Stock Escrow Agreement

EXHIBIT 10.6


STOCK ESCROW AGREEMENT


This Stock Escrow Agreement (this "Agreement") is made and entered into as of February 20, 2002, by and among Holmes Lundt (the "Representative"), as the representative of the persons listed on Schedule I attached hereto (each, a "Stockholder" and collectively, the "Stockholders"), Mobility Electronics, Inc., a Delaware corporation ("Parent"), and Jackson Walker L.L.P. ("Escrow Agent"). Terms used herein but not otherwise defined shall have the meanings ascribed thereto in the Merger Agreement (as defined below).


WHEREAS, Mobility Europe Holdings, Inc., a Delaware corporation and wholly-owned subsidiary of Parent ("Merger Sub"), Parent, Portsmith, Inc., a Delaware corporation (the "Company"), and certain of the stockholders of the Company, have entered into that certain Agreement and Plan of Merger, of even date herewith (the "Merger Agreement "), pursuant to which, among other things, the Company merged with and into Merger Sub; and


WHEREAS, pursuant to Section 2.10 of the Merger Agreement, 400,000 of the shares of Parent Common Stock to be delivered to the Eligible Stockholders under Section 2.7(a) the Merger Agreement (the "Escrowed Shares") shall be deposited hereunder;


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


1. Appointment of Escrow Agent. Parent and Representative hereby designate Jackson Walker L.L.P., as Escrow Agent, and Escrow Agent accepts such appointment for the purposes set forth in this Agreement. The parties hereto acknowledge and agree that Escrow Agent serves as legal counsel to Parent and Merger Sub, and Escrow Agent is serving hereunder as a convenience for the parties hereto; and that Escrow Agent may serve as legal counsel to Parent and Merger Sub in connection with any dispute and/or procedure under this Agreement; it being acknowledged and agreed that any conflict with respect to such activities are hereby waived in their entirety.


2. Deposit into Escrow. Concurrently with the Closing, Parent shall deliver to Escrow Agent the Escrowed Shares. The Escrowed Shares shall be allocated among the Stockholders as provided in Schedule I (subject to forfeiture as provided in Sections 2.2 and 2.11 of the Merger Agreement). The Escrowed Shares shall be distributed by Escrow Agent only in accordance with Section 5 below.


3. Duties of Escrow Agent.


(a) The duties of Escrow Agent hereunder shall be limited to the safekeeping of the Escrowed Shares and to the transfer and distribution of the same in accordance with the provisions of this Agreement, and no implied duties or obligations shall be read into this Agreement against Escrow Agent. Escrow Agent shall be protected in acting in accordance with the provisions of this Agreement upon any written notice, request, waiver, consent, receipt, certificate or other document furnished to it, as to its validity, the effectiveness of its provisions, the identity or authority of the person executing or depositing the same, the truth and acceptability of any information therein contained, which Escrow Agent in good faith believes to


1


be genuine. Escrow Agent will not be liable for any error of judgment, or any act or step taken or omitted by it in good faith, or for any mistake of fact or law or for anything it might do or refrain from doing in connection herewith, except to the extent such action shall be proved to constitute gross negligence or willful misconduct on the part of Escrow Agent. Escrow Agent shall have no duties except those that are expressly stated herein, and it shall not be bound by any notice of any claim, or demand with respect thereto, or any waiver, modification, amendment or termination of this Agreement until written notice of the same shall have been received by it and approved by it.


(b) Escrow Agent shall have no responsibility or obligation of any kind in connection with this Agreement or the Escrowed Shares except as set forth herein and shall not be required to deliver the Escrowed Shares or any part thereof or take any action with respect to any matters that might arise in connection therewith, other than to receive, hold and deliver the Escrowed Shares as herein provided.


4. Determinations by Representative. Any and all determinations with respect to a Claim (as defined below) made by Representative on behalf of the Stockholders shall be made in accordance with the instructions received from the holders of a majority-in-interest of the Escrowed Shares. Any and all costs incurred by Representative in contesting a Claim made by Parent shall be borne pro rata by all Stockholders.


5. Distributions.


(a) Delivery of all of the Escrowed Shares to the Eligible Stockholders is contingent upon the Surviving Corporation having at least $8 million of revenues and $250,000 of net income for calendar year 2002 (which calculation shall use the revenues and net income of the Company prior to the Merger and the revenues and income of Merger Sub (excluding Subsidiary) following the Merger (the "Threshold"). As soon as reasonably practicable after December 31, 2002, but on or prior to April 1, 2003, Parent shall deliver to Representative and Escrow Agent written notice (the "Claim Notice") that the Surviving Corporation has not attained the Threshold, together with Parent's calculation of the revenue and net income of the Surviving Corporation for calendar year 2002 (the "Claim"). If the Threshold has not been met, once the Claim becomes a "Final Claim" as defined under subsection (b), (c), (d) or (e) below, then the Escrow Agent shall deliver a portion of the Escrowed Shares to Parent pursuant to the following guidelines:


Escrowed Shares to be 2002 Revenue 2002 Net Income delivered to Parent ------------ --------------- ---------------------


Less than $8 million but $7 million or more $ 250,000 100,000

< ...