US Highway 45 Libertyville, Illinois 60048 Attn: President and CEO, Mobile Devices Business with a copy to: Motorola, Inc. 600 North US Highway 45 Libertyville, Illinois 60048 Attn: Law Director, Mobile Devices Business (b) Headings. The headings and captions used in connection with the Sections and paragraphs of this Agreement are inserted only for the purpose of reference. Such captions shall not be deemed to govern, limit, modify, or in any other manner affect the scope, meaning or intent of the provisions of this Agreement or any part thereof; nor shall such captions otherwise be given any legal effect. (c) Choice of Law. This Agreement shall be governed by, construed under, and enforced in accordance with the laws of the State of New York and applicable federal law, without reference to any conflicts of laws principles that may require reference to the laws of other jurisdictions. 10 (d) Severability. If any provision of this Agreement should be determined by a court of competent jurisdiction to be void or in any measure unenforceable, the Parties intend that such determination shall amend or modify this Agreement by eliminating or modifying only those provisions affected by the determination. (e) Amendments. This Agreement may be amended or modified only by a written agreement signed by both Parties. (f) Entire Agreement. This Agreement contains the complete statement of all the agreements between the Parties with respect to its subject matter, and cannot be changed or terminated orally, and will be binding upon and shall inure to the benefit of such Party's successors and permitted assigns. (g) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same document. (h) Assignment. Except where expressly provided in this Agreement to the contrary, a Party shall not assign or in any other way transfer this Agreement or any right or obligation hereunder, whether by operation of law or otherwise, without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed . This Section 12(h) shall not in any manner affect a Party's right to terminate this Agreement upon the occurrence of a Change of Control if permitted to do so under Section 8(b) above. 11 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the date first above written. MOBILITY ELECTRONICS, INC. By: /s/ Charles R. Mollo -------------------- Charles R. Mollo, Chief Executive Officer MOTOROLA, INC. By: /s/ Susan M. Fullman -------------------- Susan M. Fullman, Corporate Vice President Customer Solutions & Support Motorola Mobile Devices 12 EXHIBIT A ITIP TECHNOLOGY ISSUED POWER PATENTS
ISSUED PATENT # TITLE - --------------- ----- 5,347,211 Selectable Output Power Converter 6,643,158 Dual input AC/DC to Programmable DC Output Converter 6,700,808 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing A Secondary Buck Converter 6,650,560 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing Single-Loop Optical Feedback 6,751,109 Dual Input AC/DC Battery Operated Power Supply 6,064,177 Two-Part Battery Charger/Power Cable Article with Multiple Device Capability 6,433,274 Power Converter Device Dual Input AC/DC to Programmable DC 6,775,163 Output Converter 6,791,853 Dual Input AC/DC Power Converter Having a Programmable Peripheral Power Hub Module D2004/1351/A Singapore - 5 Watt Connector Solid Lines D2004/1352/H Singapore - 5 Watt Receptacle Solid Lines D2004/1353/D Singapore - 15 Watt Connector Solid Lines D2004/1354/J Singapore - 15 Watt Receptacle Solid Lines D2004/1355/G Singapore - 25 Watt Connector Solid Lines
A-1 D2004/1356/C Singapore - 25 Watt Receptacle Solid Lines D2004/1357/Z Singapore - 35 Watt Connector Solid Lines D2004/1358/F Singapore - 35 Watt Receptacle Solid Lines 157405 Australia - 15 Watt Connector Solid Lines 157401 Australia - 15 Watt Receptacle Solid Lines 157404 Australia - 15 Watt Connector Solid Lines 157507 Australia - 15 Watt Receptacle Solid Lines 157403 Australia - 15 Watt Plug only 157400 Australia - 25 Watt Receptacle Solid Lines 157406 Australia - 25 Watt Connector Solid Lines 157503 Australia - 25 Watt Receptacle Solid Lines 157506 Australia - 25 Watt Plug only 157402 Australia - 35 Watt Receptacle Solid Lines 157399 Australia - 35 Watt Connector Solid Lines 157505 Australia - 35 Watt Receptacle Solid Lines 157502 Australia - 35 Watt Connector Solid Lines 157508 Australia - 35 Watt Plug only

PENDING POWER PATENT APPLICATIONS
SERIAL # TITLE 10/790,654 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing A Secondary Buck Converter 10/715,259 Dual Input AC and DC Power Supply Having A Programmable DC Output Utilizing Single-Loop Optical Feedback
A-2 US02/03542 PCT Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing A Secondary Buck Converter US02/34766 PCT Dual Input AC/DC Battery Operated Power Supply US02/34749 PCT Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing Single-Loop Optical Feedback US02/34748 PCT Dual Input AC/DC to Programmable DC Output Converter 10/623,060 Programmable Power Converter 60/494,860 Dual Input AC/DC Fuel Cell Operated Power Supply 10/663,868 Compact Electronics Plenum 60/525,857 Retractable Cable System For Power Converter 02707726.2 Dual Input AC and DC Power Supply Having a Programmable DC Output (Europe) 02815764.8 Dual Input AC and DC Power Supply Having a Programmable DC Output (China) 10-2004-7002345 Dual Input AC and DC Power Supply Having a Programmable DC Output (South Korea) 2003-541,122 Dual Input AC and DC Power Supply Having a Programmable DC Output (Japan) 2004104345 Dual Input AC and DC Power Supply Having a Programmable DC Output (Russia) 2002242115 Dual Input AC and DC Power Supply Having a Programmable DC Output (Australia) 160167 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing a Secondary Buck Converter (Israel) 2004/0930 Dual Input AC and DC Power Supply Having a Programmable DC Output (South Africa)

A-3 00315/DELNP/2004 Dual Input AC and DC Power Supply Having a Programmable DC Output (India) 2004 0455 Dual Input AC and DC Power Supply Having a Programmable DC Output (Norway) 200400703-5 Dual Input AC and DC Power Supply Having a Programmable DC Output (Singapore) 2,454,044 Dual Input AC and DC Power Supply Having a Programmable DC Output (Canada) 10/790,877 Key Universal Power Tip and Power Source Connectors US2004/007084 PCT Dual Input AC/DC Power Converter Having A Programmable Peripheral Power Hub Module US04/16292 PCT Key Universal Power Tip and Power Source Connectors 10-2004-7006621 Dual Input AC/DC Battery Operated Power Supply (South Korea) 2003-541,121 Dual Input AC/DC Battery Operated Power Supply (Japan) 2002342210 Dual Input AC/DC Battery Operated Power Supply (Australia) US02/34766 Dual Input AC/DC Battery Operated Power Supply ( China) 02776371.3 Dual Input AC/DC Battery Operated Power Supply (Europe) 2,466,162 Dual Input AC/DC Battery Operated Power Supply (Canada) 01172/DELNP/200 Dual Input AC/DC Battery Operated Power Supply (India) US04/19301 PCT Programmable Power Converter US04/16292 Key Universal Power Tip and Power Source Connectors (China)

A-4 10-2004-7013263 Key Universal Power Tip and Power Source Connectors (South Korea) US04/16292 Key Universal Power Tip and Power Source Connectors (Japan) US04/16292 Key Universal Power Tip and Power Source Connectors (Russia) 2004208705 Key Universal Power Tip and Power Source Connectors (Australia) US04/16292 Key Universal Power Tip and Power Source Connectors (Israel) 2004/6728 Key Universal Power Tip and Power Source Connectors (South Africa) US04/16292 Key Universal Power Tip and Power Source Connectors (India) US04/16292 Key Universal Power Tip and Power Source Connectors (Norway) US04/16292 Key Universal Power Tip and Power Source Connectors (Singapore) 2,475,060 Key Universal Power Tip and Power Source Connectors (Canada) 29/198,752 CONNECTOR ( 5 Watt Connector TIP) 29/198,801 CONNECTOR (15 Watt Connector TIP) 29/198,777 CONNECTOR (25 Watt Connector TIP) 29/198,775 CONNECTOR (35 Watt Connector TIP) 29/198,754 CONNECTOR ( 5 Watt Receptacle) 29/198,776 CONNECTOR (15 Watt Receptacle) 29/198,755 CONNECTOR (25 Watt Receptacle) 29/198,756 CONNECTOR (35 Watt Receptacle) 29/206,090 CONNECTOR (5 Watt Connector-Revised)

A-5 29/206,089 CONNECTOR (5 Watt Receptacle-Revised) CANADA 08-901134CA 5 Watt Connector Dashed/Solid Lines 08-901135CA 5 Watt Receptacle Dashed/Solid Lines 08-901136CA 15 Watt Connector Dashed/Solid Lines 08-901137CA 15 Watt Receptacle Dashed/Solid Lines 08-901138CA 25 Watt Connector Dashed/Solid Lines 08-901139CA 25 Watt Receptacle Dashed/Solid Lines 08-901140CA 35 Watt Connector Dashed/Solid Lines 08-901141CA 35 Watt Receptacle Dashed/Solid Lines CHINA DIM040859 5 Watt Connector/Receptacle Solid Lines DIM040860 15 Watt Connector/Receptacle Solid Lines DIM040869 25 Watt Connector/Receptacle Solid Lines DIM040870 35 Watt Connector/Receptacle Solid Lines EUROPE 000213889 5 Watt Connector/Receptacle (Revised) 000188958 15,25,35 Watt Connector/Receptacle INDIA TBD 5 Watt Connector Solid Lines TBD 5 Watt Receptacle Solid Lines TBD 15 Watt Connector Solid Lines TBD 15 Watt Receptacle Solid Lines TBD 25 Watt Connector Solid Lines

