<PAGE> 1
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) APRIL 20, 2000
DURASWITCH INDUSTRIES, INC.
(Exact name of Registrant as Specified in Its Charter)
NEVADA
(State or Other Jurisdiction of Incorporation)
33-79969 88-0308867
(Commission File Number) (I.R.S. Employer Identification No.)
234 SOUTH EXTENSION ROAD, MESA, ARIZONA 85210
(Address of Principal Executive Offices) (Zip Code)
(480) 586-3300
(Registrant's Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 5. OTHER EVENTS.
On April 20, 2000, DuraSwitch entered into a license agreement, an
option agreement, and a warrant agreement with Delphi Automotive Systems LLC.
Under the license agreement, DuraSwitch agreed to license certain proprietary
technology to Delphi for royalty fees. DuraSwitch entered into a warrant
purchase agreement whereby DuraSwitch granted to Delphi a two-year warrant to
purchase 225,000 shares of DuraSwitch's common stock for $7.00 per share. The
warrant's termination date can be extended an additional two years if Delphi
exercises the option described below. DuraSwitch and Delphi also entered into an
option purchase agreement whereby DuraSwitch granted to Delphi an option to
purchase 1,651,846 shares of DuraSwitch's common stock for $7.00 per share at
any time before 11:59 p.m. on June 30, 2000.
The terms of the acquisition are more fully described in the license
agreement, option purchase agreement, option, warrant purchase agreement, and
warrant, copies of which are attached to this report on Form 8-K as Exhibits
10.1 through 10.5.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS
10.1 A copy of the license agreement is annexed to this Form 8-K as
Exhibit 10.1. (Portions of this exhibit have been omitted
pursuant to a request for confidential treatment.)
10.2 A copy of the warrant purchase agreement is annexed to this
Form 8-K as Exhibit 10.2.
10.3 A copy of the warrant is annexed to this Form 8-K as Exhibit
10.3.
10.4 A copy of the option purchase agreement is annexed to this
Form 8-K as Exhibit 10.4.
10.5 A copy of the option is annexed to this Form 8-K as Exhibit
10.5.
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
DuraSwitch Industries, Inc.
(Registrant)
Date: April 25, 2000 By: /s/ Robert J. Brilon
-----------------------------------
Robert J. Brilon, President
and Chief Financial Officer
By: /s/ R. Terren Dunlap
-----------------------------------
R. Terren Dunlap, Chairman
and Chief Executive Officer
3
<PAGE> 4
EXHIBIT INDEX
10.1 A copy of the license agreement is annexed to this Form 8-K as
Exhibit 10.1. (Portions of this exhibit have been omitted
pursuant to a request for confidential treatment.)
10.2 A copy of the warrant purchase agreement is annexed to this
Form 8-K as Exhibit 10.2.
10.3 A copy of the warrant is annexed to this Form 8-K as Exhibit
10.3.
10.4 A copy of the option purchase agreement is annexed to this
Form 8-K as Exhibit 10.4.
10.5 A copy of the option is annexed to this Form 8-K as Exhibit
10.5.
<PAGE> 1
EXHIBIT 10.1
LICENSE AGREEMENT
This Agreement is made on April 20, 2000 ("Effective Date"), between Delphi
Automotive Systems LLC ("Delphi"), with offices at 408 Dana Street, Warren, Ohio
44486, and DuraSwitch Industries, Inc., ("DuraSwitch"), having a principal place
of business at 234 South Extension, Section 103, Mesa, Arizona 85210.
BACKGROUND
A. DuraSwitch represents that it has developed unique switch
technology.
B. DuraSwitch represents that it has developed and possesses
valuable information pertaining to magnetically coupled
armature switch technology.
C. DuraSwitch represents that it has applied for patent coverage
which relates to the magnetically coupled armature switch
technology and owns patent applications and patents which are
listed in Schedule 1 and corresponding patent applications and
patents in other countries.
D. Delphi wishes to obtain from DuraSwitch, and DuraSwitch is
willing to provide to Delphi, a license in accordance with and
subject to the terms and conditions contained in this
Agreement.
E. By way of separate agreement, DuraSwitch wishes to grant an
option to purchase common stock in DuraSwitch Industries,
Inc., and Delphi is willing to agree to such an option.
The parties agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set forth
below:
1.1 "DuraSwitch Patents" shall mean:
(a) the patents listed in Schedule 1,
(b) any patents granted on the patent applications listed in
Schedule 1 and any continuations and divisions of such
applications,
(c) any patents in other countries corresponding to such patents,
and
(d) any other patents granted on inventions conceived by
DuraSwitch prior to the end of the License Period, or under
which DuraSwitch has the right to grant a license to Delphi at
any time during the License Period, and which relate to
DuraSwitch Technology. However, DuraSwitch has no performance
requirements nor efforts required to continue to develop new
technology nor share future technology developments beyond
DuraSwitch Technology.
* Indicates where information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.
<PAGE> 2
1.2 "DuraSwitch Technology" shall mean all information possessed by
DuraSwitch, now or at any time during the License Period, needed to
produce magnetically coupled armature switches.
1.3 "License Period" shall mean the period extending from the Effective
Date until April 21, 2020 or until this Agreement is terminated under
clause 11.
1.4 "Licensed Products" shall mean any and all products the manufacture,
use, sale, offer for sale or import of which, in the absence of this
Agreement, would infringe or contribute to the infringement of at least
one claim of DuraSwitch Patents.
1.5 "Exclusive Licensed Field" shall mean the original equipment, service
parts and aftermarket passenger automobile, light truck and heavy truck
industries.
1.6 "Non-exclusive Licensed Field" shall mean all fields of industry except
passenger automobile, light truck, heavy truck, appliance, avionic,
beverage dispenser, and consumer electronics (except to the extent
consumer electronics relates to the Exclusive Licensed Field).
1.7 "Pushbutton Armature" shall mean a movable conductive element actuated
by at least partially separating it from a magnet. By way of example
and not limitation, such armatures are shown in Figs. 11 and 12 of
Patent 5,523,730 and in Figs. 1-2 of Patent 5,990,772 and in Fig. 17 of
Patent 5,666,096 and in products currently sold by DuraSwitch under the
trademark Pushgate(TM).
1.8 "Translating Armature" shall mean a movable conductive element actuated
by moving a Magnet Set that is in coupling relation with the conductive
element, whether the movement is rotary, linear or otherwise. By way of
example and not limitation, such armatures are shown in Figs. 1-2, 4-5
and 8-10 of Patent 5,523,730 and in Figs. 13-15 of Patent 5,666,096 and
in products currently sold by DuraSwitch under the trademarks Rotor(TM)
and Slider(TM).
1.9 "Directionally Sensitive Armature" shall mean a movable conductive
element actuated by at least partially separating it from a magnet and
whose output is dependent upon the location on the element where a
separating force is applied. By way of example and not limitation, such
an armature is shown in Figs. 1-2 of U.S. Patent Application Serial No.
09/324,567 and in products currently sold by DuraSwitch under the
trademark MagnaMouse(TM).
1.10 "Actuating Control Mechanism" shall mean a device for movably mounting
one or more Magnet Sets. By way of example and not limitation, an
Actuating Control Mechanism with one Magnet Set is shown in Fig. 1 of
Patent 6,023,213 and an Actuating Control Mechanism with two Magnet
Sets is shown in Fig. 5 of that patent.
2
* Indicates where information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.
<PAGE> 3
1.11 "Magnet Set" shall mean one or more individual magnets grouped together
in coupling relation with a moveable conductive element.
1.12 "Delphi Affiliates" shall mean any company directly or indirectly
controlled by Delphi, or under common control with Delphi. A company is
controlled by ownership of more than fifty percent (50%) of the stock
entitled to vote for directors of the company or persons performing a
function similar to that of directors.
2. LICENSE
2.1 DuraSwitch hereby grants to Delphi to the extent of the Exclusive
Licensed Field an exclusive license with the right to grant sublicenses
under the DuraSwitch Patents and DuraSwitch Technology during the
License Period to make, use, sell, offer for sale and import Licensed
Products throughout the world.
(a) Delphi shall have the exclusive right under the DuraSwitch
Patents and DuraSwitch Technology to grant sublicenses, to the
extent of the Exclusive Licensed Field, *
(b) In respect to sublicenses granted by Delphi under this
Agreement, Delphi shall pay *
(c) Termination of this Agreement shall terminate all sublicenses
which may have been granted by Delphi, * Any sublicense
granted by Delphi shall contain provisions corresponding to
those of this paragraph respecting termination and the
conditions of continuance of sublicenses.
3
* Indicates where information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.
<PAGE> 4
(d) *
2.2 The exclusive license granted in clause 2.1 of this Agreement is not
subject to any reserved license in DuraSwitch to make, use, sell, offer
for sale and import Licensed Products.
2.3 Delphi shall have the sole right to convert the exclusive license
granted in clause 2.1 into a non-exclusive license in the Exclusive
License Field under DuraSwitch Patents and DuraSwitch Technology for
the balance of the License Period to make, use, sell, offer for sale
and import Licensed Products throughout the world. This right to
convert shall be effective on July 1, 2007 provided DuraSwitch receives
notice at least six (6) months before July 1, 2007. For the balance of
the License Period, Delphi shall pay DuraSwitch *.
2.4 After July 1, 2012 and with twelve (12) months notice, either Delphi or
DuraSwitch shall have the right to convert the exclusive license
granted in clause 2.1 into a non-exclusive license in the Exclusive
License Field under DuraSwitch Patents and DuraSwitch Technology for
the balance of the License Period to make, use, sell, offer for sale
and import Licensed Products throughout the world. For the balance of
the License Period, Delphi shall pay DuraSwitch the *.
2.5 DuraSwitch hereby grants to Delphi to the extent of the Non-exclusive
Licensed Field a non-exclusive license with no right to grant
sublicenses, except to Delphi Affiliates, under the DuraSwitch Patents
and DuraSwitch Technology during the License Period to make, use, sell,
offer for sale and import Licensed Products throughout the world except
in Australia and in New Zealand.
4
* Indicates where information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.
<PAGE> 5
2.6 DuraSwitch will execute the attached License Confirmations and any
other proper documents required to record Delphi's rights under this
Agreement in the United States Patent and Trademark Office.
2.7 DuraSwitch will promptly inform Delphi of the grant of each patent
licensed under clause 2.1 and 2.5, and of the filing of each
application for such a patent, and will promptly furnish copies of such
patents to Delphi.
2.8 DuraSwitch will promptly disclose, deliver and otherwise make fully
available to Delphi in the form of duplicates of drawings, designs,
data, reports, written specifications, instructions and consultations,
or in such other suitable manner and form as may be convenient to the
parties, all DuraSwitch Technology listed in Schedule 2 within 15 days
of the effective date of this Agreement, provided that this clause does
not apply to any DuraSwitch Technology which has been communicated to
DuraSwitch on terms which preclude DuraSwitch from disclosing it to
Delphi.
2.9 DuraSwitch, during the License Period, will continue to promptly
disclose, deliver and otherwise make fully available to Delphi in the
form of duplicates of drawings, designs, data, reports, written
specifications, instructions and consultations, or in such other
suitable manner and form as may be convenient to the parties, all
DuraSwitch Technology now possessed or hereafter discovered or
developed by DuraSwitch or otherwise coming into DuraSwitch's
possession that is requested by Delphi or that DuraSwitch believes
would be helpful to Delphi in the manufacture, sale and importation of
magnetically coupled armature switch technology, provided that this
clause does not apply to any DuraSwitch Technology which is
communicated to DuraSwitch on terms which preclude DuraSwitch from
disclosing it to Delphi. However, DuraSwitch has no performance
requirements nor efforts required to continue to develop new technology
nor share future technology developments beyond DuraSwitch Technology.
3. EXCLUSIVE LICENSE FEE / ROYALTIES
3.1 Delphi shall pay to DuraSwitch as an exclusive license fee, within
thirty (30) days of the Effective Date of this Agreement, four million
dollars U.S. (U.S. $4,000,000.00) which shall be nonrefundable and not
creditable against royalties.
5
* Indicates where information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.
