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EXHIBIT 10.11
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement"), which shall be
effective as of June 30, 1998, is by and between DuraSwitch Industries, Inc., a
Nevada Corporation (the "Company") and Blackwater Capital Partners, L.P., a
Delaware Limited Partnership ("Holder").
R E C I T A L S
A. The Company and Holder are parties to a Stock and Warrant Purchase
Agreement (the "Stock Purchase Agreement") and a Warrant No. W98-002
(the "Warrant Agreement"), each of which are dated of even date
herewith.
B. Pursuant to the Warrant Agreement, Holder is acquiring the right to
purchase 535,830 shares of the Company's Common Stock (the "Shares").
C. The Shares initially will not be registered under the Securities Act of
1933, as amended, or under the securities laws of any state, in reliance
upon exemptions from registration thereunder.
A G R E E M E N T
In consideration of the mutual covenants and obligations set forth in
this Agreement, the Company and Holder, hereby agree as follows:
1. Definitions. As used in this Agreement, the terms listed in this
Section have the meanings set forth below:
(a) "Affiliate" of any Person means any other Person who either
directly or indirectly is in control of, is controlled by or is
under common control with such Person; provided that for purposes
of this definition an investment entity shall be deemed to be
controlled by its investment manager, investment advisor or
general partner.
(b) "Business Day" means any Monday, Tuesday, Wednesday, Thursday or
Friday that is not a day on which banking institutions in the
City of Phoenix are authorized by law, regulation or executive
order to close.
(c) "Exchange Act" means the Securities Exchange Act of 1934, as
amended (or any similar successor federal statute), and the rules
and regulations thereunder, as the same are effect from time to
time.
(d) "Holder" means Holder and its successors, assigns and transferees
(subject to Section 10 of this Agreement). For purposes of this
Agreement, the Company may deem the registered holder of a
Registrable Security as the Holder of it (subject to Section 10).
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(e) "Person" means an individual, partnership, corporation, limited
liability company, joint venture, trust or unincorporated
organization, a government or agency or political subdivision
thereof or any other entity.
(f) "Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by a prospectus supplement
with respect to the terms of the offering of any portion of the
Registrable Securities covered by such Registration Statement and
by all other amendments and supplements to the prospectus,
including post-effective amendments, and all material
incorporated by reference in such prospectus.
(g) "Registrable Securities" means (i) all shares of the Company's
Common Stock issued or issuable to Holder pursuant to the Stock
Purchase Agreement as further described in Recital Section B; and
(ii) any other securities issued as a result of or in connection
with any stock dividend, stock split or reverse stock split,
combination, recapitalization, reclassification, merger or
consolidation, exchange or distribution in respect of the shares
of Common Stock referred in to (i) above.
(h) "Registration Expenses" shall have the meaning set forth in
Section 5.
(i) "Registration Statement" means any registration statement which
covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus included
therein, all amendments and supplements to such Registration
Statement including post effective amendments, all exhibits and
all material incorporated by reference in such Registration
Statement.
(j) "Registration Termination Date" means the date that is five years
following the date hereof.
(k) "SEC" means the U.S. Securities and Exchange Commission, or any
other U.S. federal agency at the time administering the
Securities Act.
(l) "Securities Act" means the Securities Act of 1933, as amended (or
any similar successor federal statute), and the rules and
regulations thereunder, as the same are in effect from time to
time.
(m) "Underwritten Offering" means an offering that is registered
under the Securities Act in which securities of the Company are
sold pursuant to a firm commitment underwriting, to an
underwriter at a fixed price for reoffering to the public or
pursuant to agency or best efforts arrangements with an
underwriter.
2. Securities Subject to this Agreement. The Registrable Securities are
entitled to the benefits of this Agreement.
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3. Registration.
(a) Piggyback Registration. If the Company at any time proposes to
file a registration statement with respect to any class of equity
securities, whether for its own account (other than a
registration statement on Form S-4 or S-8, or any successor or
substantially similar form or a registration statement covering
(i) an employee stock option, stock purchase or compensation plan
or securities issued or issuable pursuant to any such plan or
(ii) a dividend reinvestment plan) or for the account of a holder
of securities of the Company pursuant to registration rights
granted by the Company (a "Requesting Securityholder"), then the
Company shall in each case give written notice of such proposed
filing to Holder at least 20 Business Days before the anticipated
filing date of any such registration statement by the Company,
and such notice shall offer to Holder the opportunity to have any
or all of the Registrable Securities held by Holder included in
such registration statement. If Holder desires to have the
Registrable Securities registered under this Section 3, Holder
must so advise the Company in writing within 10 Business Days
after the date of receipt of such notice (which request shall set
forth the amount of Registrable Securities for which registration
is requested), and the Company shall include in such Registration
Statement all the Registrable Securities so requested to be
included therein; provided, however, that if such Registration
Statement is for an Underwritten Offering, Holder shall join in
the underwriting on the same terms and conditions as the Company
or the Requesting Securityholders and shall execute any
underwriting agreement, "lock-up" letters or other customary
agreements or documents executed by the Company or the Requesting
Securityholders in connection therewith, except Holder shall not
be required to give any representations and warranties relating
to the Company. Company shall pay all Registration Expenses with
respect to any registration pursuant to this Section 3(a).