A-6 TBD 25 Watt Receptacle Solid Lines TBD 35 Watt Connector Solid Lines TBD 35 Watt Receptacle Solid Lines ISRAEL 39540 5-35 Watt Connector/Receptacle Dashed/Solid JAPAN 2004-023,370 5 Watt Connector Dashed/Solid Lines 2004-023,371 5 Watt Receptacle Dashed/Solid Lines 2004-023,377 15 Watt Connector Dashed/Solid Lines 2004-023,378 15 Watt Receptacle Dashed/Solid Lines 2004-023,379 25 Watt Connector Dashed/Solid Lines 2004-023,381 25 Watt Receptacle Dashed/Solid Lines 2004-023,383 35 Watt Connector Dashed/Solid Lines 2004-023,384 35 Watt Receptacle Dashed/Solid Lines NORWAY TBD 5-35 Watt Connector/Receptacle RUSSIA 2004502018 5-35 Watt Connectors - Solid Lines 2004502019 5-35 Watt Receptacle - Solid Lines SOUTH AFRICA 2004/1001 5 Watt Connector Dashed/Solid Lines 2004/1000 5 Watt Receptacle Dashed/Solid Lines 2004/1003 15 Watt Connector Dashed/Solid Lines 2004/1002 15 Watt Receptacle Dashed/Solid Lines

A-7 2004/1005 25 Watt Connector Dashed/Solid Lines 2004/1004 25 Watt Receptacle Dashed/Solid Lines 2004/1007 35 Watt Connector Dashed/Solid Lines 2004/1006 35 Watt Receptacle Dashed/Solid Lines SOUTH KOREA 30-2004-0023709 5 Watt Connector Dashed Lines 30-2004-0023710 5 Watt Receptacle Dashed Lines 30-2004-0023711 15 Watt Connector Dashed Lines 30-2004-0023712 15 Watt Receptacle Dashed Lines 30-2004-0023713 25 Watt Connector Dashed Lines 30-2004-0023714 25 Watt Receptacle Dashed Lines 30-2004-0023715 35 Watt Connector Dashed Lines 30-2004-0023716 35 Watt Receptacle Dashed Lines TAIWAN 93304600 5 Watt Connector Dashed/Solid Lines 93304601 5 Watt Receptacle Dashed/Solid Lines 93304602 15 Watt Connector Dashed/Solid Lines 93304603 15 Watt Receptacle Dashed/Solid Lines 93304604 25 Watt Connector Dashed/Solid Lines 93304605 25 Watt Receptacle Dashed/Solid Lines 93304606 35 Watt Connector Dashed/Solid Lines 93304607 35 Watt Receptacle Dashed/Solid Lines