<PAGE> 6
3.2 Delphi shall pay to DuraSwitch royalties as stated in clause 3.3
through 3.6 for the license in clause 2.1 during the License Period,
but in no event shall royalties for a one (1) year period starting on
July 1, 2000 be less than the following minimum royalties and more than
the following maximum royalties during each of the years indicated:
<TABLE>
<CAPTION>
Year Minimum per Year Maximum per Year
---- ---------------- ----------------
<S> <C> <C>
* * *
</TABLE>
3.3 For every Pushbutton Armature sold by Delphi, Delphi shall pay to
DuraSwitch a royalty of *
3.4 For every Translating Armature sold by Delphi, Delphi shall pay to
DuraSwitch a royalty of *
3.5 For every Directionally Sensitive Armature sold by Delphi, Delphi shall
pay to DuraSwitch a royalty of *
3.6 Delphi shall pay no royalty to DuraSwitch for any Licensed Products
sold to DuraSwitch. Royalties for any DuraSwitch Patents conceived by
DuraSwitch prior to the end of the License Period, or under which
DuraSwitch has the right to grant a license to Delphi at any time
during the License Period shall be * DuraSwitch agrees that with
respect to any DuraSwitch Patent which may later issue covering any
apparatus made or sold by Delphi under the licenses granted in this
Agreement and upon which royalties have been paid, Delphi shall not pay
any additional royalties. However, DuraSwitch has no performance
requirements nor efforts required to continue to develop new technology
nor to share future technology developments beyond DuraSwitch
Technology.
6
* Indicates where information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.
<PAGE> 7
3.7 Royalties in clauses 3.3-3.6 for the License Period starting from July
1, 2012 shall be *
3.8 Delphi shall pay to DuraSwitch royalties, for the license granted in
clause 2.5, to be *
3.9 Within thirty (30) days after the end of each month starting on July 1,
2000, Delphi shall furnish DuraSwitch with written statements showing
Delphi's sales of Licensed Products during the preceding month, any
deductions taken, and the computation of royalties, and shall pay the
royalties due under this clause 3. A similar statement shall be
rendered and payment made within thirty (30) days after and as of the
date of termination of this Agreement covering the period from the end
of that covered by the preceding statement to the date of termination.
Delphi shall keep for two (2) years after the date of submission of
each statement, true and accurate records, files and books of account
containing all the data reasonably required for the full computation
and verification of Delphi's sales of Licensed Product, royalties and
deductions taken. Delphi agrees to permit DuraSwitch to examine, these
records to the extent necessary to verify the reports. The examination
by DuraSwitch shall be conducted by an auditor appointed by DuraSwitch
and paid for by DuraSwitch.
4. ASSIGNABILITY
4.1 The licenses granted in this agreement shall be binding upon any
successor of DuraSwitch in ownership or control of the DuraSwitch
Patents and DuraSwitch Technology.
4.2 The license is personal to Delphi, and Delphi may not assign the
license to any person unless DuraSwitch has given approval to the
assignment, which DuraSwitch may give or refuse at its absolute
discretion, provided that Delphi may assign the license, without
DuraSwitch approval to (i) the successor to that portion of its
business to which the license relates or (ii) any company directly or
indirectly controlled by Delphi, or under common control with Delphi. A
company is controlled by ownership of more than fifty percent (50%) of
the stock entitled to vote for directors of the company or persons
performing a function similar to that of directors.
5. MARKING
5.1 Delphi shall place in a conspicuous location on any Licensed Product a
distinguishing mark agreeable to both parties and the number or numbers
of the DuraSwitch Patents applicable thereto.
5.2 The marking of Licensed Product in clause 5.1 shall not be required if
the product performance is compromised thereby, the marking can not
reasonably be placed on any Licensed Product due to the product size,
or in all instances where Delphi's customers request in writing that
any Licensed Products do not include any markings.
7
* Indicates where information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.
<PAGE> 8
5.3 Delphi shall notify DuraSwitch in writing when any Licensed Products
are not marked pursuant to clause 5.2.
6. PUBLICITY
6.1 Delphi shall use the DURASWITCH trademark in all publications relating
to the Licensed Products. Usage of any DuraSwitch trademarks and trade
names shall be in accordance with DuraSwitch's then current published
specifications relating to the use thereof. DuraSwitch reserves the
right to periodically review and monitor Delphi's use of DuraSwitch's
trademark and trade names in order to preserve DuraSwitch's rights,
good will and value in its trademarks and trade names.
6.2 Except as required in clauses 5.1 and 6.1, Delphi is not required to
use any DuraSwitch trademarks or trade names.
6.3 Within three (3) days of the Effective Date of this Agreement, Delphi
and DuraSwitch shall issue a press release as shown in Schedule 4.
6.4 DuraSwitch shall not use any Delphi trademarks, trade names or service
marks without the prior written consent of Delphi.
7. CONFIDENTIALITY
7.1 All of the terms of this Agreement except clause 3.1 and a combined
total of the minimum royalties in clause 3.2 for the first seven years
equaling twelve million dollars (U.S. $12,000,000), but not the
existence of the Agreement, are confidential, and neither party shall
disclose such terms and conditions to anyone else without first
obtaining the prior written consent from the other party, provided that
either party may disclose the terms and conditions of this Agreement in
response to the legal requirement of a governmental agency or a court
of competent jurisdiction if such disclosure is first submitted to the
other party.
7.2 Delphi will protect materials received from DuraSwitch under this
Agreement and containing DuraSwitch Technology against disclosure to
others with the same degree of care Delphi protects its own materials
of a similar nature and will endeavor to instruct Delphi employees most
likely to have access to such materials that such materials are to be
so protected. DuraSwitch acknowledges that Delphi often discloses its
own materials for its own commercial purposes to customers, vendors and
consultants, and accordingly will not assert any claim with respect to
disclosure or use of any materials, or any DuraSwitch Technology,
disclosed to Delphi. The foregoing expresses Delphi's entire obligation
with respect to DuraSwitch Technology, and supersedes any obligation
that might otherwise be implied by or inferred from any legends placed
on materials containing DuraSwitch Technology.
8
* Indicates where information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.
<PAGE> 9
7.3 DuraSwitch will protect materials received from Delphi under this
Agreement against disclosure to others with the same degree of care
DuraSwitch protects its own materials of a similar nature and will
endeavor to instruct DuraSwitch employees most likely to have access to
such materials that such materials are to be so protected. Delphi
acknowledges that DuraSwitch often discloses its own materials for its
own commercial purposes to customers, vendors and consultants, and
accordingly will not assert any claim with respect to disclosure or use
of any materials disclosed to Delphi. The foregoing expresses
DuraSwitch's entire obligation with respect to such materials, and
supersedes any obligation that might otherwise be implied by or
inferred from any legends placed on materials.
8. INFRINGEMENT BY THIRD PARTIES
8.1 Each party shall notify the other party in writing of any suspected
infringement(s) of the DuraSwitch Patents and shall inform the other
party of any evidence of such infringement(s).
8.2 Delphi shall have the first right to institute suit for infringement(s)
in the Exclusive License Field. DuraSwitch agrees to join as a party
plaintiff in any such lawsuit initiated by Delphi, if requested by
Delphi or required by law, with all costs, attorney fees, and expenses
to be paid by Delphi. However, if Delphi does not institute suit for
infringement(s) within ninety (90) days of receipt of written notice
from DuraSwitch of DuraSwitch's desire to bring suit for infringement
in its own name and on its own behalf, then DuraSwitch may at its own
expense, bring suit or take any other appropriate action.
8.3 *
8.4 DuraSwitch shall have the sole right to institute suit for
infringement(s) in the Non-exclusive License Field.
8.5 Neither party may settle with an infringer without the prior approval
of the other party if such settlement would affect any rights of the
other party under the DuraSwitch Patents and DuraSwitch Technology.
9
* Indicates where information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.
<PAGE> 10
9. WARRANTY
DuraSwitch warrants it has the right to convey the licenses granted by
this Agreement. *
9.2 DuraSwitch warrants that, as of the Effective Date of this Agreement,
it has received no claim from a third party charging infringement of a
patent by any activity of DuraSwitch.
9.3 *
9.4 DuraSwitch agrees to defend at its expense and hold harmless Delphi
from all loss or damage by reason of any and all actions or proceedings
charging infringement, whether rightfully or wrongfully brought, of any
patent by reason of manufacture, use, sale, offer for sale, or import
of any Licensed Products by Delphi under this Agreement. Delphi agrees
to notify DuraSwitch in writing of all such actions or proceedings and,
at the expense of DuraSwitch, to assist DuraSwitch in the defense of
the action or proceeding. If the manufacture, use, offer for sale, sale
or import of such Licensed Products is enjoined as a result of such
action or proceeding, DuraSwitch will indemnify Delphi for any and all
losses or damages sustained by reason of obeying such injunction.
10
* Indicates where information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.
<PAGE> 11
9.5 If a claim or claims of any patent licensed hereunder shall be held
invalid, unenforceable, or cancelled by a court or administrative
agency from whose decision no appeal is taken or no appeal or other
proceeding for review can be taken (hereinafter a "final judgment"),
then such claim or claims shall, subsequent to the date of the final
judgment, be treated as invalid, unenforceable, or cancelled and no
royalties shall be due under clause 3 of this Agreement for sales
thereafter of Licensed Products covered solely by such claims.
9.7 If a claim or claims of any patent licensed hereunder shall be held
noninfringed by a third party's switch related products in a final
judgment of a court or administrative agency, then subsequent to the
date of the final judgment, Delphi shall have no obligation to pay
royalties hereunder to DuraSwitch on switch related products
manufactured, used, sold, offered for sale or imported by Delphi which
do not infringe such patent.
9.8 DuraSwitch warrants that, as of the Effective Date of this Agreement,
it has received no claim from a third party for ownership or
misappropriation of any DuraSwitch Patent and/or DuraSwitch Technology.
9.9 DuraSwitch does not warrant or represent that any DuraSwitch Technology
is or will be patentable or that any DuraSwitch Patent is or will be
valid.
9.10 DuraSwitch warrants that, as of the Effective Date of this Agreement,
to the extent of the Exclusive Licensed Field, it and its licensees
have not granted any rights under DuraSwitch Technology and/or
DuraSwitch Patents. In addition, DuraSwitch warrants that, as of the
Effective Date of this Agreement, DuraSwitch is under no obligation
with any third party prohibiting the disclosure of DuraSwitch
Technology to Delphi.
9.11 DuraSwitch agrees that with respect to any patent which may later
issue, it will not assert against Delphi, or its vendees, any claims
for infringement based on the manufacture, use, sale, offer for sale or
import of any apparatus made or sold by Delphi under the license
granted in this Agreement and upon which royalty has been paid in
accordance with the provisions of clause 3.
9.12 DuraSwitch warrants that, during the License Period all DuraSwitch
Patents will not be allowed to lapse.
10. LIABILITY
10.1 Delphi shall indemnify, defend and hold DuraSwitch harmless against all
claims and expenses, including legal expenses and reasonable attorney's
fees, arising out of the death of or injury to any person or persons or
out of damage to property resulting from Delphi's production, assembly,
sale or use of the Licensed Products.
11
* Indicates where information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.
<PAGE> 12
10.2 Delphi's indemnification under clause 10.1 shall not apply to any
claims or expenses due to: (i) the negligence of DuraSwitch; or (ii)
the intentional wrongdoing or intentional misconduct of DuraSwitch.
10.3 Delphi's indemnification under clause 10.1 shall not apply to any
claims or expenses due to: (i) the negligence of DuraSwitch; or (ii)
the intentional wrongdoing or intentional misconduct of DuraSwitch.
11. TERM
11.1 This Agreement shall continue in force for the License Period unless
terminated by either party under clause 11.2.
11.2 If either party shall at any time default in the payment of any monies
due in accordance with this Agreement or in fulfilling any of the other
obligations or conditions hereof, prior to terminating this Agreement,
the other party shall give notice of such default specifying the
reasons thereof. If such default is not cured by the noticed party
within ninety (90) days of such notice, the other party shall then have
the right in its own discretion to terminate this Agreement by giving
written notice of termination. This Agreement shall terminate on the
30th day after each notice of termination is given. The noticed party
shall have the right to cure any such default up to, but not after, the
giving of such notice of termination.