(b) Demand Registration. (i) Upon the written request of Holder, and
provided that there is then no Registration Statement in effect
with respect to the Registrable Securities, the Company will
effect, in accordance with the terms of this Agreement, the
registration under the Securities Act of the Registrable
Securities held by Holder which the Company has been so requested
to register by Holder, subject to Section 3(c); provided that the
number of securities requested to be so registered shall be not
less than 50% of the Registrable Securities held by Holder.
Holder cannot request such registration earlier than one year
after the date of this Agreement. In addition, Holder cannot
request such registration during the 90-day period following the
completion of any Underwritten Offering. The Company shall not be
obligated to effect more than two demand registrations pursuant
to this Section 3(b), provided that the Company shall not be
required to effect more than one registration on a form other
than S-3 (or any successor to such form). Holder shall pay all
Registration Expenses with respect to any registration pursuant
to this Section 3(b).
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(c) No Obligation. Neither the giving of notice by the Company nor
any request by Holder to register Registrable Securities pursuant
to Section 3(a) shall in any way obligate the Company to file any
such Registration Statement. The Company may, at any time prior
to the effective date thereof, determine not to offer the
securities to which Registration Statement relates and/or
withdraw the Registration Statement from the SEC, without
liability of the Company to the Holders.
4. Registration Procedures and Other Agreements.
(a) General. In connection with the Company's registration
obligations pursuant to Section 3, the Company will:
(i) prepare and file with the SEC a new Registration Statement
or such amendments and post-effective amendments to an
existing Offering Registration Statement as may be
necessary to keep such Registration Statement effective;
provided, however, that no Registration Statement shall be
required to remain in effect after all Registrable
Securities covered by such Registration Statement have
been sold and distributed as contemplated by such
Registration Statement;
(ii) furnish to each selling Holder, without charge, at least
one manually signed or "Edgarized" copy and as many
conformed copies as may reasonable be requested, of the
then effective Registration Statement and any
post-effective amendment thereto, and one copy of all
financial statements and schedules, all documents
incorporated therein by reference and all exhibits thereto
(including those incorporated by reference);
(iii) deliver to each selling Holder, without charge, as many
copies of the then effective Prospectus (including each
prospectus subject to completion) and any amendments or
supplements thereto as such Holder may reasonably request;
and
(iv) cooperate and assist in any filings required to be made
with the National Association of Securities Dealers, Inc.
(b) Each selling Holder must furnish to the Company, upon request, in
writing such information and documents as, in the opinion of
counsel to the Company may be reasonably required to prepare
properly and file such Registration Statement in accordance with
the applicable provisions of the Securities Act.
5. Registration Expenses. "Registration Expenses" include without
limitation all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws (including reasonable fees
and disbursements of one counsel in connection with blue sky
qualifications or registrations (or the obtaining of exemptions
therefrom) of the Registrable Securities, printing expenses (including
expenses of printing Prospectuses), messenger and delivery
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expenses, internal expenses (including all salaries and expenses of its
officers and employees performing legal or accounting duties), fees and
disbursements of its counsel and its independent certified public
accountants (including the expenses of any special audit or "comfort"
letters required by or incident to such performance or compliance),
securities acts liability insurance (if the Company elects to obtain
such insurance), fees and expenses of any special experts retained by
the Company in connection with any registration hereunder and the fees
and expenses of any other Person retained by the Company.
6. Suspension of Sales under Certain Circumstances.
(a) Upon receipt of any notice from the Company that dispositions
under the then current Prospectus must be discontinued and
suspended, each Holder will forthwith discontinue and suspend
disposition of Registrable Securities pursuant to such Prospectus
until (i) the Holders are advised in writing by the Company that
a new Registration Statement covering the offer of Registrable
Securities has become effective under the Securities Act, or (ii)
the Holders receive copies of a supplemented or amended
Prospectus contemplated by Section 4(a) hereof, or (iii) the
Holders are advised in writing by the Company that the use of the
Prospectus may be resumed.