A-8 EXHIBIT B ITIP PRODUCTS 1. Low-Power (70 watts or less) combination AC/DC power adapters for cell phones, digital cameras, MP3 players, game boys, DVD players, and other electronic devices (the "Squirt" and "Squirt Derivative"), but not for use with Portable Computers. 2. Low-Power (70 watts or less) cigarette lighter adapters (CLA) for cell phones, digital cameras, MP3 players, game boys, DVD players, and other electronic devices, but not for use with Portable Computers. 3. Low-Power (70 watts or less) mobile AC power adapters for cell phones, digital cameras, MP3 players, game boys, DVD players, and other electronic devices, but not for use with Portable Computers. 4. Dual Power. 5. iTips (i.e., tips) for the above power products or any other iTip Products. COMPUTER PRODUCTS 1. 65 watt, 70 watt, 90 watt, 120 watt, 130 watt, and other power versions of Mobility's combinations AC/DC universal power adapters (i.e., Juice or Everywhere Power) for Portable Computers with simultaneous charging of a secondary device. 2. 65 watt, 70 watt, 90 watt, 120 watt, 130 watt, and other power versions of Mobility's AC universal power adapters (ICE or wall power) for Portable Computers with simultaneous charging of a secondary device. 3. 65 watt, 70 watt, 90 watt, 120 watt, 130 watt, and other power versions of Mobility's DC universal power adapters (power extender or auto power) for Portable Computers with simultaneous charging of a secondary device. 4. Any tip or iTip for any of the above products. B-1 EXHIBIT C EXCLUDED CUSTOMERS FOR COMPUTER PRODUCTS [*] - -------------------------------------------------------------------------------- * Confidential information on this page has been omitted and filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Request. C-1 EXHIBIT D EXISTING MOBILITY SALES POLICIES The following summarizes the standard policies adhered to by the Mobility Electronics, Inc. ("Mobility") sales force and sales agents acting on behalf of Mobility sales management. These policies are continually under review and subject to amendment as deemed necessary for the effective management of new and existing sales opportunities. Approval for deviation from the following policies is available only from Mobility sales management and must be in written documented form. SALES POLICIES PAYMENT TERMS NET 30 DAYS. EXCEPTIONS WILL BE CONSIDERED BY MOBILITY'S CONTROLLER AND/OR CREDIT MANAGER ON A CASE BY CASE BASIS. CREDIT LIMITS POTENTIAL NEW CUSTOMERS MUST SUBMIT A CREDIT APPLICATION. DETERMINATION OF CREDIT LIMIT WILL BE MADE BY MOBILITY'S CREDIT MANAGER. MARKETING DEVELOPMENT FUNDS PROPOSALS FOR ECONOMICALLY JUSTIFIED MARKET DEVELOPMENT FUNDS WILL BE CONSIDERED ON A CASE BY CASE BASIS. ALL SUCH PROGRAMS REQUIRE PRIOR APPROVAL FROM MOBILITY MANAGEMENT. POWER PRODUCT BRANDING POWER PRODUCTS MUST CONTAIN "ITIP" COMPATIBLE BRANDING, IN ACCORDANCE WITH MOBILITY'S BRANDING GUIDELINES. LICENSE TO UTILIZE "IGO" BRANDING AVAILABLE UPON TERMS AGREEABLE TO MOBILITY MANAGEMENT. ALL PACKAGING AND BRANDING MUST COMPLY WITH MOBILITY TRADEMARK USAGE GUIDELINES AND REQUIRES MOBILITY PRIOR WRITTEN REVIEW AND APPROVAL. PRICING QUOTATIONS SEE MOBILITY PRICING MATRIX FOR CUSTOMER DEFINITIONS AND PRICING TIERS. ALL PRICE QUOTES MUST COMPLY WITH THIS PRICE STRUCTURE, UNLESS PRIOR WRITTEN APPROVAL IS OBTAINED FROM MOBILITY. THE PRICING MATRIX IS CONFIDENTIAL AND CANNOT BE DISCLOSED TO ANY THIRD PARTY; PROVIDED, HOWEVER, IF NECESSARY TO MAKE A SALE, THE SPECIFIC PRICING TIER INFORMATION CAN BE SHARED WITH A CUSTOMER (BUT ONLY THE PRICING WITH RESPECT TO THE APPLICABLE CUSTOMER TIER). D-1 ORDER SUBMISSION AND ACCEPTANCE VERBAL ORDERS ARE NOT ACCEPTABLE. FACSIMILE, MAIL OR ELECTRONIC SUBMISSION REQUIRED FOR ALL ORDERS. ALL ORDERS REQUIRE MOBILITY'S PRIOR WRITTEN ACCEPTANCE. MOBILITY ELECTRONICS 17800 NORTH PERIMETER DRIVE, SUITE 200 SCOTTSDALE, AZ 85255 FAX 480-281-7742 EMAIL - BSTECH@MOBL.COM, ANEWBY@MOBL.COM OR MEAGLESPIRIT@MOBL.COM LEAD-TIME FOR ORDER SHIPMENT CUSTOMER MUST PROVIDE MOBILITY WITH A 16-WEEK ROLLING FORECAST FOR PLANNING PURPOSES ONLY. ORDER LEAD-TIME FOR "DERIVATIVE" PRODUCTS (DIFFERENT CABLES, TIPS, PACKAGING, ETC) IS 16-WEEKS. ORDER LEAD-TIME FOR REPLENISHMENT OF EXISTING PRODUCTS (NO CHANGES) IS 12 WEEKS. ORDER CANCELLATION AND RE-SCHEDULING FACSIMILE, MAIL OR ELECTRONIC SUBMISSION REQUIRED FOR ALL ORDER CANCELLATIONS AND RE-SCHEDULED DELIVERY DATES. MOBILITY ELECTRONICS 17800 NORTH PERIMETER DRIVE, SUITE 200 SCOTTSDALE, AZ 85255 FAX 480-281-7742 EMAIL - BSTECH@MOBL.COM, ANEWBY@MOBL.COM OR MEAGLESPIRIT@MOBL.COM D-2 OPEN PURCHASE ORDERS MAY BE MODIFIED UPON WRITTEN NOTICE PER THE FOLLOWING SCHEDULE:
BEFORE INCREASE DECREASE CANCEL RESCHEDULE SHIPMENT --------------- -------- -------- ------ ---------- ~~31-60 DAYS 15% 15% 0% 50% (UP TO 60 DAYS) 61-90 DAYS 50% 50% 25% 100% (UP TO 60DAYS) 90+ DAYS 100% 100% 100%~~
CANCELLED ORDERS WILL NOT RELEASE CUSTOMER FROM LONG LEAD-TIME COMPONENTS (DEFINED AS BEYOND 60 DAYS LEAD-TIME FOR ANY GIVEN COMPONENT). SHIPPING TERMS FOB POINT OF MANUFACTURE, UNLESS OTHERWISE APPROVED BY MOBILITY IN WRITING. RETURNS DEFECTIVE MATERIALS ARE RETURNABLE FOR CREDIT UPON VERIFICATION OF FAILURE BY MOBILITY ELECTRONICS OR AUTHORIZED 3RD PARTY TESTING PARTY. CREDIT PROVIDED UPON FAILURE VERIFICATION. NON-DEFECTIVE MATERIALS WILL BE RETURNED TO CUSTOMER AND CUSTOMER WILL BE CHARGED FOR REPACKING, HANDLING, SORTING AND TESTING OF THE NON-DEFECTIVE MATERIALS. WARRANTY SEE SPECIFIC PRODUCT FOR APPLICABLE WARRANTY. RETURN MATERIAL AUTHORIZATION (RMA) FACSIMILE, MAIL OR ELECTRONIC SUBMISSION REQUIRED FOR ALL RMA REQUESTS. MOBILITY ELECTRONICS 17800 NORTH PERIMETER DRIVE, SUITE 200 SCOTTSDALE, AZ 85255 FAX 480-281-7742 EMAIL - BSTECH@MOBL.COM, ANEWBY@MOBL.COM OR MEAGLESPIRIT@MOBL.COM UPON RECEIPT AND ACCEPTANCE, MOBILITY ELECTRONICS WILL PROVIDE CUSTOMER WITH RMA NUMBER AND SHIPPING INSTRUCTIONS. D-3 EXHIBIT E TRANSITION PLAN During the "Transition Period," as defined below, RadioShack Corporation ("RadioShack") shall purchase the following products (the "Listed Products") from Mobility at the following prices for re-sale exclusively through the RadioShack Channels:
PRODUCT TRANSITION PRICE COMMENT - ------- ---------------- ------- [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
"Transition Period" shall mean the period between March 31, 2005 and the earlier of (a) December 31, 2005 and (b) the date on which RadioShack's iTips Product Commission, as defined in and pursuant to that certain Sales Representative Agreement between RadioShack and Mobility dated as of March 31, 2005 (the "iTip Sales Rep Agreement"), equals or exceeds, on a pro forma basis, the following: (i) the number of units of above Listed Products sold by RadioShack for a calendar quarter, multiplied by (ii) the cost of the above Listed Products to RadioShack per Mobility's most favorable pricing for retail customers purchasing similar volumes minus the cost of the above Listed Products at the costs listed above. [*]. No iTips Product Commission will be paid by Mobility to RadioShack or Sales Rep on sales of the above Listed Products to RadioShack until the Transition Period expires. - -------------------------------------------------------------------------------- * Confidential information on this page has been omitted and filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Request. E-1 EX-10.2 8 p70452exv10w2.txt EXHIBIT 10.2 EXHIBIT 10.2 SALES REPRESENTATIVE AGREEMENT This Sales Representative Agreement (the "Agreement") is made and entered into as of March 31, 2005 (the "Effective Date"), by and between MOBILITY ELECTRONICS, INC., a Delaware corporation and its affiliates having its principal office at 17800 N. Perimeter Dr., Suite 200, Scottsdale, Arizona 85255 ("Mobility") and RADIOSHACK CORPORATION, a Delaware corporation, and its affiliates having its principal office at 300 RadioShack Circle, Fort Worth, Texas 76102 ("Sales Rep"). Mobility and Sales Rep are sometimes each referred to herein as a "Party" and collectively, as the "Parties". 1. FORMATION OF DIVISION. (a) Formation. Effective as of the Effective Date, Mobility will, for purposes of this Agreement, form a division of Mobility for the purpose of designing, developing, manufacturing, marketing and selling iTip Products (the "Division"). The Parties acknowledge and agree that the Division will not be a separate legal entity, but will be part of Mobility. (b) Resources and Expenses. The Division will utilize employees and resources of Mobility, but will maintain its own accounting records. The Division will be allocated the cost of dedicated personnel, resources and expenses (the "Direct Expenses"), a percentage of the cost of intellectual property filings, defense, enforcement and protection that is related to iTip Technology (the "IP Expenses") as provided below and a reasonable portion of any Mobility shared personnel, resources and expenses incurred on behalf of the Division (the "Indirect Expenses"); it being agreed and understood that: (i) all Permitted Sales Revenues (as defined below), cost of goods sold, and Direct Expenses shall be determined in accordance with generally accepted accounting principles, consistently applied ("GAAP"); (ii) 50% of the IP Expenses shall be allocated to the Division, and (iii) a reasonable portion of the quarterly Indirect Expenses shall be allocated to the Division; provided, however, that notwithstanding the above, the total sales, marketing, research and development and general and administrative expenses, Indirect Expenses and IP Expenses of the Division (excluding the iTip Products Commission (and any similar commission to any other sales representative of Mobility)) (the "Total Operating Expenses") shall not exceed (1) if the Permitted Sales Revenues of the Division for any calendar year is less than $50 million, thirty percent (30%) of the Permitted Sales Revenue of the Division for such calendar year; (2) if the Permitted Sales Revenue of the Division for any calendar year is at least $50 million but less than $100 million, the lesser of (A) twenty five percent (25%) of the Permitted Sales Revenue of the Division for such calendar year, or (B) the percentage equal to Mobility's overall sales, marketing, research and development, and general and administrative expenses as compared to its overall revenues (net of returns and allowances) for such calendar year (for each calendar year, the "Maximum Overall Operating Expense Percentage"); (3) if the Permitted Sales Revenue of the Division for any calendar year is $100 million or more, the lesser of (A) twenty percent (20%) of the Permitted Sales Revenue of the Division for such calendar year, or (B) the Maximum Overall Operating Expense Percentage for such calendar year. The limitations set forth in (1), (2) and (3) of the previous sentence being collectively referred to as the "Maximum Percentages". 1 (c) Management. The Division will be under the management and control of Mobility. 2. ENGAGEMENT OF SERVICES. (a) Generally. Sales Rep will serve as Mobility's non-exclusive, worldwide representative for the sale of Mobility's Computer Products and Mobility's iTip Products (collectively, the "Mobility Products"). For purposes of this Agreement: (i) "Computer Products" means Mobility's existing line of universal power products for computers (including notebook, laptop, handheld, tablet computers and the like, but excluding personal digital assistants, wireless internet (or e-mail devices), smartphones and the like (the "Portable Computers")) and all future versions (including expanded functionality), modifications, enhancements, and derivatives to such products, and any new universal power product for Portable Computers which is 60 watts or more in power and is offered for sale by Mobility from time to time. Such products may also include features for charging non-computer mobile electronic devices. Some of the current Computer Products currently offered for sale by Mobility are listed in Exhibit B attached hereto. (ii) "iTips" means any tip, cord or removable or interchangeable item that utilizes iTip Technology to remotely program a power product (including the remote programming of any iTip Product) to correctly determine and provide the appropriate voltage, current and/or power requirements for the purpose of operating or charging the battery for an electronic device (e.g., cell phones, PDA's, digital cameras, MP3 players, CD players, and the like). (iii) "iTip Products" means Mobility's existing line of universal power products for use with mobile electronic devices and all future versions (including expanded functionality), modifications, enhancements, and derivatives to such products, and any new universal power products offered for sale by Mobility from time to time, which: (i) are 70 watts or less in power; (ii) utilize iTip Technology; and (iii) cannot be used to power or charge a Portable Computer. Some of the current iTip Products currently offered for sale by Mobility are listed in Exhibit B attached hereto. (iv) "iTip Technology" means the underlying iTip, combination AC/DC, simultaneous charging and other related Intellectual Property Rights (as defined below) of Mobility that are incorporated into the iTips and products of Mobility that utilize iTips, including, but not limited to, the patents and patents pending listed on Exhibit A attached hereto. (b) Sales Channels and Territory. (i) Sales Rep shall have the worldwide right to act as Mobility's sales representative for the sale of Mobility Products; provided, however, that in the event of any channel conflict issues affecting Sales Rep, Mobility shall consult with Sales Rep regarding such issues and give due consideration to the input 2 provided by Sales Rep. Mobility shall then resolve such issues in a manner which considers the interests of all Parties and third parties involved in the channel conflict issue (including, without limitation, consideration of Sales Rep's pre-existing relationships with its customers). In the event that Sales Rep does not accept Mobility's resolution of the channel conflict issue, Sales Rep can appeal such decision to the Chief Executive Officer, President or Chief Operating Officer of Mobility, who shall make the final determination of such channel conflict issue. If following such final determination Sales Rep still does not accept such resolution, Sales Rep may terminate this Agreement without liability upon written notice to Mobility, in which event, this Agreement shall be null and void and of no further force or effect. Notwithstanding anything in this Agreement to the contrary, Sales Rep will not have the right to sell Computer Products to the customers identified in Exhibit C attached hereto, except as approved in advance in writing by Mobility from time to time. Sales Rep will use good faith efforts to market the Mobility Products through: (1) the RadioShack Channels (as defined below); [*] and (iv) to other persons as agreed to by the Parties from time to time. (ii) [*] The Parties agree that for a thirty (30) day period following the Effective Date, the Parties will use reasonable commercial efforts to develop a mutually agreeable plan for the Parties to pursue the European retail market for "iGo" branded Mobility Products; it being agreed and understood that Mobility's Chief Executive Officer will be involved in such efforts, as well as appropriate representatives of Sales Rep. (c) Sales Policies. All sales activities conducted by Sales Rep pertaining to the Mobility Products will be in accordance with the sales policies of Mobility, which sales policies are attached hereto as Exhibit D (which sales policies may be changed by Mobility from time to time after prior written notice to, and notice and consultation with, Sales Rep). In the event that Sales Rep does not accept any change made by Mobility to its sales policy, Sales Rep can appeal such decision to the Chief Executive Officer, President or Chief Operating Officer of Mobility, who shall make the final determination of such sales policy change. If following such final determination Sales Rep still does not accept such sales policy change, Sales Rep may terminate this Agreement without liability upon written notice to Mobility, in which event, this Agreement shall be null and void and of no further force or effect. All orders for the Mobility Products shall be solicited at prices specified by Mobility. Sales Rep acknowledges specifically that all sales solicitations are to be made on the basis of Mobility's sales policy as provided in Exhibit D, as may be changed as provided above. - -------------------------------------------------------------------------------- * Confidential information on this page has been omitted and filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Request. 3 (d) Sales Orders. All sales orders and agreements relating to the purchase of Mobility Products shall be subject to approval by Mobility, and all contracts and purchase orders shall be executed and placed with Mobility. Mobility's approval of a sales order or agreement relating to the purchase of Mobility Products shall be based primarily on Sales Rep's compliance with Mobility's sales policies. Sales Rep shall promptly notify Mobility with respect to any and all customers who are interested in purchasing Mobility Products, and any and all potential customer issues. If Sales Rep desires pre-approval by Mobility of a sales order for a particular potential customer, Mobility shall, upon the request of Sales Rep, provide Sales Rep certain terms and conditions for such pre-approval (e.g., quantity, price, payment terms and delivery schedule). Notwithstanding anything to the contrary contained in this Agreement, no order for Mobility Products shall be binding unless accepted in writing by an authorized representative of Mobility (except that any pre-approved conditions quoted by Mobility to Sales Rep for a particular potential customer for a specified order shall be binding upon Mobility for that particular customer pertaining to such specified order). (e) Collection Activities. Mobility shall be responsible for the collection of all accounts receivable relating to the sale of Mobility Products, but Sales Rep agrees to provide reasonable assistance to Mobility in this area for customers of Mobility managed by Sales Rep (e.g., making phone calls, requesting payment and/or other communications with the customer) as reasonably requested by Mobility from time to time. (f) Rolling Forecast. Mobility and Sales Rep will work together to formulate, on a monthly basis, a detailed, non-binding, rolling 12-month forecast for: (i) Sales Rep's sales of Mobility Products (broken-down by product, customer and geography) on behalf of Mobility; and (ii) Mobility's manufacturing and delivery schedule and backlog, with the first forecast being completed on or prior to April 30, 2005. (g) Customer Support and Other Product Issues. Except as otherwise specified herein, Mobility shall be responsible for all Mobility Product related issues (and expenses), including, without limitation, technical support and warranty issues. Furthermore, Sales Rep will not hold any inventory under this Agreement nor will Sales Rep be responsible for any costs of distribution programs established by Mobility. Notwithstanding the above, all of the costs and expenses described above in this subsection (g) shall be considered costs and expenses of the Division and shall be paid for by the Division. (h) Representations and Warranties. Mobility represents and warrants that it is under no obligation or restriction, and it will not assume or incur any such obligation or restriction, that does or would in any material way interfere or conflict with the performance of this Agreement by Mobility. Mobility represents and warrants that (i) it has and will have full and sufficient title and/or right and interest to the Mobility Products and underlying technology to grant the rights to Sales Rep that are granted pursuant to this Agreement; and (ii) neither the execution or performance by Mobility of this Agreement, nor the consummation of any transactions contemplated herein does or will (a) violate any law, order, regulation or ruling applicable to Mobility, or (b) infringe any intellectual or other property, personal or contract rights of any third party. To the extent permitted under Regulation FD, Mobility agrees to promptly inform Sales Rep upon the occurrence of: (i) Mobility's receipt of any third party intellectual property infringement claims and any third party material lawsuits, in either case, 4 which affects the Division or the iTip Technology; (ii) any change to the composition of Mobility's senior management team; and (iii) any decision by Mobility to undergo a Change in Control (as defined in Section 8(b)) or to enter into a joint venture, partnership or acquire all or substantially all of the assets of a third party, in any case, which affects the Division or the iTip Technology. (i) Most Favored Sales Representative. Mobility represents and warrants that it will not enter into any sales representative agreement related to iTip Products which provides for a "profits participation" type of sharing arrangement similar to that of Section 3(a) below on terms and conditions more favorable than those set forth in this Agreement. 3. COMMISSIONS. (a) Commissions for iTip Products. Mobility will pay Sales Rep a commission, payable on a calendar quarterly basis, equal to twenty-four and one half percent (24.5%) of the "Pre-Commission EBIT" earned by the Division during each calendar quarter (collectively, the "iTip Products Commission"); provided, however, if Pre-Commission EBIT for any period is a negative number (i.e., a loss for such period) (an "EBIT Loss"), then the EBIT Loss shall be allocated entirely to Mobility, and for any subsequent period(s) in which there is a positive pre-Commission EBIT, Mobility shall be allocated all of such Pre-Commission EBIT until Mobility recovers all EBIT Loss previously allocated to Mobility. For purposes of calculating the Commission, the following terms shall have the following meanings: (i) "Pre-Commission EBIT" means Permitted Sales Revenues of the Division for iTip Products less: (1) returns and allowances for iTip Products; (2) cost of goods sold of the Division for iTip Products (excluding cost of goods sold for products where the revenue is excluded from the definition of Permitted Sales Revenue (as provided in such definition)); (3) the Direct Expenses of the Division; (4) the IP Expenses; and (5) the Indirect Expenses of the Division. (ii) "Permitted Sales Revenues" means all revenues (including without limitation, licensing revenues and sales revenues) of the Division for iTip Products and/or iTip Technology, excluding: (1) the Computer Portion of the sales revenues attributable to any product that is an iTip Product, but is bundled with any one or more Computer Products; and (2) revenues generated from the sale of the products through the RadioShack Channel during the transition period as provided for in Exhibit E attached hereto. As used above, (i) "Computer Portion" shall mean that portion of sales revenue for the bundled product multiplied by a fraction, the numerator of which shall be the manufactured suggested retail price of the Computer Product contained in such bundled product, and the denominator of which shall be the manufactured suggested retail price of the iTip Product portion of the bundled product plus the manufactured suggested retail price of the Computer Product contained in such bundled product (provided, however, that the portion remaining after excluding the Computer Portion must be greater than the manufacturing cost of the iTip Product portion of the bundled product); and (ii) "RadioShack Channels" shall mean RadioShack Corporation's retail stores (including its dealer/franchise stores, but excluding its Sam's Club 5 program, and its Sprint kiosk program) in the United States and its territories and Mexico, and RadioShack.com. (b) Commissions for Computer Products. Mobility will pay Sales Rep a commission, payable on a calendar quarterly basis, equal to three percent (3.0%) of the sales price (net of returns and allowances) for any Computer Product sold by Sales Rep under this Agreement during each calendar quarter; provided, however, for any Computer Product bundled with any iTip Product, such commission shall be reduced by the three percent (3.0%) of the iTip Portion (the "Computer Products Commission", and collectively with the iTip Products Commission, the "Commissions"). As used above, "iTip Portion" shall mean that portion of sales revenue for the bundled product multiplied by a fraction, the numerator of which shall be the manufactured suggested retail price of the iTip Product contained in such bundled product, and the denominator of which shall be the manufactured suggested retail price of the iTip Product portion of the bundled product plus the manufactured suggested retail price of the Computer Product contained in such bundled product. (c) Payments. Within twenty (20) days after the end of each calendar quarter, Mobility shall provide a report to Sales Rep setting forth the Commission due to Sales Rep for such calendar quarter (the "Commission Report"), and shall pay such Commissions concurrent with the delivery of the Commission Report. (d) Audit Rights. Mobility agrees to make and maintain such books, records and accounts as are reasonably necessary to verify the accuracy of the Commissions payments made to Sales Rep. Mobility agrees that it will, at the sole expense of Sales Rep, permit Sales Rep's auditors to have reasonable access to Mobility's business records and books of account, upon at least five (5) business days' prior notice and no more than once during each fiscal year, during Mobility's normal business hours for the purpose of determining whether the appropriate Commissions have been made to Sales Rep for the prior 12-month period. If any such audit discloses that Mobility has underpaid Sales Rep, Mobility agrees to pay any shortfall within thirty (30) days; provided, however, if Mobility disagrees with any underpayment, Mobility will direct its auditors to engage in discussions with Sales Rep's auditors in order to reach a mutually agreeable resolution of the issue. If any such audit discloses an underpayment of over five percent (5%) of amounts otherwise owed to Sales Rep, Mobility shall reimburse Sales Rep for the reasonable costs of the audit. If any audit discloses any overpayment to Sales Rep by Mobility, Sales Rep shall refund the amount of such overpayment within thirty (30) days. Notwithstanding anything to the contrary contained in this subsection (d), if during a calendar year the Total Operating Expenses (expressed as a percentage of the Permitted Sales Revenue of the Division) do not exceed the Maximum Overall Operating Expense Percentage for such calendar year, then in no event may Sales Rep audit or question any determination by Mobility to incur a particular cost or expense or take a particular action (e.g., hire personnel, purchase equipment, develop a product, sue for intellectual property infringement, etc); although Sales Rep may audit whether the allocation was proper. (e) Commissions Adjustments. Returns, allowances, other deductions from the sale price, or any other adjustments to the Commissions calculations shall be debited or credited, as appropriate, during the calendar quarter in which they arise. 6 4. EXPENSES. Mobility shall have no liability for any expenses that may be incurred by Sales Rep to carry out its obligations under this Agreement. Sales Rep agrees that it shall incur no expense chargeable to Mobility except as may be specifically authorized in advance and in writing by an authorized officer of Mobility. 5. MARKETING MATERIALS. Mobility will provide, without cost to Sales Rep, reasonable supplies of standard advertising literature and samples which Mobility deems to be required to encourage and facilitate the sale of the Mobility Products. In the event that a customer or potential customer desires or requires specialized marketing materials and/or advertising allowances in order to undertake a marketing or advertising program involving Mobility Products, Mobility and Sales Rep shall work together to determine the extent of Mobility's financial commitment thereto, if any; it being the intent of the Parties that Mobility will incur such types of expenses in situations where it is economically justified or "standard practice" (e.g., carrier co-op programs). Such commitments by Mobility will be deemed Direct Expenses of the Division. 6. NON-COMPETITION AND RESTRICTED ACTIVITIES. (a) Sales Rep agrees that during the Term it will not manufacture, have manufactured, offer to sell, sell, market or distribute any product that is a "Competitive Functional Equivalent". As used herein, "Competitive Functional Equivalent" shall mean any product that incorporates or utilizes iTip Technology. (b) Sales Rep hereby agrees that for so long as Sales Rep and/or its Affiliates own any securities of Mobility, Sales Rep will not, and will not cause or permit an Affiliate of Sales Rep to, directly or indirectly: [*]. (c) As used above, an "Affiliate" of any Party means any corporation, entity or person controlling, controlled by , or under common control with such Party. 7. INDEPENDENT CONTRACTOR RELATIONSHIP. The relationship of Sales Rep to Mobility shall be that of special representative for purposes of sales solicitation. Sales Rep shall not be considered the agent or legal representative of Mobility for any purpose, except as provided herein, and no officer, agent or employee of Sales Rep shall be considered as having employee status with Mobility. Sales Rep shall remain, for all purposes, an independent contractor and nothing in this Agreement shall constitute Sales Rep as an agent, representative, subsidiary, joint venture, partner, employee, or servant of Mobility for any purpose whatsoever. Sales Rep is not granted the right of authority to assume, or to create any obligation or responsibility, express or implied, on behalf of, or in the name of, Mobility, except as may be provided herein, or as may specifically be authorized in writing by an authorized official of Mobility. 8. TERM AND TERMINATION. - -------------------------------------------------------------------------------- * Confidential information on this page has been omitted and filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Request 7 (a) Initial Term. This Agreement shall be effective as of the Effective Date and shall remain in effect for fifteen (15) years following the Effective Date (the "Initial Term"). Thereafter, this Agreement shall automatically renew for subsequent one year periods (each, a "Renewal Term"), unless either Party terminates this Agreement by written notice to the other Party at least one hundred and twenty (120) days prior to the end of the Initial Term or any Renewal Term. The Initial Term and any Renewal Term(s) are collectively referred to herein as the "Term". Notwithstanding anything in this Agreement to the contrary: (i) Sales Rep may terminate this Agreement upon written notice to Mobility at any time after five (5) years following the Effective Date, in which case, all terms and provisions of this Agreement shall terminate and be of no further or effect; and (ii) if this Agreement expires at the end of any Initial Term or Renewal Term or is terminated by Sales Rep after the Initial Term then the provisions of Sections 3(a), (c), (d) and (e) and Section 6, as well as the applicable definitions in this Agreement, shall survive such expiration or termination, unless Sales Rep provides a written notice to Mobility at the time of such expiration or termination that Sales Rep elects to terminate the provisions of Sections 3(a), (c), (d) and (e) above, in which event all terms and provisions of this Agreement shall terminate and be of no further force or effect. (b) Termination. In addition to the other termination rights set forth in this Agreement, a Party will only have the right to terminate this Agreement during the Term if (i) the non-terminating Party is declared or acknowledges that it is insolvent or otherwise unable to pay its debts as they become due or upon the filing of any proceeding (whether voluntary or involuntary) for bankruptcy, insolvency or relief from creditors; (ii) a Change of Control (defined below) of a Party has occurred; and/or (iii) the non-terminating Party has committed (through any act or omission) a material default or breach of any covenant, obligation, representation or warranty under this Agreement, and such default or breach has not been cured within thirty (30) days after receipt of written notice from the other Party specifying such default or breach. Any determination to terminate this Agreement following the expiration of such thirty (30) day notice shall be in writing and delivered to the other Party. Upon any such termination, this Agreement shall be null and void and of no further force or effect. "Change of Control" shall mean (a) the consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of any Party; (b) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under such Act) of more than fifty percent (50%) of either: (i) the then outstanding shares of common stock of any Party hereto; (ii) the combined voting power of the then outstanding voting securities of any Party hereto entitled to vote generally in the election of directors; or (iii) the income and profits interest of the general partners or limited partners where the entity is a limited partnership; or (c) in the case of Mobility, the consummation of a reorganization, merger or consolidation or sale or other disposition of the Division. The right to terminate the Agreement as a result of a Change of Control shall lie only with the Party who did not have a Change of Control. (c) Liability Upon Termination. Neither Party shall be liable to the other, because of such termination, for compensation (other than Commission which may become payable as a result of orders accepted by Mobility prior to termination and released for shipment within ninety (90) days after such termination), reimbursement, or damages on account of the loss of prospective profits on anticipated sales, or on account of expenditures, investments, 8 leases, or any type of commitments made in connection with the business of either caused by the termination of this Agreement. (d) Return of Materials. Upon termination, Sales Rep shall immediately return all proprietary and confidential material, including but not limited to price books, customer catalogues, installation drawings, sales manuals, designer guides and owner's manuals. (e) Mitigation of Damages. Upon the occurrence of an event creating grounds for termination under this Section 8, the Parties shall use commercially reasonable efforts to mitigate damages caused by the occurrence of such event. 9. CONFIDENTIALITY AND NON-DISPARAGEMENT. Each Party agrees to identify in writing as confidential or proprietary, or mark as confidential or proprietary, any information that either Party deems to be confidential information. Each Party agrees that information that is disclosed orally shall not be considered confidential information unless it is reduced to writing or to a written summary that identifies the orally-disclosed topics to be considered as confidential information and such writing is provided to the recipient at the time of disclosure or within thirty (30) days thereafter. Each Party agrees to treat such confidential information as strictly confidential and shall take reasonable precautions to safeguard such information, shall not use it for any unauthorized purposes, and shall not disclose it to any third party without the prior written consent of the Party from whom it was obtained; provided, however, that the Party receiving the confidential information may disclose such information to its responsible officers, employees, agents and representatives who require such information for the purposes contemplated by this Agreement, provided that such persons shall be subject to the obligations of confidentiality provided in this Section 9. Notwithstanding this Section 9, confidential information shall not include information that: (i) the recipient can demonstrate by written evidence was lawfully in its possession prior to its first receipt of such information from the deliverer thereof; (ii) is independently developed by the recipient without use of any confidential information of the other Party; (iii) is or becomes available in the public domain at the time of disclosure or thereafter other than as a result of disclosure by the recipient; or (iv) is received from a third party with a legal or contractual right to disclose such information. Each Party agrees to conduct its business in such a way as not to damage the other's valuable reputation, or disparage such Party, its employees, directors, parent, subsidiaries, or affiliates. 10. LIMITATION OF LIABILITY. (a) TO THE EXTENT ALLOWED BY APPLICABLE LAW, IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY LOSS OF PROFITS, LOSS OF USE OR DATA, INTERRUPTION OF BUSINESS, OR FOR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. (b) IN NO EVENT SHALL MOBILITY OR ITS SUPPLIERS BE LIABLE TO SALES REP FOR ANY UNAUTHORIZED REPRESENTATION OR WARRANTY MADE TO ANY THIRD PARTY BY SALES REP. 9 11. INDEMNIFICATION. (a) Indemnity. Subject to the limitations set forth in Section 10(a), each Party (the "Indemnifying Party") agrees to indemnify, defend and hold harmless the other Party and its officers, directors, employees, agents and subsidiaries, and each of its representatives, and its successors and permitted assigns (an "Indemnified Party") at all times from and after the Effective Date from and against Damages that the Indemnified Parties may at any time suffer or incur or become subject to as a direct or indirect result of: (i) any breach of any representation or warranty made by the Indemnifying Party in this Agreement; (ii) any breach or default in the performance by the Indemnifying Party of any of the covenants to be performed by the Indemnifying Party under this Agreement; (iii) any gross negligence, willful misconduct or dishonesty of the Indemnifying Party or its employees, agents, representatives, contractors or any other person under its control; (iv) any infringement of intellectual property rights of any third person resulting from any Party's use of any such intellectual property rights that is provided by the Indemnifying Party; or (v) any acts or omissions of the Indemnifying Party in violation of federal, state or local laws. (b) Damages. For the purposes of this Agreement, the term "Damages" shall include all losses, costs, expenses, damages and liabilities incurred by, and all claims made and amounts finally awarded or charged against any Indemnified Party, including all payments and settlements in discharge thereof, and reasonable professional and attorneys' fees and expenses incurred in investigating or in attempting to avoid the same or oppose the imposition thereof (provided, however, that for claims between the Parties, Damages shall include attorneys' fees only under circumstances of the gross negligence or willful behavior of the Indemnifying Party), together with lawful interest thereon. The term "Damages" shall not include any amounts for which any Indemnified Party actually receives payment under an insurance policy, excluding self-insured amounts and deductible amounts which are deemed "Damages" hereunder. 12. GENERAL. (a) Notices. All notices hereunder given by a Party shall be in writing and shall be hand delivered or sent by U.S. Registered or Certified Mail, postage prepaid, return-receipt requested, or delivered by a courier company, prepaid, to the addresses indicated below. The addresses of the Parties until further written notice to the contrary are: Mobility: Mobility Electronics, Inc. 17800 Perimeter Drive, Suite 200 Scottsdale, Arizona 85255 Attn: Charles R. Mollo, CEO Sales Rep: RadioShack Corporation 300 RadioShack Circle, Fort Worth, Texas 76102 Attn: Vice President - Law (b) Headings. The headings and captions used in connection with the Sections and paragraphs of this Agreement are inserted only for the purpose of reference. Such 10 captions shall not be deemed to govern, limit, modify, or in any other manner affect the scope, meaning or intent of the provisions of this Agreement or any part thereof; nor shall such captions otherwise be given any legal effect. (c) Choice of Law. This Agreement shall be governed by, construed under, and enforced in accordance with the laws of the State of New York and applicable federal law, without reference to any conflicts of laws principles that may require reference to the laws of other jurisdictions. (d) Severability. If any provision of this Agreement should be determined by a court of competent jurisdiction to be void or in any measure unenforceable, the Parties intend that such determination shall amend or modify this Agreement by eliminating or modifying only those provisions affected by the determination. (e) Amendments. This Agreement may be amended or modified only by a written agreement signed by both Parties. (f) Entire Agreement. This Agreement contains the complete statement of all the agreements between the Parties with respect to its subject matter, and cannot be changed or terminated orally, and will be binding upon and shall inure to the benefit of such Party's successors and permitted assigns. (g) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same document. (h) Assignment. Except where expressly provided in this Agreement to the contrary, a Party shall not assign or in any other way transfer this Agreement or any right or obligation hereunder, whether by operation of law or otherwise, without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed . This Section 12(h) shall not in any manner affect a Party's right to terminate this Agreement upon the occurrence of a Change of Control if permitted to do so under Section 8(b) above. 11 IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as of the date first above written. MOBILITY ELECTRONICS, INC. By: /s/ Charles R. Mollo -------------------- Charles R. Mollo, Chief Executive Officer RADIOSHACK CORPORATION By: /s/ Edmond Chan --------------- Edmond Chan, Senior Vice President and Chief Strategy Officer 12 EXHIBIT A ITIP TECHNOLOGY ISSUED POWER PATENTS
ISSUED PATENT # TITLE 5,347,211 Selectable Output Power Converter 6,643,158 Dual input AC/DC to Programmable DC Output Converter 6,700,808 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing A Secondary Buck Converter 6,650,560 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing Single-Loop Optical Feedback 6,751,109 Dual Input AC/DC Battery Operated Power Supply 6,064,177 Two-Part Battery Charger/Power Cable Article with Multiple Device Capability 6,433,274 Power Converter Device 6,775,163 Dual Input AC/DC to Programmable DC Output Converter 6,791,853 Dual Input AC/DC Power Converter Having a Programmable Peripheral Power Hub Module D2004/1351/A Singapore - 5 Watt Connector Solid Lines D2004/1352/H Singapore - 5 Watt Receptacle Solid Lines D2004/1353/D Singapore - 15 Watt Connector Solid Lines D2004/1354/J Singapore - 15 Watt Receptacle Solid Lines D2004/1355/G Singapore - 25 Watt Connector Solid Lines D2004/1356/C Singapore - 25 Watt Receptacle Solid Lines
A-1 D2004/1357/Z Singapore - 35 Watt Connector Solid Lines D2004/1358/F Singapore - 35 Watt Receptacle Solid Lines 157405 Australia - 15 Watt Connector Solid Lines 157401 Australia - 15 Watt Receptacle Solid Lines 157404 Australia - 15 Watt Connector Solid Lines 157507 Australia - 15 Watt Receptacle Solid Lines 157403 Australia - 15 Watt Plug only 157400 Australia - 25 Watt Receptacle Solid Lines 157406 Australia - 25 Watt Connector Solid Lines 157503 Australia - 25 Watt Receptacle Solid Lines 157506 Australia - 25 Watt Plug only 157402 Australia - 35 Watt Receptacle Solid Lines 157399 Australia - 35 Watt Connector Solid Lines 157505 Australia - 35 Watt Receptacle Solid Lines 157502 Australia - 35 Watt Connector Solid Lines 157508 Australia - 35 Watt Plug only