12. LICENSED PRODUCT QUALITY
12.1 The DuraSwitch Quality Standards, attached as Schedule 3, shall be used
as a minimum acceptable level of quality for all Licensed Products.
12.2 DuraSwitch shall be permitted to inspect Licensed Products in order to
ensure minimum compliance with the DuraSwitch Quality Standards. Such
inspection will be permitted by Delphi not more than four times per
year during reasonable working hours and only after a written request
has been received by Delphi one (1) week in advance of such inspection.
12
* Indicates where information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.
<PAGE> 13
13. NOTICE
13.1 All notices given under this Agreement shall be in writing and shall be
deemed to have been properly given when delivered personally or sent by
prepaid registered or certified mail, or electronic transmission, and
all payments and statements shall be sent by first class mail, postage
prepaid, to the following addresses:
<TABLE>
<CAPTION>
<S> <C>
If given to Delphi: If given to DuraSwitch:
President President
Delphi Packard Electric Systems DuraSwitch Industries, Inc.
408 Dana Street 234 South Extension, Section 103
P.O. Box 431 Mesa, Arizona, 85210
Warren, Ohio 44486
with courtesy copies to: with courtesy copies to:
Attention: Legal Staff - M/C 480-414-420 ____________________________
P.O. Box 5052 ____________________________
Troy, Michigan 48007-5052 ____________________________
Fax: (248) 267-5559 ____________________________
</TABLE>
The date of service shall be deemed to be the date on which such notice,
payment, or statement was personally delivered, posted, or sent by telex or
electronic transmission. Either party may give written notice of a change of
address and, after notice of such change has been received, any notice, payment,
or statement thereafter shall be given to such party as above provided at such
changed address.
14. COVENANT
14.1 DuraSwitch, for the License Period, agrees to refrain from disclosing
any DuraSwitch Technology to any company, partnership or other entity
which is engaged in the manufacture, use or sale of products in the
Exclusive Licensed Field.
15. CONSTRUCTION
15.1 This Agreement will be governed by and construed in accordance with the
laws of the state of Illinois, without regard to its law of conflicts.
The headings of Articles and Sections in this Agreement are intended
solely for convenience of reference and shall not be considered in
construing this Agreement.
13
* Indicates where information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.
<PAGE> 14
16. EXTRANEOUS WRITINGS
16.1 This Agreement constitutes the entire understanding between the parties
with respect to the subject matter hereof; all prior agreements,
drafts, representations, statements, negotiations, and undertakings are
superseded hereby. No amendment to this Agreement shall be effective
unless it is in writing and signed by duly authorized representatives
of both parties.
17. ARBITRATION
17.1 Both parties shall use their best efforts to resolve by mutual
agreement any disputes, controversies, or differences which may arise
from, under, out of, or in connection with this Agreement. If such
disputes, controversies, or differences cannot be settled between the
parties within sixty (60) days of the first written notice relative
thereto, it shall be resolved by arbitration before three arbitrators
acting under the Expedited Arbitration Rules in accordance with the
most recent Rules of the American Arbitration Association. Such
arbitration shall be held in Michigan and the award rendered in the
arbitration shall be final and binding upon both parties.
IN WITNESS THEREOF, the parties have made this Agreement the day and year
written above.
Delphi Automotive Systems LLC DuraSwitch Industries, Inc.
By:_______________________________ By:___________________________________
Name:_____________________________ Name:_________________________________
Title:____________________________ Title:________________________________
Date:_____________________________ Date:_________________________________
14
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confidential treatment and has been filed separately with the Commission.
<PAGE> 15
LICENSE CONFIRMATION
This document confirms that Duraswitch Industries Inc., incorporated under the
laws of Nevada and having a principal place of business at 234 South Extension,
Section 103, Mesa, Arizona, ("Duraswitch"), has granted DELPHI AUTOMOTIVE
SYSTEMS LLC, incorporated under the laws of Delaware and having a place of
business at Warren, Ohio ("DELPHI"), to the extent of the original equipment,
service parts and aftermarket passenger automobile, light truck and heavy truck
industries, an exclusive license with the right to grant sublicenses to make,
use, sell, offer for sale and import throughout the world magnetically coupled
armature switches covered by one or more of the patents listed in the attached
Schedule 1,any patents granted on the patent applications listed in the attached
Schedule 1 and any continuations and divisions of such applications, any patents
in other countries corresponding to such patents, any other patents granted on
certain inventions conceived by Duraswitch, and certain other patents under
which Duraswitch has the right to grant a license to Delphi, upon and subject to
the terms of an Agreement between Duraswitch and Delphi made the 20th day of
April, 2000.
DURASWITCH INDUSTRIES, INC.
BY _____________________________________
TITLE __________________________________
DATE ___________________________________
THE FOREGOING INSTRUMENT WAS ACKNOWLEDGED BEFORE ME THIS _____ DAY OF
_____________, 2000 BY ___________________________________ OF DURASWITCH
INDUSTRIES, INC., A NEVADA COMPANY ON BEHALF OF THE COMPANY.
(SEAL) ________________________________________
NOTARY PUBLIC
15
* Indicates where information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.
<PAGE> 16
LICENSE CONFIRMATION
This document confirms that Duraswitch Industries Inc., incorporated under the
laws of Nevada and having a principal place of business at 234 South Extension,
Section 103, Mesa, Arizona, ("Duraswitch"), has granted DELPHI AUTOMOTIVE
SYSTEMS LLC, incorporated under the laws of Delaware and having a place of
business at Warren, Ohio ("DELPHI"), to the extent of all fields of industry
except passenger automobile, light and heavy truck original equipment, service
parts and aftermarket industries, appliance, avionic, beverage dispenser,
consumer electronics (except to the extent consumer electronics relates to the
Exclusive Licensed Field) a non-exclusive license with no right to grant
sublicenses to make, use, sell, offer for sale and import throughout the world
except Australia and New Zealand magnetically coupled armature switches covered
by one or more of the patents listed in the attached Schedule 1,any patents
granted on the patent applications listed in the attached Schedule 1 and any
continuations and divisions of such applications, any patents in other countries
corresponding to such patents, any other patents granted on certain inventions
conceived by Duraswitch, and certain other patents under which Duraswitch has
the right to grant a license to Delphi, upon and subject to the terms of an
Agreement between Duraswitch and Delphi made the 20th day of April, 2000.
DURASWITCH INDUSTRIES, INC.
BY _____________________________________
TITLE __________________________________
DATE ___________________________________
THE FOREGOING INSTRUMENT WAS ACKNOWLEDGED BEFORE ME THIS _____ DAY OF
_____________, 2000 BY ___________________________________ OF DURASWITCH
INDUSTRIES, INC., A NEVADA COMPANY ON BEHALF OF THE COMPANY.
(SEAL) ________________________________________
NOTARY PUBLIC
16
* Indicates where information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.
<PAGE> 17
SCHEDULE 1
Applications
*
Letters Patent
<TABLE>
<CAPTION>
<S> <C> <C>
U.S. Patent No.
5,523,730
5,666,096
5,867,082
5,990,772
6,023,213
</TABLE>
17
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confidential treatment and has been filed separately with the Commission.
<PAGE> 18
SCHEDULE 2
The following list includes DuraSwitch Technology to be transferred to Delphi
within fifteen (15) days of the Effective Date pursuant to clause 2.6 of this
Agreement.
1. All Manufacturing Specifications including, but not limited to, quality
control plans
2. All Engineering Design Specifications
3. All Part Prints
4. All formulations required to manufacture the Licensed Products
5. All Quality data for the past two months
6. All production test data for the past two months
7. All tooling, jig and fixture blueprints, design manuals, and training
manuals
18
* Indicates where information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.
<PAGE> 19
[DURASWITCH LOGO]
SCHEDULE 4
PUSHGATE(TM) PRODUCT SPECIFICATION - NUMBER DPS-0600
- - ASTM-F1597 - Determining The Actuation Force and Contact Force of a
Membrane Switch
- - ASTM-F1661 - Determining Contact Bounce Time of Membrane Switch
- - ASTM-F1662 - Verifying The Specific Dielectric Withstand Voltage of A
Membrane Switch
- - ASTM-F1663 - Determining The Capacitance of A Membrane Switch
- - ASTM-F1681 - Determining the Current Carrying Capacity of A Conductor
as Part of A Membrane Switch
- - ASTM-F1683 - Creasing or Bending A Membrane Switch Tail Assembly
- - ASTM-F1689 - Determining The Insulation Resistance of A Membrane Switch
- - ASTM-F1762 - Effects of Variation of Atmospheric Pressure on Membrane
Switches
- - ASTM-F1812 - Membrane Switch ESD Shielding Test Method
- - ASTM-F1842 - Determining Ink or Coating Adhesion on Plastic Substrates
for Membrane Switches
- - ASTM-F1895 - Submersion of Membrane Switch
- - ASTM-F1896 - Determining the Circuit Resistance of A Membrane Switch
- - Mil-Std 202 - Test Methods for Electronic & Electrical Component Parts
- - Mil-Std-810E - Environmental Test Methods and Engineering Guidelines
- - UDI-R-20459 - Quality Assurance Environmental Test Plan
Note: The aforementioned ASTM test specifications were written specifically
for membrane switch technology. DuraSwitch(R) PushGate(TM) technology,
although similar in many aspects does not have an applicable industry
standard at this time that can be referenced. In all cases, the
PushGate(TM) technology meets and in critical areas exceeds the
Membrane specifications. In those cases where PushGate(TM) technology
exceeds those design and test standards, our Document will note such
differences.
(C) DuraSwitch Industries, Inc. 2000 Page 3 of 56
19
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confidential treatment and has been filed separately with the Commission.
<PAGE> 20
[DURASWITCH LOGO]
SCHEDULE 4
PUSHGATE(TM) PRODUCT SPECIFICATION - NUMBER DPS-0600
- - FORMAT FOR REPORTING
- - General description of test to be performed and results expected
- Customer
- Product type
- Serial number
- Model number
- Drawing number
- Brief description of features, functions, etc.
- - Hardware identification (switch unit to component level assembly)
- - Functional description of the affected parts of the switch unit
- - Test Measurements
- Description of test and particular referenced documents
- Test results (charting, graphing, test datum)
- - Root Cause of failure
- - Corrective actions
- - ATTACHMENTS
- - Incremental test log (showing time of test starts, interruptions,
failures and restarts)
- - Failure Mode and Effect Analysis (physics of failures)
- - REFERENCE DOCUMENTS FOR TESTING
- - ASTM Membrane Switch
- - ASTM-1596 - Exposure of Membrane Switches to Temperature and Humidity
- - ASTM-F1570 - Determining the Tactile Ratio of a Membrane Switch
- - ASTM-F1578 - Contact Closure Cycling of a Membrane Switch
- - ASTM-F1595 - Viewing Conditions for visual Inspection Standards of
Membrane Switches
20
* Indicates where information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.
<PAGE> 21
SCHEDULE 4
21
* Indicates where information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.
<PAGE> 22
[DURASWITCH LOGO]
SCHEDULE 4
PUSHGATE(TM) PRODUCT SPECIFICATION - NUMBER DPS-0600
9. QUALITY CONSIDERATIONS
PURPOSE:
The purpose of this procedure will be to outline the test requirements to
validate, qualify, and determine product performance, capability, and worthiness
to specification on a random sample and test basis. To ensure that all product
on an ongoing basis complies the company's basic assembly, environmental,
mechanical and electrical specifications.
- - SCOPE:
The following test(s) are to determine whether DuraSwitch(R) products meet
specified performance parameters, i.e.; Electrical, Mechanical, Environmental
and Human Factors Engineering. Environmental requirements will include:
temperature, humidity, shock, and vibration areas that could normally be
experienced in and through the use when exposed in our daily surroundings. In
addition, product will be subjected to a total functional test based upon all
aspects of product design as defined within the DuraSwitch(R) performance
specifications as noted at the time of customer acceptance of quote.
This procedure, PERFORMANCE, LIFE CYCLE AND ENVIRONMENTAL PROFILING will output
the necessary data, in narrative and statistical format required, outlining the
environmental and stress conditions to which the product under test will be
subjected to during its various life phases. The data may be form of
calculations, laboratory tests and/or operational measurements. Each profile
will show the number of measurements from which the average value of these
stresses and design achievements are determined as well as their characteristic
variability which will be expressed in terms of standard deviation.