(b) If at any time following the date hereof any of the Company's
shares of Common Stock are to be sold pursuant to an Underwritten
Offering, then for the period commencing 45 days prior to, and
expiring 180 days after, the effective date of such Underwritten
Offering, none of the Holders will effect any public sale or
distribution of any Registrable Securities or any other shares of
Common Stock of the Company then owned by such Holders, other
than pursuant to such Underwritten Offering (if any Registrable
Securities are included in such Underwritten Offering).
7. Indemnification.
(a) Indemnification by the Company. The Company agrees to indemnify
and hold harmless, to the full extent permitted by law, but
without duplication, each Holder of Registrable Securities, any
their respective officers and directors, if any, and each Person
who controls such Holder within the meaning of the Securities
Act, against all losses, claims, damages, liabilities and
expenses (including reasonable costs of investigation and
reasonable legal fees and expenses) resulting from any untrue
statement of a material fact in, or any omission of a material
fact required to be stated in, any Registration Statement or in
any preliminary or final Prospectus, or any amendment or
supplement thereto, or necessary to make the statements therein
(in the case of a Prospectus in light of the circumstances under
which they were made) not misleading, except insofar as the same
are caused by or contained in any information furnished in
writing to the Company by any Holder or any underwriter expressly
for use therein; provided that the Company will not be liable
pursuant to this Section 7(a) if such losses, claims, damages,
liabilities or expenses have been caused by the failure
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of any selling Holder to deliver a copy of the Registration
Statement or Prospectus, or any amendments or supplements
thereto, after the Company has furnished such copies to such
Holder.
(b) Indemnification by the Holders of Registrable Securities. In
connection with any Registration Statement covering Registrable
Securities of any Holder, such Holder will furnish to the Company
in writing such information as the Company reasonably requests
for use in connection with any such Registration Statement or
Prospectus and agrees to indemnify and hold harmless, to the full
extent permitted by law, but without duplication, the Company,
its officers, directors, shareholders, employees, advisors and
agents, and each Person who controls the Company (within the
meaning of the Securities Act), against any losses, claims,
damages, liabilities and expenses resulting from any untrue
statement of a material fact in, or any omission of a material
fact required to be stated in, the Registration Statement or in
any preliminary or final Prospectus, or any amendment or
supplement thereto, or necessary to make the statements therein
(in the case of a Prospectus in light of the circumstances under
which they were made) not misleading, but only to the extent that
such untrue statement or omission is contained in any information
so furnished in writing by such Holder to the Company
specifically for inclusion therein. If the offering to which the
Registration Statement relates is an Underwritten Offering, each
Holder agrees to enter into an underwriting agreement in
customary form with such underwriters and to indemnify such
underwriters, their officers and directors, if any, and each
Person who controls such underwriters within the meaning of the
Securities Act to the same extent as hereinabove provided with
respect to indemnification by such Holder of the Company.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks
indemnification, and (ii) permit such indemnifying party to
assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that
any Person entitled to indemnification hereunder shall have the
right to employ separate counsel and to participate in, but not
control, the defense of such claim, but the fees and expenses of
such counsel shall be at the expense of such indemnified Person,
unless (A) the indemnifying party shall have failed to assume the
defense of such claim and employ counsel reasonably, satisfactory
to the indemnified party in a timely manner, or (B) in the
reasonable judgment of any such Person, based upon written advice
of its counsel, a conflict of interest may exist between such
Person and the indemnifying party with respect to such claims (in
which case, if the Person notifies the indemnifying party in
writing, that such Person elects to employ separate counsel at
the expense of the indemnifying party, the indemnifying party
shall not have the right to assume the defense of any such claim
as to which such conflict of interest may exist). The
indemnifying party will not be subject to any liability for any
settlement made without its consent. No indemnified party will be
required to consent to the entry of any judgment or enter
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into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of
such claim or litigation. An indemnifying party who is not
entitled to, or elects not to, assume the defense of the claim
will not be obligated to pay the fees and expenses of more than
one counsel for all parties indemnified by such indemnifying
party with respect to such claim, as well as one local counsel in
each relevant jurisdiction.