PENDING POWER PATENT APPLICATIONS
SERIAL # TITLE 10/790,654 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing A Secondary Buck Converter 10/715,259 Dual Input AC and DC Power Supply Having A Programmable DC Output Utilizing Single-Loop Optical Feedback
A-2 US02/03542 PCT Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing A Secondary Buck Converter US02/34766 PCT Dual Input AC/DC Battery Operated Power Supply US02/34749 PCT Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing Single-Loop Optical Feedback US02/34748 PCT Dual Input AC/DC to Programmable DC Output Converter 10/623,060 Programmable Power Converter 60/494,860 Dual Input AC/DC Fuel Cell Operated Power Supply 10/663,868 Compact Electronics Plenum 60/525,857 Retractable Cable System For Power Converter 02707726.2 Dual Input AC and DC Power Supply Having a Programmable DC Output (Europe) 02815764.8 Dual Input AC and DC Power Supply Having a Programmable DC Output (China) 10-2004-7002345 Dual Input AC and DC Power Supply Having a Programmable DC Output (South Korea) 2003-541,122 Dual Input AC and DC Power Supply Having a Programmable DC Output (Japan) 2004104345 Dual Input AC and DC Power Supply Having a Programmable DC Output (Russia) 2002242115 Dual Input AC and DC Power Supply Having a Programmable DC Output (Australia) 160167 Dual Input AC and DC Power Supply Having a Programmable DC Output Utilizing a Secondary Buck Converter (Israel) 2004/0930 Dual Input AC and DC Power Supply Having a Programmable DC Output (South Africa)