Reporting shall include: test specifications, method used, test parameters,
duration, descriptions of how the test will be performed, test set-up (block
diagram), test equipment to be utilized, location of voltage and current
sensors, resistance measurements, accelerometers, thermocouples, etc., relative
to test items, and data reduction techniques.
The Product Assurance team working under the supervision of Quality Engineering
will perform the test, record test data and anomalies in written format. The
report will include an analysis of the causes of the anomalies and corrective
action taken to prevent recurrence. A test anomaly caused by an equipment
failure (this includes failures caused by external sources) shall be reported in
the same manner.
(C) DuraSwitch Industries, Inc. 2000 Page 38 of 56
22
* Indicates where information has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.
<PAGE> 23
SCHEDULE 4
[DELPHI AUTOMOTIVE SYSTEMS LOGO]
NEWS RELEASE
DRIVING TOMORROW'S TECHNOLOGY
FOR RELEASE: Tuesday, April 25, 2000 CONTACTS: Ann Cornell
330.759.6141
DuraSwitch: Heather Beshears
480.586.3357
DELPHI PARTNERS WITH DURASWITCH(R) TO BRING NEW SWITCH TECHNOLOGY INTO
AUTOMOTIVE MARKET
WARREN, Ohio -- Delphi Automotive Systems (NYSE:DPH) signed a licensing
agreement today with DuraSwitch Industries Inc. (AMEX:DRA) for exclusive rights
to utilize and manufacture DuraSwitch's revolutionary magnetically coupled
switch technology for the automotive industry, announced David R. Heilman,
president, Delphi Packard Electric Systems and vice president, Delphi.
Delphi's Packard Electric Division will utilize its knowledge of
switches and switch packaging to adapt the DuraSwitch technology to the
automotive industry, as well as the non-automotive switch markets. Along with
the licensing and manufacturing agreement, Delphi has an option to acquire
slightly under 20 percent of DuraSwitch.
"This is a significant win for Delphi and for DuraSwitch," said
Heilman. "I'm confident that the marketplace acceptance of this innovative
technology will be great, yielding substantial sales that will benefit both
Delphi and DuraSwitch. Our potential for an equity position in DuraSwitch will
not only cement our relationship, but will allow us to participate in their
value growth."
Delphi's diversified customer base and solid manufacturing footprint
will help take DuraSwitch global. The automotive switch market is valued at $4
billion, with a 6.8 percent compounded average annual growth rate.
Heilman said, "This is exactly the switch technology that is needed to
provide the multitude of switching and electronic features that today's
automotive customers demand. We consider DuraSwitch to be a next generation
switch technology, which has a straightforward design that fits perfectly with
our manufacturing capabilities."
23
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confidential treatment and has been filed separately with the Commission.
<PAGE> 24
SCHEDULE 4
DuraSwitch utilizes a patented, revolutionary magnetic-based design
that provides previously unheard of levels of reliability and durability, with a
consistent tactile feedback or "click." This specialized technology enables the
switches to be used in applications where either membrane or electro-mechanical
switches are currently used. It easily incorporates into flat panel,
electronically integrated switch packaging, currently required in advanced
electrical/ electronic architectures and in demand by vehicle manufacturers.
"We are excited to be part of the Delphi Team, combining our switch
technology with their state-of-the-art manufacturing capabilities," said Terry
Dunlap, chief executive officer and chairman, DuraSwitch. "I'm confident that by
working together the opportunities to apply this technology will quickly extend
well beyond the automotive market."
"We see Delphi as the perfect partner," said Bob Brilon, president and
chief financial officer, DuraSwitch. "Their strong global presence and solid
customer base will help us achieve our vision of leadership in human-machine
interface technology."
This partnership with DuraSwitch will enable Delphi to maintain and
grow its current switch business. The intent is to begin moving away from some
of the electro-mechanical switches typically used in vehicles and replace them
with DuraSwitch technology, which has fewer parts, Heilman said. By doing so,
switch degradation and failure rates can be minimized leading directly to more
satisfied vehicle buyers.
"Our exclusive licensing agreement with DuraSwitch will help Delphi
become a leader in automotive switch technology," said Carl Rausch, director of
marketing, planning and business development, Delphi Packard Electric. "We see
this switch technology fitting nicely with Delphi's infotainment systems and
devices, as well as other automotive communication applications. It also lends
itself well to the custom styling, differentiation and higher quality that our
customers are requesting."
DuraSwitch, incorporated in 1997, and headquartered in Mesa, Ariz.,
designs and licenses an innovative switch technology that is used to operate
products in a variety of commercial and consumer applications. DuraSwitch became
listed on the American Stock Exchange in August 1999. Some key customers include
Disney World, Rain Bird, Johnson Outdoors, Raytheon Marine, U.S. Filter and
Frymaster. DuraSwitch can be found on the Internet at www.duraswitch.com
24
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confidential treatment and has been filed separately with the Commission.
<PAGE> 25
SCHEDULE 4
Delphi Automotive Systems, headquartered in Troy, Mich., USA, is a world leader
in transportation and mobile electronics components and systems technology.
Delphi's three business sectors - Dynamics & Propulsion; Safety, Thermal &
Electrical Architecture; and Electronics & Mobile Communication - provide
comprehensive product solutions to complex customer needs. Delphi has
approximately 214,200 employees, and operates 178 wholly owned manufacturing
sites, 41 joint ventures, 53 customer centers and sales offices and 27 technical
centers in 39 countries. Regional headquarters are located in Paris, Tokyo and
Sao Paulo, Brazil. Delphi can be found on the Internet at www.delphiauto.com.
# # #
25
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confidential treatment and has been filed separately with the Commission.
<PAGE> 1
EXHIBIT 10.2
WARRANT PURCHASE AGREEMENT
THIS WARRANT PURCHASE AGREEMENT ("AGREEMENT") is dated APRIL
20, 2000, by and between DELPHI AUTOMOTIVE SYSTEMS CORPORATION, a Delaware
corporation ("HOLDER") and DURASWITCH INDUSTRIES, INC., a Nevada corporation
("COMPANY").
In consideration of the premises and the mutual
representations, warranties, covenants and agreements contained in this
Agreement, the parties, intending to be legally bound, agree as follows:
1. In consideration of Holder entering into a License
Agreement with Company dated as of the date of this Agreement, and other good
and valuable consideration, receipt of which is hereby acknowledged by Company,
Company hereby issues to Holder its warrant to purchase up to 225,000 shares of
its $.001 par value common stock (the "COMMON STOCK"), subject to adjustment as
provided therein (the "WARRANT").
2. Company represents and warrants to Holder that:
(a) Company will at all times have authorized, and reserved
sufficient shares of Common Stock for issuance pursuant to the Warrant;
it will take all actions necessary to ensure that all such shares are
issued in full compliance with all applicable laws and regulations, and
with any requirement of any securities exchange upon which any capital
stock of Company may be listed; and the issuance of the Warrant is, and
of such shares will be, exempt from registration under any federal or
state securities laws; and
(b) Company's authorized capitalization consists solely of
40,000,000 shares of Common Stock par value $.001 per share and
10,000,000 shares of Series A, no par value preferred stock; with
respect to each class of shares, Company's most recent SEC filing, Form
10-KSB describes outstanding shares and shares issuable based on all
existing options, warrants and other rights to acquire Company's Common
Stock or Preferred Stock (as the case may be), with no changes since
that filing, except as previously otherwise disclosed in writing to
Holder.
(c) Company has full power and authority to enter into this
Agreement and to consummate the transactions contemplated herein, and
this Agreement has been duly executed and delivered by Company and is a
valid and legally binding obligation of Company in accordance with its
terms under Nevada law.
3. Holder represents and warrants to Company that it is
acquiring the Warrant (and will acquire the Common Stock issuable upon exercise
of the Warrant) for its own account for investment and not with a view towards
distribution, except in compliance with all applicable laws.
4. Holder shall not sell or otherwise transfer the
Warrant or any Common Stock acquired upon the exercise of the Warrant except
pursuant to an effective registration under the Securities Act of 1933 (the
"SECURITIES ACT") or in a transaction which, in the opinion of counsel (which
may be in-house counsel to Holder), qualifies as an exempt transaction under the
Securities Act and the rules and regulations promulgated thereunder and any
applicable state securities laws. The certificates evidencing the Warrant and
the Common Stock issuable upon exercise of the Warrant may bear an appropriate
legend reflecting the foregoing restrictions on the transfer of such securities.
5. The provisions of Exhibit A hereto, pursuant to which
Company has granted certain registration rights to Holder, are incorporated
herein by reference as if stated in full in this Agreement.
6. This Agreement (including the Exhibits), together
with the Warrant (and Exhibits to the Warrant), constitutes the complete and
entire agreement between Holder and Company regarding the sale of the Warrant to
Holder by Company.
1
<PAGE> 2
7. The interpretation, performance and enforcement of
this Agreement shall be governed by the laws of the State of Nevada without
resort to that state's conflict-of-laws principles.
8. This Agreement (including the registration rights set
forth in Exhibit A) shall inure to the benefit of and be binding upon the
successors, assigns and transferees of each of the parties, including, without
limitation and without the need for an express assignment, subsequent
transferees of the Warrant or any shares of Common Stock acquired upon the
exercise of the Warrant; but nothing herein shall be deemed to permit any
assignment, transfer or other disposition of the Warrant or any shares of Common
Stock acquired upon the exercise of the Warrant issued pursuant to this
Agreement in violation of applicable law.
IN WITNESS WHEREOF, each of the parties has duly executed this
Agreement as of this 20th day of April, 2000.
Signed:
DELPHI AUTOMOTIVE SYSTEMS DURASWITCH INDUSTRIES, INC.
CORPORATION
- ----------------------------------- -------------------------------------
2
<PAGE> 3
EXHIBIT A
REGISTRATION RIGHTS
1. PIGGY-BACK RIGHTS.
(a) If Company decides, at any time prior to the second
year anniversary of the expiration of the Exercise Period (as defined
in the Warrant), to prepare and file a registration statement under the
Securities Act of 1933 (the "SECURITIES ACT") with respect to the
public offering for cash of any shares of its Common Stock (or of other
securities convertible into or exchangeable for Common Stock)
("REGISTRATION STATEMENT"), and which is not a registration solely to
implement an employee benefit plan or a transaction to which Rule 145
under the Securities Act is applicable, Company shall give 30 days'
prior written notice of such decision to Holder and shall, upon the
written request of Holder and subject to Paragraph 3 below, include in
the Registration Statement such number of Warrant Shares (as defined in
the Warrant) as Holder may request, together with any other shares of
Common Stock then beneficially owned by Holder or Holder's affiliates
(collectively "HOLDER'S SHARES"). If Company has not received a request
from Holder to include Warrant Shares within such 30-day period, then
Company shall have no obligation to include any such shares in the
offering. The registration rights granted in this section shall expire
if not exercised before the second year anniversary of the expiration
of the Exercise Period.
(b) Company shall keep such Registration Statement(s) and
other filings relating thereto effective and current under the
Securities Act permitting the sale of Holder's Shares included therein
for the same period that the registration is maintained effective in
respect of shares of other persons (including Company). In any
underwritten offering of Common Stock, any Holder's Shares which are
included will be sold at the same time and the same per-share price as
Company's shares. In connection with any Registration Statement or
subsequent amendment or similar document filed with respect thereto,
Company shall make Holder's Shares covered thereby eligible for public
offering and sale under the securities and Blue Sky laws of such
jurisdictions as may be specified by Holder before the effective date
of such Registration Statement; provided that Company shall not be
obligated to qualify to do business in any jurisdiction where it is not
so qualified as of such effectiveness, or to take any action which
would subject it to unlimited service of process in any jurisdiction
where it is not so subject at such time. Company shall keep such Blue
Sky filings current for the length of time it must keep effective any
Registration Statement, post-effective amendment, prospectus or
offering circular pursuant hereto.
(c) Upon receipt of any notice from Company that the
Registration Statement or any prospectus included therein must be
supplemented or amended, Holder will forthwith discontinue disposition
of any shares pursuant to such Registration Statement until Holder's
receipt of copies of a supplemented or amended prospectus covering such
shares, and, if so directed by Company, Holder will deliver to Company
(at Company's expense and as soon as possible) all copies, other than
permanent file copies then in Holder's possession, of the prospectus
covering such shares current at the time of its receipt of such notice.