(d) Contribution. If for any reason the indemnification provided for
in Section 7(a) or 7(b) hereof is unavailable to an indemnified
party or insufficient to hold it harmless as contemplated by
Sections 7(a) and 7(b) hereof, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party
as a result of such loss, claim, damage, liability or expense in
such proportion as is appropriate to reflect not only the
relative benefits received by the indemnifying party and the
indemnified party, but also the relative fault of the
indemnifying party and the indemnified party, as well as any
other relevant equitable considerations. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11
(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent
misrepresentations.
8. Current Public Information. The Company agrees that it will file all
reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder
(or, if it ceases to be required to file such reports, it will, upon the
request of Holders owning not less than 51% of the Registrable
Securities [excluding any Registrable Securities that have previously
been sold pursuant to a Registration Statement hereunder or Rule 144
under the Securities Act], make publicly available other information),
and it will take such further action as may reasonably be required, in
each case to the extent required from time to time to enable the Holders
to sell Registrable Securities without registration under the Securities
Act within the limitations of the applicable exemptions provided by (x)
Rule 144 under the Securities Act, as such Rule may be amended from time
to time, or (y) any similar regulation hereinafter adopted by the SEC.
9. No Inconsistent Agreements. The Company has not previously entered into
and shall not in the future enter into any agreement, arrangement or
understanding with respect to its securities which is inconsistent with
the rights granted to the Holders in this Agreement.
10. Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, without the written consent
of (a) the Company and (b) the Holders owning not less than 51% of the
Registrable Securities (excluding any Registrable Securities that have
previously been sold pursuant to a Registration Statement hereunder or
Rule 144 under the Securities Act).
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11. Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered
first-class mail, confirmed facsimile with copy by first-class mail, or
air-courier guaranteeing overnight delivery:
(a) If to a Holder of Registrable Securities, at the most current
address for such Holder, as it appears on the books of the
Company; and
(b) If to the Company: DuraSwitch Industries, 000 Xxxxx Xxxx Xxxxx,
Xxxx, Xxxxxxx 00000, Attention: President; fax (000) 000-0000, or
at such other address as may be designated from time to time by
notice given in accordance with the provisions of this Section
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All such notices and other communications shall be deemed to have been
delivered and received (i) in the case of personal delivery or
facsimile, on the date of such delivery, (ii) in the case of overnight
courier, on the Business Day after the date when sent, and (iii) in the
case of mailing, on the fifth Business Day following such mailing.
12. Successors and Assigns. This Agreement shall inure to the benefit of and
be binding upon the successors, transferees and assigns of the parties
hereto; provided, however, that (a) no transferee in any transfer made
in reliance on Rule 144 under the Securities Act shall have any rights
as a Holder under this Agreement; and (b) no Person to whom the
Registrable Securities are transferred shall have any rights under this
Agreement as a Holder unless such Person agrees to be bound by the terms
and conditions of this Agreement.
13. Headings. The headings in this Agreement are inserted for convenience
only and shall not constitute a part hereof.
14. Governing Law; Consent to Jurisdiction. This Agreement shall be governed
by and construed and enforced in accordance with the internal laws of
the State of Arizona without reference to principles of conflict of
laws. The parties to this Agreement hereby consent to the jurisdiction
in personam of the Superior Court of the State of Arizona, in and for
the County of Maricopa or of the United States District Court for the
District of Arizona, in any legal proceeding to enforce any obligations
under this Agreement, and agree that venue in Maricopa County is not
inconvenient.
15. Construction. The Section headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement. All terms used in one number or gender
shall be construed to include any other number or gender as the context
may require. Whenever the words "include," "includes," or "including"
are used in this Agreement, they shall be deemed to be followed by the
words "without limitation."
16. Entire Agreement. This Agreement, together with any other documents and
certificates delivered hereunder, the Stock Purchase Agreement and the
Warrant Agreement, state the entire agreement of the Company and Holder
with respect to the subject matter hereof,
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merge all prior negotiations, agreements and understandings, if any, and
state in full all representations, warranties and agreements which have
induced this Agreement.
The Company and Holder have duly executed and delivered this agreement
as of the date first written above.
COMPANY: HOLDER:
DuraSwitch Industries, Inc. Blackwater Capital Partners, L.P.
000 X. Xxxx Xxxxx 0000 Xxxxxxxx Xxxx
Xxxx, Xxxxxxx 00000 Xxxxxxxx, Xxxxxxxx 00000
Fax: 000-000-0000 Fax: 000-000-0000
/s/ R. Xxxxxx Xxxxxx /s/ Xxxxxx X. Xxxxx
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R. Xxxxxx Xxxxxx, President Xxxxxx X. Xxxxx, Managing Partner
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