A-3 00315/DELNP/2004 Dual Input AC and DC Power Supply Having a Programmable DC Output (India) 2004 0455 Dual Input AC and DC Power Supply Having a Programmable DC Output (Norway) 200400703-5 Dual Input AC and DC Power Supply Having a Programmable DC Output (Singapore) 2,454,044 Dual Input AC and DC Power Supply Having a Programmable DC Output (Canada) 10/790,877 Key Universal Power Tip and Power Source Connectors US2004/007084 PCT Dual Input AC/DC Power Converter Having A Programmable Peripheral Power Hub Module US04/16292 PCT Key Universal Power Tip and Power Source Connectors 10-2004-7006621 Dual Input AC/DC Battery Operated Power Supply (South Korea) 2003-541,121 Dual Input AC/DC Battery Operated Power Supply (Japan) 2002342210 Dual Input AC/DC Battery Operated Power Supply (Australia) US02/34766 Dual Input AC/DC Battery Operated Power Supply ( China) 02776371.3 Dual Input AC/DC Battery Operated Power Supply (Europe) 2,466,162 Dual Input AC/DC Battery Operated Power Supply (Canada) 01172/DELNP/200 Dual Input AC/DC Battery Operated Power Supply (India) US04/19301 PCT Programmable Power Converter US04/16292 Key Universal Power Tip and Power Source Connectors (China)