Company shall use its best efforts to deliver and, if necessary, cause
to be made effective under the Securities Act, and any applicable state
securities laws, any such amended or supplemented prospectus as soon as
possible.
2. EXPENSES; CONSENT. In connection with any
Registration Statement or other filing described herein (including without
limitation keeping such filings effective as provided herein), Company shall
bear all the expenses and professional fees related to the registration
including, but not limited to, printing, filing, legal, accounting and
registration fees (provided that Holder shall be responsible for any legal
expenses incurred by Holder relating to registration of Holder's Shares).
Company shall also provide Holder with such number of printed copies of the
prospectus, offering circulars and/or supplemental or amended prospectuses in
final and preliminary form as Holder may reasonably request. Company consents to
the use of each such prospectus or offering circular in connection with the sale
of the Holder's Shares.
3
<PAGE> 4
3. UNDERWRITTEN OFFERINGS.
(a) If any registration in which Holder proposes to
participate pursuant to Paragraph 1 involves the distribution of any
securities through one or more underwriters, Company will, if requested
by Holder, arrange for such underwriters to include all of the Company
shares to be offered and sold by Holder among the securities of Company
to be distributed by such underwriters. The underwriters' obligation to
include such Shares shall be conditioned upon Holder's agreement to
enter into an agreement with the managing or lead underwriter, as is
customary for selling shareholders which are not affiliates of the
issuer, provided that Holder shall not be required to make any
representations or warranties to or agreements with Company or the
underwriters other than representations, warranties or agreements
regarding Holder, its shares and its intended method of distribution or
any other representations or warranties required by law or customarily
given by selling shareholders which are not affiliates of the Issuer in
an underwritten public offering.
(b) If any registration under Paragraph 1 involves an
underwritten offering and the managing underwriter of such offering
shall advise Company that, in its view, the number of securities
requested to be included in such registration exceeds the largest
number (the "MAXIMUM AMOUNT") that can be sold in an orderly manner in
such offerings, within a price range acceptable to Company, Company
shall include in such registration shares in the following priority:
first, all shares of Common Stock that the Company proposes to register
for its own account; and second, Holder's Shares requested by Holder to
be included in the Registration Statement, pro rata with the aggregate
of all shares of all other persons exercising similar registration
rights granted before the date hereof.
4. INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY COMPANY. Company shall indemnify,
to the fullest extent permitted by law, Holder, its directors,
stockholders, officers, affiliates, employees, agents and each person
who controls any of the foregoing within the meaning of the Securities
Act against all losses, claims, damages, liabilities and expenses
(including reasonable attorneys' fees) caused by, resulting from,
arising out of or related to any untrue or alleged untrue statement of
a material fact contained in any Registration Statement, prospectus or
preliminary prospectus or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements made therein not misleading, except insofar as the
same are caused by or contained in any information with respect to
Holder furnished in writing to Company by Holder specifically for use
therein or caused by Holder's failure to deliver a copy of the
Registration Statement or prospectus or any amendments or supplements
thereto in accordance with the requirements of the Securities Act after
Company has furnished such Holder with a copy of the same. Company
shall also indemnify any underwriter of Company's Common Stock, its
officers, employees and directors and each person who controls such
underwriter (within the meaning of the Securities Act) to the same
extent as provided above with respect to the indemnification of Holder.
(b) INDEMNIFICATION BY HOLDER. In connection with any
Registration Statement in which Holder is participating, such Holder
will furnish to Company in writing such information and affidavits as
Company reasonably requests in connection with preparation of the
Registration Statement, prospectus or preliminary prospectus and shall
indemnify, to the full extent permitted by law, Company, its directors,
each of its officers who have signed the Registration Statement and
each person who controls Company (within the meaning of the Securities
Act) against any losses, claims, damages, liabilities and expenses
(including reasonable attorneys' fees) caused
4
<PAGE> 5
by, resulting from, arising out of or related to any untrue statement
of a material fact or any omission of a material fact required to be
stated in the Registration Statement or prospectus or any amendment
thereof or supplement thereto, or necessary to make the statements
therein (in the case of a prospectus, in the light of the circumstances
under which they were made) not misleading, to the extent, but only to
the extent, that such untrue statement or omission is caused by or
contained in any information or affidavit furnished in writing by such
Holder expressly for use in such Registration Statement, prospectus,
preliminary prospectus or any amendment thereof. In no event shall the
liability of Holder hereunder exceed the amount of net proceeds
received by it upon the sale of securities pursuant to such offering.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person
entitled to indemnification hereunder shall give prompt written notice
to the indemnifying party after the receipt by such person of any
written notice of the commencement of any action, suit, proceeding or
investigation or threat thereof made in writing for which such person
may claim indemnification or contribution pursuant to this Agreement
and, unless in the reasonable judgment of such indemnified party a
conflict of interest may exist between such indemnified party and the
indemnifying party with respect to such claim, permit the indemnifying
party to assume the defense of such claim with counsel satisfactory to
such indemnified party. If the indemnifying party is not entitled to,
or elects not to, assume the defense of a claim, it will not be
obligated to pay the fees and expenses of more than one counsel with
respect to such claim, unless in the reasonable judgment of counsel for
such indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party shall be
obligated to pay the reasonable fees and expenses of such additional
counsel or counsels. The indemnifying party will not be subject to any
liability for any settlement made without its consent.
(d) CONTRIBUTION.
(i) If the indemnification provided for in this
Paragraph 4 from the indemnifying party is unavailable to an
indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then the
indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate
to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which
resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party
and indemnified party shall be determined by reference to,
among other things, whether any action in question, including
any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such
indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in
Subparagraph 4(c) hereof, any legal or other fees or expenses
reasonably incurred by such party in connection with any
investigation or proceeding.
(ii) The parties agree that it would not be just
and equitable if contribution pursuant to this Subparagraph
4(d) were determined by pro rata allocation or by any other
method of allocation which does not take account of the
equitable considerations referred to in the immediately
preceding paragraph.
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<PAGE> 6
(iii) If indemnification is available under this
Paragraph 4, the indemnifying parties shall indemnify each
indemnified party to the full extent provided in Subparagraphs
4(a) and 4(b) hereof without regard to the relative fault of
said indemnifying party or indemnified party or any other
equitable consideration provided for in this Paragraph 4(d).
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<PAGE> 1
Exhibit 10.3
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR UNDER APPLICABLE STATE SECURITIES LAWS.
EXCEPT AS PROVIDED HEREIN, THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED EXCEPT IN COMPLIANCE WITH APPLICABLE LAWS AND THE OTHER
RESTRICTIONS ON TRANSFER SET FORTH HEREIN.
DURASWITCH INDUSTRIES, INC.
---------------------------
WARRANT TO PURCHASE COMMON STOCK
APRIL 20, 2000
1. GRANT. DuraSwitch Industries, Inc, a Nevada
corporation (hereinafter, "COMPANY"), for value received hereby grants to Delphi
Automotive Systems Corporation, a Delaware corporation ("HOLDER") the right from
time to time to subscribe for and purchase up to 225,000 shares of Company's
authorized but unissued $.001 par value common stock (the "COMMON STOCK"),
subject to adjustment as provided below. (The shares of Common Stock issuable
under this Warrant are referred to as the "WARRANT SHARES".)
2. TERM. This Warrant may be exercised at any time
before 11:59 p.m. on April 20, 2002, or 11:59 p.m. on April 20, 2004 if Holder
exercises its call option for Company's stock dated April 20, 2000 (the
"EXERCISE PERIOD").
3. EXERCISE PRICE. The exercise price of this Warrant
(the "ORIGINAL EXERCISE PRICE") is $ 7.00 per share.
4. RESERVATION AND AUTHORIZATION OF COMMON STOCK.
Company agrees (a) that all Warrant Shares will, upon issuance, be validly
issued, fully paid and non-assessable and free of all transfer taxes, liens and
charges, (b) that during the Exercise Period, Company will at all times have
authorized and reserved for the purpose of issue or transfer upon exercise of
this Warrant, sufficient shares of Common Stock to provide for the exercise of
this Warrant and (c) that Company will take all such actions as may be necessary
to ensure that the Warrant Shares may be issued without violation of any
applicable law or regulation, or any requirement of any securities exchange upon
which any capital stock of Company may be listed.
5. EXERCISE PROCEDURE.
(a) Holder may exercise this Warrant, in whole or in part
(but not as to a fractional share of Common Stock), by presenting it
and tendering the Exercise Price for the Warrant Shares as to which the
Warrant is being exercised in legal tender or by certified check or
wire transfer to Company, at Company's principal executive offices,
along with a duly exercised written subscription substantially in the
form of Exhibit 5. (The date on which this Warrant is thus surrendered
is referred to as the "EXERCISE DATE".) Company shall promptly, but in
no event later than ten (10) days after the Exercise Date, at its
expense (including the payment of issuance taxes), issue and deliver to
Holder certificate(s) representing the number of shares of Common Stock
so purchased, together with any cash in lieu of fractional shares
pursuant to subparagraph 5(b) below. Such shares of Common Stock shall
be deemed issued to Holder for all purposes as of the opening of
business on the Exercise Date notwithstanding any delay in the actual
issuance. Unless this Warrant has expired (or been exercised in full),
a new Warrant representing the portion of this Warrant, if any, that
shall not have been exercised also shall be delivered to Holder within
such time.
(b) Company shall not be required to issue fractional
shares of Common Stock on the exercise of this Warrant. The number of
full shares of Common Stock which shall be issuable upon such exercise
shall be computed on the basis of the aggregate number of whole shares
of
1
<PAGE> 2
Common Stock purchasable on exercise of the Warrant (or portion thereof
so presented). If any fraction of a share of Common Stock would, except
for the provisions of this subparagraph 5(b), be issuable on the
exercise of the Warrant (or proportion thereof so presented), Company
shall pay an amount in cash calculated by it to be equal to the product
yielded by the multiplication of (i) the Fair Market Value of a share
of Common Stock on the Exercise Date by (ii) the fraction of a share of
Common Stock which Holder would otherwise be entitled to receive as a
result of such exercise.
6. RESALE OF WARRANT OR SHARES. Neither this Warrant nor
the Warrant Shares have been registered under the Securities Act or under the
securities laws of any state. Neither this Warrant nor such shares when issued
may be sold or transferred, in the absence of (i) an effective registration
statement for this Warrant or such shares, as the case may be, under the
Securities Act and such registration or qualification as may be necessary under
the securities laws of any state, or (ii) if requested by Company, an opinion of
counsel reasonably satisfactory to Company (who may be inside counsel to Holder)
that such registration or qualification is not required. Company shall cause any
certificate evidencing securities issued upon exercise of this Warrant before
said registration and qualification of such securities to bear an appropriate
legend describing the foregoing transfer restrictions. Notwithstanding any other
provision of this Warrant, Holder may transfer this Warrant (in whole or in
part) and any securities issuable upon exercise of this Warrant to any person or
entity which is an affiliate or subsidiary of Holder.
7. TRANSFER. This Warrant shall be registered on the
books of Company which shall be kept at its principal office for that purpose,
and, subject to paragraph 6, shall be transferable in whole or in part but only
on such books by Holder in person or by duly authorized attorney with written
notice substantially in the form of Exhibit 7 hereof. Company will at no time
close its transfer books against the transfer of this Warrant or of any shares
of Common Stock or other securities issuable upon the exercise of this Warrant
in any manner which interferes with the timely exercise of this Warrant.
