Document:

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                                                                    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.
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                  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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                  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

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                                    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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                  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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                  (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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                                                                    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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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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         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.

                                       3
<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]

                                       4
<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 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:___________________________________________________

                                       5
<PAGE>   6
                                    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

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