A-4 10-2004-7013263 Key Universal Power Tip and Power Source Connectors (South Korea) US04/16292 Key Universal Power Tip and Power Source Connectors (Japan) US04/16292 Key Universal Power Tip and Power Source Connectors (Russia) 2004208705 Key Universal Power Tip and Power Source Connectors (Australia) US04/16292 Key Universal Power Tip and Power Source Connectors (Israel) 2004/6728 Key Universal Power Tip and Power Source Connectors (South Africa) US04/16292 Key Universal Power Tip and Power Source Connectors (India) US04/16292 Key Universal Power Tip and Power Source Connectors (Norway) US04/16292 Key Universal Power Tip and Power Source Connectors (Singapore) 2,475,060 Key Universal Power Tip and Power Source Connectors (Canada) 29/198,752 CONNECTOR ( 5 Watt Connector TIP) 29/198,801 CONNECTOR (15 Watt Connector TIP) 29/198,777 CONNECTOR (25 Watt Connector TIP) 29/198,775 CONNECTOR (35 Watt Connector TIP) 29/198,754 CONNECTOR ( 5 Watt Receptacle) 29/198,776 CONNECTOR (15 Watt Receptacle) 29/198,755 CONNECTOR (25 Watt Receptacle) 29/198,756 CONNECTOR (35 Watt Receptacle) 29/206,090 CONNECTOR (5 Watt Connector-Revised)

A-5 29/206,089 CONNECTOR (5 Watt Receptacle-Revised) CANADA 08-901134CA 5 Watt Connector Dashed/Solid Lines 08-901135CA 5 Watt Receptacle Dashed/Solid Lines 08-901136CA 15 Watt Connector Dashed/Solid Lines 08-901137CA 15 Watt Receptacle Dashed/Solid Lines 08-901138CA 25 Watt Connector Dashed/Solid Lines 08-901139CA 25 Watt Receptacle Dashed/Solid Lines 08-901140CA 35 Watt Connector Dashed/Solid Lines 08-901141CA 35 Watt Receptacle Dashed/Solid Lines CHINA DIM040859 5 Watt Connector/Receptacle Solid Lines DIM040860 15 Watt Connector/Receptacle Solid Lines DIM040869 25 Watt Connector/Receptacle Solid Lines DIM040870 35 Watt Connector/Receptacle Solid Lines EUROPE 000213889 5 Watt Connector/Receptacle (Revised) 000188958 15,25,35 Watt Connector/Receptacle INDIA TBD 5 Watt Connector Solid Lines TBD 5 Watt Receptacle Solid Lines TBD 15 Watt Connector Solid Lines TBD 15 Watt Receptacle Solid Lines TBD 25 Watt Connector Solid Lines

A-6 TBD 25 Watt Receptacle Solid Lines TBD 35 Watt Connector Solid Lines TBD 35 Watt Receptacle Solid Lines ISRAEL 39540 5-35 Watt Connector/Receptacle Dashed/Solid JAPAN 2004-023,370 5 Watt Connector Dashed/Solid Lines 2004-023,371 5 Watt Receptacle Dashed/Solid Lines 2004-023,377 15 Watt Connector Dashed/Solid Lines 2004-023,378 15 Watt Receptacle Dashed/Solid Lines 2004-023,379 25 Watt Connector Dashed/Solid Lines 2004-023,381 25 Watt Receptacle Dashed/Solid Lines 2004-023,383 35 Watt Connector Dashed/Solid Lines 2004-023,384 35 Watt Receptacle Dashed/Solid Lines NORWAY TBD 5-35 Watt Connector/Receptacle RUSSIA 2004502018 5-35 Watt Connectors - Solid Lines 2004502019 5-35 Watt Receptacle - Solid Lines SOUTH AFRICA 2004/1001 5 Watt Connector Dashed/Solid Lines 2004/1000 5 Watt Receptacle Dashed/Solid Lines 2004/1003 15 Watt Connector Dashed/Solid Lines 2004/1002 15 Watt Receptacle Dashed/Solid Lines