8. ADJUSTMENTS UPON CERTAIN EVENTS.
(a) STOCK SPLIT OR DIVIDEND; ADJUSTMENT TO EXERCISE PRICE
AND NUMBER OF WARRANT SHARES. If the shares of Common Stock at any time
outstanding shall be subdivided into a greater or combined into a
lesser number of shares of Common Stock, by stock-split, reverse split
or otherwise, or if shares of Common Stock shall be issued as a stock
dividend, the Exercise Price shall be increased or decreased, as
applicable, to an amount which shall bear the same relation to the
Exercise Price in effect immediately before such subdivision,
combination or stock dividend as the total number of shares of Common
Stock outstanding immediately after such subdivision, combination or
stock dividend shall bear to the total number of shares of Common Stock
outstanding immediately before such subdivision, combination or stock
dividend; likewise, in case of any such subdivision, combination or
stock dividend, the number of Warrant Shares shall be increased or
decreased as applicable, to the number which shall bear the same
relation to the number of Warrant Shares obtainable hereunder
immediately before such event, as the total number of shares of Common
Stock outstanding immediately after such event shall bear to the total
number of shares of Common Stock outstanding immediately before such
event. An adjustment made pursuant to this subparagraph 8(a) shall
become effective immediately upon the effective date of such
subdivision, combination or stock dividend retroactive to the record
date, if any, for such subdivision, combination or stock dividend.
(b) MERGER, RECLASSIFICATION, ETC. In case of any capital
reorganization, or any reclassification of the Common Stock, or in case
of any consolidation of Company with or the merger of Company into any
other corporation or other entity (other than a consolidation or merger
in which Company is the continuing corporation) or in case of the sale
of all or substantially all of the property and assets of Company to
any other corporation or other entity, this Warrant shall, effective
upon such reorganization, reclassification, consolidation, merger or
sale be exercisable upon the terms and conditions specified herein, for
the number of shares of stock or other securities or property of
Company, or of the corporation, person or other entity
2
<PAGE> 3
resulting from such consolidation or surviving such merger or to which
such sale shall be made, as the case may be, which Holder of this
Warrant would have been entitled to receive had this Warrant been
exercised immediately before such reorganization, reclassification,
consolidation, merger or sale or any record date with respect thereto.
In any such case, if necessary, the provision set forth in this Warrant
with respect to the rights and interests thereafter of Holder shall be
appropriately adjusted in good faith by the Board of Directors of
Company so as to be applicable, as nearly as may reasonably be
possible, to any shares of stock or other securities or property
thereafter deliverable on the exercise of this Warrant. The subdivision
or combination of shares of Common Stock at any time outstanding into a
greater or lesser number of shares of Common Stock which results in
adjustment pursuant to subparagraph 8(a) above shall not be deemed to
be a reclassification of the Common Stock of Company for the purposes
of this subparagraph 8(b). Company shall not effect any such
consolidation, merger, or sale, unless before or upon the consummation
thereof the successor corporation (if other than Company) resulting
from such consolidation or merger or the corporation purchasing such
assets shall assume, by written instrument executed and delivered to
Company and Holder, the obligation to deliver to Holder such shares of
stock, securities or assets to which in accordance with the foregoing
provisions, such Holder may be entitled, as well as any other
obligations arising under this Warrant. If any such transaction occurs,
but does not expressly incorporate a price per share of Common Stock of
Company, Company's Board of Directors shall nonetheless reduce the
Exercise Price if, in good faith, it concludes that such transaction
values Company at a per share price of less than the Exercise Price.
(c) LIQUIDATING DIVIDENDS, ETC. If Company makes a
distribution of its assets to the holders of its Common Stock as a
dividend in liquidation or by way of return of capital or other than as
a dividend payable out of earnings or surplus legally available for
dividends under applicable law or any distribution to such holders made
in respect of the sale of all or substantially all of Company's assets
(other than as provided in Sections 8(a) or 8(b), Holder shall be
entitled to receive upon the exercise hereof, in addition to the shares
of Common Stock receivable upon such exercise, and without payment of
any consideration other than the Exercise Price, an amount in cash
equal to the fair market value of such distribution per share of Common
Stock multiplied by the number of shares of Common Stock which, on the
record date for such distribution, are issuable upon exercise of this
Warrant, or if no such record is taken, as of the date of such
distribution (with no further adjustment being made following any event
which causes a subsequent adjustment in the number of shares of Common
Stock issuable upon the exercise hereof), and an appropriate provision
therefor shall be made a part of any such distribution.
(d) NOTICE OF ADJUSTMENT. Whenever the number of Warrant
Shares or the Exercise Price is adjusted, as herein provided, Company
shall promptly notify Holder in writing of such adjustment(s) and shall
deliver to such Holder a statement setting forth the number of Warrant
Shares and the Exercise Price after such adjustment(s), setting forth a
brief statement of the facts requiring such adjustment(s) and setting
forth the computation by which such adjustment(s) was made.
(e) STATEMENT OF WARRANT. The form of this Warrant need
not be changed because of any change in the Exercise Price or in the
number of Warrant Shares.
9. NOTICE. When any notice is required by this Warrant
to be given to a person, such notice shall be provided by first class mail,
postage prepaid or by facsimile transmission or any other means of physical
delivery reasonably calculated to reach such person at least as quickly as first
class mail, to the principal executive offices of such person, attention:
Corporate Secretary.
10. REPLACEMENT OF WARRANT. At the request of Holder and
on production of evidence reasonably satisfactory to Company of the loss, theft,
destruction or mutilation of this Warrant (and in the case of loss, theft, or
destruction, if required by Company, upon delivery of an indemnity agreement
reasonably requested by Company), Company at its expense will issue in lieu
thereof a new
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<PAGE> 4
Warrant of like tenor, representing the right to subscribe for and purchase the
number of shares of Common Stock which may be subscribed for and purchased
hereunder.
11. REPRESENTATIONS.
(a) Holder, by its acceptance hereof represents that it
is an accredited investor within the meaning of Rule 501 of the
Securities Act and covenants that this Warrant is, and any stock issued
hereunder will be, acquired for investment purposes, and that Holder
will not distribute the same in violation of any state or federal law
or regulation.
(b) Company represents that it is duly incorporated under
the laws of the State of Nevada; that Company has been duly authorized
by all necessary corporate action to issue this Warrant to Holder; and
that this Warrant, when executed on Company's behalf by the person
named below will be binding upon Company in accordance with its terms.
IN WITNESS WHEREOF, Company has caused this Warrant to be
signed on its behalf by its undersigned officer, and its corporate seal to be
hereunto affixed, as of the date first above written.
DURASWITCH INDUSTRIES, INC.
Attest:
By: By:
-------------------------------- ---------------------------------
Title: Title:
-------------------------------- ---------------------------------
[Corporate Seal]
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<PAGE> 5
EXHIBIT 5
FORM OF ELECTION TO PURCHASE
TO: DURASWITCH INDUSTRIES, INC.
Ladies and Gentlemen:
The undersigned hereby elects to exercise its right
under the attached Warrant by purchasing
____________________ shares of the Common Stock of
Company, and herewith tenders in payment for such
shares the aggregate exercise price of
$_____________________ all in accordance with the
terms of the attached Warrant.
The undersigned requests that the certificate(s) for such
shares be issued in the name of _________________________ whose taxpayer number
is _________________ and whose address is __________________________
_______________________ and that such certificates (and any cash delivered
therewith) be delivered to _______________________________ whose address is
____________________________________________.
Date:_____________________
Signed:_____________________________________
(Signature must conform in all respects to name of Holder as specified
on face of the Warrant.)
Name of Holder:____________________________________________________________
(please print)
Address of Holder:____________________________________________________________
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<PAGE> 6
EXHIBIT 7
ASSIGNMENT
FOR VALUE RECEIVED,
-----------------------------------------------------
(Name)
whose address is
-----------------------------------------------------
ASSIGNS AND TRANSFERS the attached Warrant together with all right, title and
interest therein, and does hereby irrevocably appoint
---------------------------
- -------------------------- attorney to transfer said Warrant on the books of
Company with full power of substitution in the premises.
Done this day of
--- ----------------, ---------.
Signed:
---------------------------------
By:
-------------------------------------
Its:
------------------------------------
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<PAGE> 1
Exhibit 10.4
OPTION PURCHASE AGREEMENT
THIS OPTION PURCHASE AGREEMENT ("AGREEMENT") is dated APRIL
20, 2000, by and between DELPHI AUTOMOTIVE SYSTEMS CORPORATION, a Delaware
corporation ("HOLDER") and DURASWITCH INDUSTRIES, INC., a Nevada corporation
("COMPANY").
In consideration of the premises and the mutual
representations, warranties, covenants and agreements contained in this
Agreement, the parties, intending to be legally bound, agree as follows:
1. In consideration of Holder entering into a License
Agreement with Company dated as of the date of this Agreement, and other good
and valuable consideration, receipt of which is hereby acknowledged by Company,
Company hereby issues to Holder an irrevocable option to purchase 1,651,846
shares of its $.001 par value common stock (the "COMMON STOCK"), subject to
adjustment as provided in the Option to Purchase Common Stock (the "OPTION").
2. Company represents and warrants to Holder that:
(a) Company will at all times have authorized, and
reserved sufficient shares of Common Stock for issuance pursuant to the
Option and/or this Agreement; it will take all actions necessary to
ensure that all such shares are issued in full compliance with all
applicable laws and regulations, and with any requirement of any
securities exchange upon which any capital stock of Company may be
listed; and the issuance of the Option is, and of such shares will be,
exempt from registration under any federal or state securities laws;
and
(b) Company's authorized capitalization consists solely
of 40,000,000 shares of Common Stock par value $.001 per share and
10,000,000 shares of Series A, no par value preferred stock; with
respect to each class of shares, Company's most recent SEC filing, Form
10-KSB describes outstanding shares and shares issuable based on all
existing options, warrants and other rights to acquire Company's Common
Stock or Preferred Stock (as the case may be), with no changes since
that filing, except as previously otherwise disclosed in writing to
Holder.
(c) Company has full power and authority to enter into
this Agreement and to consummate the transactions contemplated herein,
and this Agreement has been duly executed and delivered by Company and
is a valid and legally binding obligation of Company in accordance with
its terms under Nevada law.
3. Holder represents and warrants to Company that it is
acquiring the Option (and will acquire the Common Stock issuable upon exercise
of the Option) for its own account for investment and not with a view towards
distribution, except in compliance with all applicable laws.
4. Holder shall not sell or otherwise transfer the
Option or any Common Stock acquired upon the exercise of the Option except
pursuant to an effective registration under the Securities Act of 1933 (the
"SECURITIES ACT") or in a transaction which, in the opinion of counsel (which
may be in-house counsel to Holder), qualifies as an exempt transaction under the
Securities Act and the rules and regulations promulgated thereunder and any
applicable state securities laws. The certificates evidencing the Option and the
Common Stock issuable upon exercise of the Option may bear an appropriate legend
reflecting the foregoing restrictions on the transfer of such securities.
5. The provisions of Exhibit A hereto, pursuant to which
Company has granted certain registration rights to Holder, are incorporated
herein by reference as if stated in full in this Agreement.
6. This Agreement (including the Exhibits), together
with the Option (and Exhibits to the Option), constitutes the complete and
entire agreement between Holder and Company regarding the sale of the Option to
Holder by Company.
<PAGE> 2
7. The interpretation, performance and enforcement of
this Agreement shall be governed by the laws of the State of Nevada without
resort to that state's conflict-of-laws principles.
8. This Agreement (including the registration rights set
forth in Exhibit A) shall inure to the benefit of and be binding upon the
successors, assigns and transferees of each of the parties, including, without
limitation and without the need for an express assignment, subsequent
transferees of the Option or any shares of Common Stock acquired upon the
exercise of the Option; but nothing herein shall be deemed to permit any
assignment, transfer or other disposition of the Option or any shares of Common
Stock acquired upon the exercise of the Option issued pursuant to this Agreement
in violation of applicable law.
9. At the date of this Agreement, Holder has not had an
opportunity to investigate or analyze the business, assets, commitments
(licenses, other contracts, etc.), liabilities, properties and affairs of
Company. Company agrees to provide Holder with reasonable access to its
facilities and personnel to enable Holder to complete such investigation and
analysis, and to provide Holder with copies of documents relating thereto during
the Exercise Period. In addition, Company will keep Holder informed of its
affairs, and will advise Holder of any and all events or conditions that exist
or occur and that have had or might have a material adverse effect on the
assets, properties, business, liabilities, prospects or financial condition of
Company, other than such events or conditions previously disclosed to Holder in
writing.