A-7 2004/1005 25 Watt Connector Dashed/Solid Lines 2004/1004 25 Watt Receptacle Dashed/Solid Lines 2004/1007 35 Watt Connector Dashed/Solid Lines 2004/1006 35 Watt Receptacle Dashed/Solid Lines SOUTH KOREA 30-2004-0023709 5 Watt Connector Dashed Lines 30-2004-0023710 5 Watt Receptacle Dashed Lines 30-2004-0023711 15 Watt Connector Dashed Lines 30-2004-0023712 15 Watt Receptacle Dashed Lines 30-2004-0023713 25 Watt Connector Dashed Lines 30-2004-0023714 25 Watt Receptacle Dashed Lines 30-2004-0023715 35 Watt Connector Dashed Lines 30-2004-0023716 35 Watt Receptacle Dashed Lines TAIWAN 93304600 5 Watt Connector Dashed/Solid Lines 93304601 5 Watt Receptacle Dashed/Solid Lines 93304602 15 Watt Connector Dashed/Solid Lines 93304603 15 Watt Receptacle Dashed/Solid Lines 93304604 25 Watt Connector Dashed/Solid Lines 93304605 25 Watt Receptacle Dashed/Solid Lines 93304606 35 Watt Connector Dashed/Solid Lines 93304607 35 Watt Receptacle Dashed/Solid Lines

A-8 EXHIBIT B ITIP PRODUCTS 1. Low-Power (70 watts or less) combination AC/DC power adapters for cell phones, digital cameras, MP3 players, game boys, DVD players, and other electronic devices (the "Squirt" and "Squirt Derivative"), but not for use with Portable Computers. 2. Low-Power (70 watts or less) cigarette lighter adapters (CLA) for cell phones, digital cameras, MP3 players, game boys, DVD players, and other electronic devices, but not for use with Portable Computers. 3. Low-Power (70 watts or less) mobile AC power adapters for cell phones, digital cameras, MP3 players, game boys, DVD players, and other electronic devices, but not for use with Portable Computers. 4. Dual Power. 5. iTips (i.e., tips) for the above power products or any other iTip Products. COMPUTER PRODUCTS 1. 65 watt, 70 watt, 90 watt, 120 watt, 130 watt, and other power versions of Mobility's combinations AC/DC universal power adapters (i.e., Juice or Everywhere Power) for Portable Computers with simultaneous charging of a secondary device. 2. 65 watt, 70 watt, 90 watt, 120 watt, 130 watt, and other power versions of Mobility's AC universal power adapters (ICE or wall power) for Portable Computers with simultaneous charging of a secondary device. 3. 65 watt, 70 watt, 90 watt, 120 watt, 130 watt, and other power versions of Mobility's DC universal power adapters (power extender or auto power) for Portable Computers with simultaneous charging of a secondary device. 4. Any tip or iTip for any of the above products. B-1 EXHIBIT C EXCLUDED CUSTOMERS FOR COMPUTER PRODUCTS [*] - -------------------------------------------------------------------------------- * Confidential information on this page has been omitted and filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Request. C-1 EXHIBIT D EXISTING MOBILITY SALES POLICIES The following summarizes the standard policies adhered to by the Mobility Electronics, Inc. ("Mobility") sales force and sales agents acting on behalf of Mobility sales management. These policies are continually under review and subject to amendment as deemed necessary for the effective management of new and existing sales opportunities. Approval for deviation from the following policies is available only from Mobility sales management and must be in written documented form. SALES POLICIES PAYMENT TERMS NET 30 DAYS. EXCEPTIONS WILL BE CONSIDERED BY MOBILITY'S CONTROLLER AND/OR CREDIT MANAGER ON A CASE BY CASE BASIS. CREDIT LIMITS POTENTIAL NEW CUSTOMERS MUST SUBMIT A CREDIT APPLICATION. DETERMINATION OF CREDIT LIMIT WILL BE MADE BY MOBILITY'S CREDIT MANAGER. MARKETING DEVELOPMENT FUNDS PROPOSALS FOR ECONOMICALLY JUSTIFIED MARKET DEVELOPMENT FUNDS WILL BE CONSIDERED ON A CASE BY CASE BASIS. ALL SUCH PROGRAMS REQUIRE PRIOR APPROVAL FROM MOBILITY MANAGEMENT. POWER PRODUCT BRANDING POWER PRODUCTS MUST CONTAIN "ITIP" COMPATIBLE BRANDING, IN ACCORDANCE WITH MOBILITY'S BRANDING GUIDELINES. LICENSE TO UTILIZE "IGO" BRANDING AVAILABLE UPON TERMS AGREEABLE TO MOBILITY MANAGEMENT. ALL PACKAGING AND BRANDING MUST COMPLY WITH MOBILITY TRADEMARK USAGE GUIDELINES AND REQUIRES MOBILITY PRIOR WRITTEN REVIEW AND APPROVAL. PRICING QUOTATIONS SEE MOBILITY PRICING MATRIX FOR CUSTOMER DEFINITIONS AND PRICING TIERS. ALL PRICE QUOTES MUST COMPLY WITH THIS PRICE STRUCTURE, UNLESS PRIOR WRITTEN APPROVAL IS OBTAINED FROM MOBILITY. THE PRICING MATRIX IS CONFIDENTIAL AND CANNOT BE DISCLOSED TO ANY THIRD PARTY; PROVIDED, HOWEVER, IF NECESSARY TO MAKE A SALE, THE SPECIFIC PRICING TIER INFORMATION CAN BE SHARED WITH A CUSTOMER (BUT ONLY THE PRICING WITH RESPECT TO THE APPLICABLE CUSTOMER TIER). D-1 ORDER SUBMISSION AND ACCEPTANCE VERBAL ORDERS ARE NOT ACCEPTABLE. FACSIMILE, MAIL OR ELECTRONIC SUBMISSION REQUIRED FOR ALL ORDERS. ALL ORDERS REQUIRE MOBILITY'S PRIOR WRITTEN ACCEPTANCE. MOBILITY ELECTRONICS 17800 NORTH PERIMETER DRIVE, SUITE 200 SCOTTSDALE, AZ 85255 FAX 480-281-7742 EMAIL - BSTECH@MOBL.COM, ANEWBY@MOBL.COM OR MEAGLESPIRIT@MOBL.COM LEAD-TIME FOR ORDER SHIPMENT CUSTOMER MUST PROVIDE MOBILITY WITH A 16-WEEK ROLLING FORECAST FOR PLANNING PURPOSES ONLY. ORDER LEAD-TIME FOR "DERIVATIVE" PRODUCTS (DIFFERENT CABLES, TIPS, PACKAGING, ETC) IS 16-WEEKS. ORDER LEAD-TIME FOR REPLENISHMENT OF EXISTING PRODUCTS (NO CHANGES) IS 12 WEEKS. ORDER CANCELLATION AND RE-SCHEDULING FACSIMILE, MAIL OR ELECTRONIC SUBMISSION REQUIRED FOR ALL ORDER CANCELLATIONS AND RE-SCHEDULED DELIVERY DATES. MOBILITY ELECTRONICS 17800 NORTH PERIMETER DRIVE, SUITE 200 SCOTTSDALE, AZ 85255 FAX 480-281-7742 EMAIL - BSTECH@MOBL.COM, ANEWBY@MOBL.COM OR MEAGLESPIRIT@MOBL.COM OPEN PURCHASE ORDERS MAY BE MODIFIED UPON WRITTEN NOTICE PER THE FOLLOWING SCHEDULE:
BEFORE INCREASE DECREASE CANCEL RESCHEDULE ------ -------- -------- ------ ---------- SHIPMENT -------- 31-60 DAYS 15% 15% 0% 50% (UP TO 60 DAYS) 61-90 DAYS 50% 50% 25% 100% (UP TO 60 DAYS) 90+ DAYS 100% 100% 100%
CANCELLED ORDERS WILL NOT RELEASE CUSTOMER FROM LONG LEAD-TIME COMPONENTS (DEFINED AS BEYOND 60 DAYS LEAD-TIME FOR ANY GIVEN COMPONENT). SHIPPING TERMS D-2 FOB POINT OF MANUFACTURE, UNLESS OTHERWISE APPROVED BY MOBILITY IN WRITING. RETURNS DEFECTIVE MATERIALS ARE RETURNABLE FOR CREDIT UPON VERIFICATION OF FAILURE BY MOBILITY ELECTRONICS OR AUTHORIZED 3RD PARTY TESTING PARTY. CREDIT PROVIDED UPON FAILURE VERIFICATION. NON-DEFECTIVE MATERIALS WILL BE RETURNED TO CUSTOMER AND CUSTOMER WILL BE CHARGED FOR REPACKING, HANDLING, SORTING AND TESTING OF THE NON-DEFECTIVE MATERIALS. WARRANTY SEE SPECIFIC PRODUCT FOR APPLICABLE WARRANTY. RETURN MATERIAL AUTHORIZATION (RMA) FACSIMILE, MAIL OR ELECTRONIC SUBMISSION REQUIRED FOR ALL RMA REQUESTS. MOBILITY ELECTRONICS 17800 NORTH PERIMETER DRIVE, SUITE 200 SCOTTSDALE, AZ 85255 FAX 480-281-7742 EMAIL - BSTECH@MOBL.COM, ANEWBY@MOBL.COM OR MEAGLESPIRIT@MOBL.COM UPON RECEIPT AND ACCEPTANCE, MOBILITY ELECTRONICS WILL PROVIDE CUSTOMER WITH RMA NUMBER AND SHIPPING INSTRUCTIONS. D-3 EXHIBIT E TRANSITION PLAN During the "Transition Period," as defined below, RadioShack shall purchase the following products (the "Listed Products") from Mobility at the following prices:
PRODUCT TRANSITION PRICE COMMENT - ------- ---------------- ------- [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*] [*]
"Transition Period" shall mean the period between March 31, 2005 and the earlier of (a) December 31, 2005 and (b) the date on which RadioShack's iTips Product Commission equals or exceeds, on a pro forma basis, the following: (i) the number of units of above Listed Products sold by RadioShack for a calendar quarter, multiplied by (ii) the cost of the above Listed Products to RadioShack per Mobility's most favorable pricing for retail customers purchasing similar volumes minus the cost of the above Listed Products at the costs listed above. [*]. No iTips Product Commission will be paid by Mobility to RadioShack or Motorola, Inc. on sales of the above Listed Products to RadioShack until the Transition Period expires. - -------------------------------------------------------------------------------- * Confidential information on this page has been omitted and filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Request. E-1 EX-99.1 9 p70452exv99w1.htm EXHIBIT 99.1 exv99w1