10. Upon exercise of the Option for [1,651,846] Option
Shares, Holder and Messrs. Dunlap, Van Zeeland (Tony) and Brilon (the "PRIMARY
SHAREHOLDERS") will enter a shareholders' agreement ("SHAREHOLDERS' AGREEMENT")
that provides that all shares owned by them will be voted in such manner, and
Company, Holder and the Primary Stockholders will take such other action as may
be necessary to:
(a) Cause the By-laws of Company to be amended to include
the terms set forth in subparagraph (e) below (to the extent such
By-laws are not already in effect);
(b) Prevent, without the written consent of Holder, any
amendment to the articles of Incorporation or By-laws of Company except
as referred to in clause (a) above;
(c) Cause the Board of Directors of Company to consist of
six members and to cause one designee of Holder (increased to two
designees if Holder's ownership interest increases to 20% or greater
and Board of Directors increases to greater than six members) and the
three Designees of the Primary stockholders to be elected as directors
of Company;
(d) Prevent Company from taking any action inconsistent
with the Stockholders' Agreement or the Articles of Incorporation or
By-laws described therein; and
(e) Prevent any subsidiary or affiliate of Company from
taking, without the consent of Holder, any of the following actions
which, if taken by Company, will require the prior unanimous consent of
the Directors of Company. Approval of the following matters must
include the unanimous affirmative vote of the Directors of Company:
(i) changing the nature of Company's business or
expanding or reducing the scope of Company's operations;
(ii) amending the Certificate of Incorporation or
By-laws of Company;
(iii) the creation of debt or debt obligations
exceeding a two to one ratio of debt to equity;
(iv) dividends or other distributions absent
positive retained earnings;
(f) Company currently has comprehensive employee benefit
plans. The parties will consider in good faith whether any voting
provisions are appropriate relating to significant changes in employee
compensation arrangements.
11. Company and Holder and the Primary Shareholders agree
to negotiate in good faith to finalize the Shareholders' Agreement prior to
expiration of the Exercise Period.
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<PAGE> 3
IN WITNESS WHEREOF, each of the parties has duly executed this
Agreement as of this 20th day of April, 2000.
Signed:
DELPHI AUTOMOTIVE SYSTEMS DURASWITCH INDUSTRIES, INC.
CORPORATION
- ----------------------------------- -----------------------------------
3
<PAGE> 4
EXHIBIT A
REGISTRATION RIGHTS
1. PIGGY-BACK RIGHTS.
(a) If Company decides, at any time prior to the second
year anniversary of the expiration of the Exercise Period (as defined
in the Option), to prepare and file a registration statement under the
Securities Act of 1933 (the "SECURITIES ACT") with respect to the
public offering for cash of any shares of its Common Stock (or of other
securities convertible into or exchangeable for Common Stock)
("REGISTRATION STATEMENT"), and which is not a registration solely to
implement an employee benefit plan or a transaction to which Rule 145
under the Securities Act is applicable, Company shall give 30 days'
prior written notice of such decision to Holder and shall, upon the
written request of Holder and subject to Paragraph 3 below, include in
the Registration Statement such number of Option Shares (as defined in
the Option) as Holder may request, together with any other shares of
Common Stock then beneficially owned by Holder or Holder's affiliates
(collectively "HOLDER'S SHARES"). If Company has not received a request
from Holder to include Option Shares within such 30-day period, then
Company shall have no obligation to include any such shares in the
offering. The registration rights granted in this section shall expire
if not exercised before the second year anniversary of the expiration
of the Exercise Period.
(b) Company shall keep such Registration Statement(s) and
other filings relating thereto effective and current under the
Securities Act permitting the sale of Holder's Shares included therein
for the same period that the registration is maintained effective in
respect of shares of other persons (including Company). In any
underwritten offering of Common Stock, any Holder's Shares which are
included will be sold at the same time and the same per-share price as
Company's shares. In connection with any Registration Statement or
subsequent amendment or similar document filed with respect thereto,
Company shall make Holder's Shares covered thereby eligible for public
offering and sale under the securities and Blue Sky laws of such
jurisdictions as may be specified by Holder before the effective date
of such Registration Statement; provided that Company shall not be
obligated to qualify to do business in any jurisdiction where it is not
so qualified as of such effectiveness, or to take any action which
would subject it to unlimited service of process in any jurisdiction
where it is not so subject at such time. Company shall keep such Blue
Sky filings current for the length of time it must keep effective any
Registration Statement, post-effective amendment, prospectus or
offering circular pursuant hereto.
(c) Upon receipt of any notice from Company that the
Registration Statement or any prospectus included therein must be
supplemented or amended, Holder will forthwith discontinue disposition
of any shares pursuant to such Registration Statement until Holder's
receipt of copies of a supplemented or amended prospectus covering such
shares, and, if so directed by Company, Holder will deliver to Company
(at Company's expense and as soon as possible) all copies, other than
permanent file copies then in Holder's possession, of the prospectus
covering such shares current at the time of its receipt of such notice.
Company shall use its best efforts to deliver and, if necessary, cause
to be made effective under the Securities Act, and any applicable state
securities laws, any such amended or supplemented prospectus as soon as
possible.
2. EXPENSES; CONSENT. In connection with any
Registration Statement or other filing described herein (including without
limitation keeping such filings effective as provided herein), Company shall
bear all the expenses and professional fees related to the registration
including, but not limited to, printing, filing, legal, accounting and
registration fees (provided that Holder shall be responsible for any legal
expenses incurred by Holder relating to registration of Holder's Shares).
Company shall also provide Holder with such number of printed copies of the
prospectus, offering circulars and/or supplemental or amended prospectuses in
final and preliminary form as Holder may reasonably request. Company consents to
the use of each such prospectus or offering circular in connection with the sale
of the Holder's Shares.
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<PAGE> 5
3. UNDERWRITTEN OFFERINGS.
(a) If any registration in which Holder proposes to
participate pursuant to Paragraph 1 involves the distribution of any
securities through one or more underwriters, Company will, if requested
by Holder, arrange for such underwriters to include all of the Company
shares to be offered and sold by Holder among the securities of Company
to be distributed by such underwriters. The underwriters' obligation to
include such Shares shall be conditioned upon Holder's agreement to
enter into an agreement with the managing or lead underwriter, as is
customary for selling shareholders which are not affiliates of the
issuer, provided that Holder shall not be required to make any
representations or warranties to or agreements with Company or the
underwriters other than representations, warranties or agreements
regarding Holder, its shares and its intended method of distribution or
any other representations or warranties required by law or customarily
given by selling shareholders which are not affiliates of the Issuer in
an underwritten public offering.
(b) If any registration under Paragraph 1 involves an
underwritten offering and the managing underwriter of such offering
shall advise Company that, in its view, the number of securities
requested to be included in such registration exceeds the largest
number (the "MAXIMUM AMOUNT") that can be sold in an orderly manner in
such offerings, within a price range acceptable to Company, Company
shall include in such registration shares in the following priority:
first, all shares of Common Stock that the Company proposes to register
for its own account; and second, Holder's Shares requested by Holder to
be included in the Registration Statement, pro rata with the aggregate
of all shares of all other persons exercising similar registration
rights granted before the date hereof.
4. INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY COMPANY. Company shall indemnify,
to the fullest extent permitted by law, Holder, its directors,
stockholders, officers, affiliates, employees, agents and each person
who controls any of the foregoing within the meaning of the Securities
Act against all losses, claims, damages, liabilities and expenses
(including reasonable attorneys' fees) caused by, resulting from,
arising out of or related to any untrue or alleged untrue statement of
a material fact contained in any Registration Statement, prospectus or
preliminary prospectus or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements made therein not misleading, except insofar as the
same are caused by or contained in any information with respect to
Holder furnished in writing to Company by Holder specifically for use
therein or caused by Holder's failure to deliver a copy of the
Registration Statement or prospectus or any amendments or supplements
thereto in accordance with the requirements of the Securities Act after
Company has furnished such Holder with a copy of the same. Company
shall also indemnify any underwriter of Company's Common Stock, its
officers, employees and directors and each person who controls such
underwriter (within the meaning of the Securities Act) to the same
extent as provided above with respect to the indemnification of Holder.
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<PAGE> 6
(b) INDEMNIFICATION BY HOLDER. In connection with any
Registration Statement in which Holder is participating, such Holder
will furnish to Company in writing such information and affidavits as
Company reasonably requests in connection with preparation of the
Registration Statement, prospectus or preliminary prospectus and shall
indemnify, to the full extent permitted by law, Company, its directors,
each of its officers who have signed the Registration Statement and
each person who controls Company (within the meaning of the Securities
Act) against any losses, claims, damages, liabilities and expenses
(including reasonable attorneys' fees) caused by, resulting from,
arising out of or related to any untrue statement of a material fact or
any omission of a material fact required to be stated in the
Registration Statement or prospectus or any amendment thereof or
supplement thereto, or necessary to make the statements therein (in the
case of a prospectus, in the light of the circumstances under which
they were made) not misleading, to the extent, but only to the extent,
that such untrue statement or omission is caused by or contained in any
information or affidavit furnished in writing by such Holder expressly
for use in such Registration Statement, prospectus, preliminary
prospectus or any amendment thereof. In no event shall the liability of
Holder hereunder exceed the amount of net proceeds received by it upon
the sale of securities pursuant to such offering.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person
entitled to indemnification hereunder shall give prompt written notice
to the indemnifying party after the receipt by such person of any
written notice of the commencement of any action, suit, proceeding or
investigation or threat thereof made in writing for which such person
may claim indemnification or contribution pursuant to this Agreement
and, unless in the reasonable judgment of such indemnified party a
conflict of interest may exist between such indemnified party and the
indemnifying party with respect to such claim, permit the indemnifying
party to assume the defense of such claim with counsel satisfactory to
such indemnified party. If the indemnifying party is not entitled to,
or elects not to, assume the defense of a claim, it will not be
obligated to pay the fees and expenses of more than one counsel with
respect to such claim, unless in the reasonable judgment of counsel for
such indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party shall be
obligated to pay the reasonable fees and expenses of such additional
counsel or counsels. The indemnifying party will not be subject to any
liability for any settlement made without its consent.
(d) CONTRIBUTION.
(i) If the indemnification provided for in this
Paragraph 4 from the indemnifying party is unavailable to an
indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then the
indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate
to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which
resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party
and indemnified party shall be determined by reference to,
among other things, whether any action in question, including
any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such
indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in
Subparagraph 4(c) hereof, any legal or other fees or expenses
reasonably incurred by such party in connection with any
investigation or proceeding.
(ii) The parties agree that it would not be just
and equitable if contribution pursuant to this Subparagraph
4(d) were determined by pro rata allocation or by any
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other method of allocation which does not take account of the
equitable considerations referred to in the immediately
preceding paragraph.
(iii) If indemnification is available under this
Paragraph 4, the indemnifying parties shall indemnify each
indemnified party to the full extent provided in Subparagraphs
4(a) and 4(b) hereof without regard to the relative fault of
said indemnifying party or indemnified party or any other
equitable consideration provided for in this Paragraph 4(d).
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<PAGE> 1
Exhibit 10.5
THIS OPTION HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR UNDER APPLICABLE STATE SECURITIES LAWS. EXCEPT AS
PROVIDED HEREIN, THIS OPTION MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED EXCEPT IN COMPLIANCE WITH APPLICABLE LAWS AND THE OTHER
RESTRICTIONS ON TRANSFER SET FORTH HEREIN.
DURASWITCH INDUSTRIES, INC.
---------------------------
OPTION TO PURCHASE COMMON STOCK
APRIL 20, 2000
1. GRANT. DuraSwitch Industries, Inc, a Nevada
corporation (hereinafter, "COMPANY"), for value received hereby grants to Delphi
Automotive Systems Corporation, a Delaware corporation ("HOLDER") an irrevocable
option ("OPTION") to purchase 1,651,846 shares of Company's authorized but
unissued $.001 par value common stock (the "COMMON STOCK"), subject to
adjustment as provided below. (The shares of Common Stock issuable under this
Option are referred to as the "OPTION SHARES".)
2. TERM. This Option may be exercised at any time before
11:59 p.m. on June 30, 2000 (the "EXERCISE PERIOD"), subject to subparagraph
8(d) below.