Exhibit 99.1

For Immediate Release

CONTACTS:

Tony Rossi
Julia Francis

FRB for Mobility Electronics
Mobility Electronics, Inc

310-854-8317
480-596-0061, ext. 386

trossi@financialrelationsboard.com
jfrancis@mobl.com

RADIOSHACK AND MOTOROLA MAKE STRATEGIC INVESTMENT IN
MOBILITY ELECTRONICS
Revised structure of strategic relationship positions Mobility to expand profitability and
drive efforts to promote itip™ technology
SCOTTSDALE, Ariz., April 4, 2005 — Mobility Electronics, Inc. (Nasdaq/NMS: MOBE), a leading provider of innovative portable power and computing solutions for the mobile electronic device user, today announced that it has signed certain agreements to revise the structure of its strategic relationship with RadioShack Corporation (NYSE: RSH) and Motorola, Inc. (NYSE: MOT), which includes an aggregate equity investment from both companies of $10 million in Mobility Electronics common stock.
Leveraging this investment, Mobility will create a new division to focus on power solutions for low-power mobile electronic devices based on Mobility’s itip technology. Mobility’s patented itip technology allows one power adapter to power nearly all mobile electronic devices on the market through the use of interchangeable tips.
In addition, the financial model for Mobility’s sales through Motorola and RadioShack has been restructured, driving anticipated material increases in revenues, gross margin, and EBIT on itip product sales. RadioShack and Motorola will continue to support itip product sales through their existing distribution channels; these worldwide resources will expand Mobility’s reach without substantially increasing its existing infrastructure.
Major points of the new structure include:

•   Mobility will form an operating division exclusively dedicated to the design, development, marketing and sales of patented itip power products for low-power mobile electronic devices (ME power products).

•   RadioShack and Motorola each have made a $5 million equity investment in Mobility common stock at a purchase price of $7.25 per share, resulting in an aggregate investment of $10 million. Both RadioShack and Motorola have received 2 warrants,

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Mobility Electronics,
Inc. Page 2 of 3

    each exercisable for an additional $5 million of Mobility common stock at a price of $8.40 per share. These warrants will become exercisable upon, among other matters, the achievement of certain milestones relating to the financial performance of the newly formed operating division.

•   Mobility will manage all customers, personnel and resources of the new division. Additionally, RadioShack and Motorola will act as sales representatives for Mobility, for which they will receive a sales commission. Under the new structure, all sales and wholesale gross margins of itips products will flow through Mobility’s new division.

•   The Mobility ME power products currently carried by Radio Shack in their 6,900 stores - iGo EverywherePower™, iGo AutoPower™, iGo WallPower™, iGo DualPower™, and related itips - will be progressively phased into this new structure by December 31, 2005. Once the phase-in period is complete (and assuming an ME power adapter and itip mix consistent with current expectations), Mobility expects its average mark-up on power adapters for low-power mobile electronic devices sold through RadioShack to increase to approximately $3.00 per adapter from its average mark-up of approximately $0.80 per adapter during 2004. Mobility’s per unit price for sales of all ME power adapters, other than those sold through the RadioShack stores during the phase-in period, is expected to average approximately $9.00 per adapter through 2005, decreasing to about $7.50 per adapter in 2006 as larger customers begin purchasing the products and the RadioShack phase-in period is complete.

“The restructuring of our relationship with RadioShack and Motorola was driven by the opportunities available for the itip technology and the desire to create a structure that will optimize the ability to grow this business to significantly larger levels,” said Charlie Mollo, Chief Executive Officer of Mobility Electronics. “As a result of the new structure, we expect the economics of this business to be substantially improved for Mobility, including increased revenue, gross profit and EBIT from sales of power products developed under this agreement for low-power mobile electronic devices. In addition, the equity investment will provide Mobility with increased capital to invest in the further growth of the business.”
Financial Guidance
Commenting on the financial implications for Mobility Electronics, Mr. Mollo said, “We expect that this new structure will only have a modestly positive impact on Mobility’s sales and earnings in 2005, as most of the major new customers for our ME power adapters will not begin selling the products until later in the year and the transition plan with RadioShack will not be complete until year-end. However, we expect that the new structure will have a material impact on our financial results in 2006 and beyond as sales increase through major customers such as InterTan, Carphone Warehouse, wireless carriers and distributors, and other accounts that we sign-up with the assistance of RadioShack and Motorola’s sales organizations.”
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Mobility Electronics,
Inc. Page 3 of 3
About Mobility Electronics, Inc.
Mobility Electronics, Inc., based in Scottsdale, Arizona, is a rapidly growing developer and marketer of a broad range of innovative solutions for the mobile electronic device market (e.g., mobile phones, portable computers, smartphones, PDAs, digital cameras, etc.). The company’s innovative solutions include power adapters, hardware products for handheld devices, expansion and docking products for servers, desktop and portable computers, and other accessories for the mobile electronic device market.
Mobility Electronics’ brands include both the iGo™ and MAGMA™ product lines. iGo’s flagship products include the industry’s first combination AC/DC power adapter, Juice^™, as well as first-to-market handheld accessory products such as Pitch^™. The company’s MAGMA line of patented expansion products enables the industry’s only PCI expansion solutions for servers, desktop and mobile computing users.
Mobility Electronics’ products are available to mobile electronic device users directly via the company’s online store www.igo.com as well as through the company’s global distribution base of leading resellers, retailers and OEM partners. For additional information on Mobility Electronics’ products and services, call 480-596-0061, or visit its Web site at www.mobilityelectronics.com.
Mobility Electronics is a registered trademark, and iGo, Juice, iGo EverwherePower, iGo AutoPower, iGo WallPower, iGo DualPower, Pitch, MAGMA, and ...improving your mobile experience are trademarks of Mobility Electronics, Inc. All other trademarks or registered trademarks are the property of their respective owners.
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to statements relating to the company’s expectations regarding the benefits of its revised agreements with RadioShack and Motorola, including expected expanded profitability; expected material increases in the company’s revenues, gross margin, and earnings before interest and taxes; expected increases in the company’s average mark-up revenue and per unit sales prices for its power adapters; expected material impact on the company’s financial results in 2006; and overall improvements in the economics of the company’s power adapter business. These forward-looking statements are based on management’s current expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. In particular, factors that could cause actual results to differ materially from those in the forward-looking statements include the loss of, and failure to replace, any significant customers, including RadioShack and Motorola; the timing and success of new product introductions; the development and introduction of new products by us and our competitors; the performance of suppliers and subcontractors; industry and general economic or business conditions; the ability of the company to compete successfully in the future; risks relating to pending litigation and other factors detailed in our filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date made and are not guarantees of future performance. We disclaim any obligation to publicly update or revise any forward-looking statements.
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o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


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


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

	(a)	Financial Statements of Business Acquired.

		Not Applicable

	(b)	Pro Forma Financial Information.

		Not Applicable

	(c)	Exhibits.


	MOBILITY ELECTRONICS, INC.
Dated: April 5, 2005	By:	/s/ Charles R. Mollo
		Name:	Charles R. Mollo
		Title:	President and Chief Executive Officer


CONTACTS:
Tony Rossi		Julia Francis
FRB for Mobility Electronics		Mobility Electronics, Inc
310-854-8317		480-596-0061, ext. 386
trossi@financialrelationsboard.com		jfrancis@mobl.com

•	Mobility will form an operating division exclusively dedicated to the design, development, marketing and sales of patented itip power products for low-power mobile electronic devices (ME power products).

•	RadioShack and Motorola each have made a $5 million equity investment in Mobility common stock at a purchase price of $7.25 per share, resulting in an aggregate investment of $10 million. Both RadioShack and Motorola have received 2 warrants,

	each exercisable for an additional $5 million of Mobility common stock at a price of $8.40 per share. These warrants will become exercisable upon, among other matters, the achievement of certain milestones relating to the financial performance of the newly formed operating division.

•	Mobility will manage all customers, personnel and resources of the new division. Additionally, RadioShack and Motorola will act as sales representatives for Mobility, for which they will receive a sales commission. Under the new structure, all sales and wholesale gross margins of itips products will flow through Mobility’s new division.

•	The Mobility ME power products currently carried by Radio Shack in their 6,900 stores - iGo EverywherePower™, iGo AutoPower™, iGo WallPower™, iGo DualPower™, and related itips - will be progressively phased into this new structure by December 31, 2005. Once the phase-in period is complete (and assuming an ME power adapter and itip mix consistent with current expectations), Mobility expects its average mark-up on power adapters for low-power mobile electronic devices sold through RadioShack to increase to approximately $3.00 per adapter from its average mark-up of approximately $0.80 per adapter during 2004. Mobility’s per unit price for sales of all ME power adapters, other than those sold through the RadioShack stores during the phase-in period, is expected to average approximately $9.00 per adapter through 2005, decreasing to about $7.50 per adapter in 2006 as larger customers begin purchasing the products and the RadioShack phase-in period is complete.