3. EXERCISE PRICE. The exercise price for each Option
Share described in paragraph 1 (the "ORIGINAL EXERCISE PRICE") is $7.00 per
share, subject to adjustment as provided below.
4. RESERVATION AND AUTHORIZATION OF COMMON STOCK.
Company agrees (a) that all Option Shares will, upon issuance, be validly
issued, fully paid and non-assessable and free of all transfer taxes, liens and
charges, (b) that during the Exercise Period, Company will at all times have
authorized and reserved for the purpose of issue or transfer upon exercise of
this Option, sufficient shares of Common Stock to provide for the exercise of
this Option and (c) that Company will take all such actions as may be necessary
to ensure that the Option Shares may be issued without violation of any
applicable law or regulation, or any requirement of any securities exchange upon
which any capital stock of Company may be listed.
5. EXERCISE PROCEDURE. Holder may exercise this Option,
in whole but not in part, by presenting it and tendering the aggregate Exercise
Price for the Option Shares in legal tender or by certified check or wire
transfer to Company, at Company's principal executive offices, along with a duly
exercised written subscription substantially in the form of Exhibit 5. (The date
on which this Option is thus surrendered is referred to as the "EXERCISE DATE".)
Company shall promptly, but in no event later than ten (10) days after the
Exercise Date, at its expense (including the payment of issuance taxes), issue
and deliver to Holder certificate(s) representing the number of shares of Common
Stock so purchased. Such shares of Common Stock shall be deemed issued to Holder
for all purposes as of the opening of business on the Exercise Date
notwithstanding any delay in the actual issuance.
6. RESALE OF OPTION OR SHARES. Neither this Option nor
the Option Shares have been registered under the Securities Act or under the
securities laws of any state. Neither this Option nor such shares when issued
may be sold or transferred, in the absence of (i) an effective registration
statement for this Option or such shares, as the case may be, under the
Securities Act and such registration or qualification as may be necessary under
the securities laws of any state, or (ii) if requested by Company, an opinion of
counsel reasonably satisfactory to Company (who may be inside counsel to Holder)
that such registration or qualification is not required. Company shall cause any
certificate evidencing securities issued upon exercise of this Option before
said registration and qualification of such securities to bear an appropriate
legend describing the foregoing transfer restrictions. Notwithstanding any other
provision of this Option, Holder may transfer this Option (in whole but not in
part) and any
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<PAGE> 2
securities issuable upon exercise of this Option to any person or entity which
is an affiliate or subsidiary of Holder.
7. TRANSFER. This Option shall be registered on the
books of Company which shall be kept at its principal office for that purpose,
and, subject to paragraph 6, shall be transferable in whole but not in part but
only on such books by Holder in person or by duly authorized attorney with
written notice substantially in the form of Exhibit 7 hereof. Company will at no
time close its transfer books against the transfer of this Option or of any
shares of Common Stock or other securities issuable upon the exercise of this
Option in any manner which interferes with the timely exercise of this Option.
8. ADJUSTMENTS UPON CERTAIN EVENTS.
(a) STOCK SPLIT OR DIVIDEND; ADJUSTMENT TO EXERCISE PRICE
AND NUMBER OF OPTION SHARES. If the shares of Common Stock at any time
outstanding shall be subdivided into a greater or combined into a
lesser number of shares of Common Stock, by stock-split, reverse split
or otherwise, or if shares of Common Stock shall be issued as a stock
dividend, the Exercise Price shall be increased or decreased, as
applicable, to an amount which shall bear the same relation to the
Exercise Price in effect immediately before such subdivision,
combination or stock dividend as the total number of shares of Common
Stock outstanding immediately after such subdivision, combination or
stock dividend shall bear to the total number of shares of Common Stock
outstanding immediately before such subdivision, combination or stock
dividend; likewise, in case of any such subdivision, combination or
stock dividend, the number of Option Shares shall be increased or
decreased as applicable, to the number which shall bear the same
relation to the number of Option Shares obtainable hereunder
immediately before such event, as the total number of shares of Common
Stock outstanding immediately after such event shall bear to the total
number of shares of Common Stock outstanding immediately before such
event. An adjustment made pursuant to this subparagraph 8(a) shall
become effective immediately upon the effective date of such
subdivision, combination or stock dividend retroactive to the record
date, if any, for such subdivision, combination or stock dividend.
(b) MERGER, RECLASSIFICATION, ETC. In case of any capital
reorganization, or any reclassification of the Common Stock, or in case
of any consolidation of Company with or the merger of Company into any
other corporation or other entity (other than a consolidation or merger
in which Company is the continuing corporation) or in case of the sale
of all or substantially all of the property and assets of Company to
any other corporation or other entity, this Option shall, effective
upon such reorganization, reclassification, consolidation, merger or
sale be exercisable upon the terms and conditions specified herein, for
the number of shares of stock or other securities or property of
Company, or of the corporation, person or other entity resulting from
such consolidation or surviving such merger or to which such sale shall
be made, as the case may be, which Holder of this Option would have
been entitled to receive had this Option been exercised immediately
before such reorganization, reclassification, consolidation, merger or
sale or any record date with respect thereto. In any such case, if
necessary, the provision set forth in this Option with respect to the
rights and interests thereafter of Holder shall be appropriately
adjusted in good faith by the Board of Directors of Company so as to be
applicable, as nearly as may reasonably be possible, to any shares of
stock or other securities or property thereafter deliverable on the
exercise of this Option. The subdivision or combination of shares of
Common Stock at any time outstanding into a greater or lesser number of
shares of Common Stock which results in adjustment pursuant to
subparagraph 8(a) above shall not be deemed to be a reclassification of
the Common Stock of Company for the purposes of this subparagraph 8(b).
Company shall not effect any such consolidation, merger, or sale,
unless before or upon the consummation thereof the successor
corporation (if other than Company) resulting from such consolidation
or merger or the corporation purchasing such assets shall assume, by
written instrument executed and delivered to Company and Holder, the
obligation to deliver to Holder such shares of stock, securities or
assets to which in accordance with the foregoing provisions, such
Holder may be entitled, as well as any other obligations arising under
this Option. If any such transaction occurs, but does not expressly
incorporate a price per share
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<PAGE> 3
of Common Stock of Company, Company's Board of Directors shall
nonetheless reduce the Exercise Price if, in good faith, it concludes
that such transaction values Company at a per share price of less than
the Exercise Price.
(c) LIQUIDATING DIVIDENDS, ETC. If Company makes a
distribution of its assets to the holders of its Common Stock as a
dividend in liquidation or by way of return of capital or other than as
a dividend payable out of earnings or surplus legally available for
dividends under applicable law or any distribution to such holders made
in respect of the sale of all or substantially all of Company's assets
(other than as provided in Sections 8(a) or 8(b), Holder shall be
entitled to receive upon the exercise hereof, in addition to the shares
of Common Stock receivable upon such exercise, and without payment of
any consideration other than the Exercise Price, an amount in cash
equal to the fair market value of such distribution per share of Common
Stock multiplied by the number of shares of Common Stock which, on the
record date for such distribution, are issuable upon exercise of this
Option, or if no such record is taken, as of the date of such
distribution (with no further adjustment being made following any event
which causes a subsequent adjustment in the number of shares of Common
Stock issuable upon the exercise hereof), and an appropriate provision
therefor shall be made a part of any such distribution.
(d) ADDITIONAL AGREEMENTS RELATING TO OPTION SHARES.
Company agrees that the 1,651,846 Option Shares referred to in
paragraph 1 plus the 225,000 shares of Common Stock issuable under the
Warrant are intended to represent a 19.9 % equity interest in Company.
If Holder acquires the 1,651,846 Option Shares referred to in paragraph
1 above, Company agrees:
(i) Company may from time to time issue (an
"ISSUANCE") shares of Common Stock upon exercise of options,
warrants, convertible instruments and other rights to acquire
Company's Common Stock. In such event, the Option shall be
increased to allow Holder to purchase such number of shares of
Common Stock as is necessary to maintain Holder's 19.9 %
ownership interest in Company, at an exercise price equal to
the average closing price of the Common Stock over the 90 day
period immediately preceding the date of such Issuance. Such
Option may be exercised at any time within [90 days] after
Company notifies Holder of such Issuance.
(ii) Conversely, Company may from time to time redeem
or otherwise acquire or retire shares of Common Stock (a
"REDEMPTION EVENT"). In such event, Holder will have a right
to require Company to purchase ("PUT RIGHT") such number of
shares of Common Stock as is necessary to maintain a 19.9 %
interest in Company. The price at which Company will buy such
shares shall be the same price paid by Company in the
Redemption Event. The Put Right may be exercised by Holder
within [90 days] after Company notifies Holder of the
occurrence of a Redemption Event.
(e) NOTICE OF ADJUSTMENT. Whenever the number of Option
Shares or the Exercise Price is adjusted, as herein provided, Company
shall promptly notify Holder in writing of such adjustment(s) and shall
deliver to such Holder a statement setting forth the number of Option
Shares and the Exercise Price after such adjustment(s), setting forth a
brief statement of the facts requiring such adjustment(s) and setting
forth the computation by which such adjustment(s) was made.
(f) STATEMENT OF OPTION. The form of this Option need not
be changed because of any change in the Exercise Price or in the number
of Option Shares.
9. NOTICE. When any notice is required by this Option to
be given to a person, such notice shall be provided by first class mail, postage
prepaid or by facsimile transmission or any other means of physical delivery
reasonably calculated to reach such person at least as quickly as first class
mail, to the principal executive offices of such person, attention: Corporate
Secretary.
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<PAGE> 4
10. REPLACEMENT OF OPTION. At the request of Holder and
on production of evidence reasonably satisfactory to Company of the loss, theft,
destruction or mutilation of this Option (and in the case of loss, theft, or
destruction, if required by Company, upon delivery of an indemnity agreement
reasonably requested by Company), Company at its expense will issue in lieu
thereof a new Option of like tenor, representing the right to subscribe for and
purchase the number of shares of Common Stock which may be subscribed for and
purchased hereunder.
11. REPRESENTATIONS.
(a) Holder, by its acceptance hereof represents that it
is an accredited investor within the meaning of Rule 501 of the
Securities Act and covenants that this Option is, and any stock issued
hereunder will be, acquired for investment purposes, and that Holder
will not distribute the same in violation of any state or federal law
or regulation.
(b) Company represents that it is duly incorporated under
the laws of the State of Nevada; that Company has been duly authorized
by all necessary corporate action to issue this Option to Holder; and
that this Option, when executed on Company's behalf by the person named
below will be binding upon Company in accordance with its terms.
IN WITNESS WHEREOF, Company has caused this Option to be
signed on its behalf by its undersigned officer, and its corporate seal to be
hereunto affixed, as of the date first above written.
DURASWITCH INDUSTRIES, INC.
Attest:
By: By:
-------------------------------- ----------------------------------
Title: Title:
----------------------------- -------------------------------
[Corporate Seal]
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EXHIBIT 5
FORM OF ELECTION TO PURCHASE
TO: DURASWITCH INDUSTRIES, INC.
Ladies and Gentlemen:
The undersigned hereby elects to exercise its right under the
attached Option by purchasing ____________________ shares of the Common Stock of
Company, and herewith tenders in payment for such shares the aggregate exercise
price of $_____________________ all in accordance with the terms of the attached
Option.
The undersigned requests that the certificate(s) for such
shares be issued in the name of _________________________ whose taxpayer number
is _________________ and whose address is
__________________________________________________ and that such certificates
(and any cash delivered therewith) be delivered to
_______________________________ whose address is ________________________
___________________________.
Date:_____________________
Signed:_____________________________________
(Signature must conform in all respects to name of Holder as specified
on face of the Option.)
Name of Holder:______________________________________________________
(please print)
Address of Holder:___________________________________________________
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EXHIBIT 7
ASSIGNMENT
FOR VALUE RECEIVED,
------------------------------------------------
(Name)
whose address is
---------------------------------------------------
ASSIGNS AND TRANSFERS the attached Option together with all
right, title and interest therein, and does hereby irrevocably appoint
- ----------------------------------------------------------- attorney
to transfer said Option on the books of Company with full power of substitution
in the premises.
Done this day of
--- ----------------, ---------.
Signed:
----------------------------------------------
By:
--------------------------------------------------
Its:
-------------------------------------------------
6
