Exhibit 10.16
SHARE PURCHASE AGREEMENT
By
and Between
as the
“Buyer” herein, on the one hand,
and
DIGITAL RECORDERS, INC.
as “DRI” herein, on the other hand
Dated as of June 11, 2007
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT
(this “Agreement”), dated as of June 11, 2007, by
and between
(the “Buyer”), on the one hand, and DIGITAL
RECORDERS, INC. (“DRI”) on the other.
In consideration of the covenants,
representations, warranties and mutual agreements herein set forth,
the Buyer and DRI hereby agree as follows:
ARTICLE I
THE SHARE PURCHASE AND ANCILLARY AGREEMENTS
Section 1.1 Purchase
of the Shares. Subject to and upon the terms and conditions
hereof and the representations, warranties and covenants contained
herein, on the Closing Date (as defined below) DRI shall sell,
transfer, assign and deliver certificate(s) representing
shares of the Company’s
Series J Convertible Preferred Stock (the
“Shares”) to the Buyer, and the Buyer shall purchase
the Shares from DRI, free and clear of all liens, claims and
encumbrances thereon (the “Purchase Transaction”). The
Shares shall have the rights, obligations and preferences set forth
in the Certificate of Designation of Series J Convertible
Preferred Stock attached hereto as Exhibit 1.1; which shall
include, but not be limited to, conversion into common stock of DRI
at $2.26 per share.
Section 1.2 Purchase
Price .
(a) Upon the terms and subject
to the conditions herein set forth, DRI and the Buyer agree that on
the Closing Date DRI shall issue the Shares to the Buyer in
exchange for a wire or certified funds of $
U.S. (the “Consideration”).
(b) At the Closing, DRI shall
deliver to the Buyer a certificate representing the Shares against
delivery by the Buyer to DRI of the Consideration. The certificate
for the securities comprising the Shares shall be registered in the
name of
.
Section 1.3
Registration Rights . At the Closing, the parties shall
enter into a Registration Rights Agreement, in the form set forth
as Exhibit 1.3 (the “Registration Rights
Agreement”).
1
ARTICLE II
CLOSING
Section 2.1 The
Closing. The closing of the sale and purchase of the Shares
contemplated hereby (the “Closing”) shall take place at
a date and time to be specified by the Buyer and DRI (the
“Closing Date”). The Closing shall take place at the
offices of DRI in Research Triangle Park, North Carolina, or any
other place mutually agreeable to the parties, subject to the right
of the parties to close by exchange of executed counterpart
documents on the Closing Date.
Section 2.2
Deliveries By DRI . At the Closing, DRI shall deliver to the
Buyer or cause to be delivered to the Buyer the certificate or
certificates representing the Shares registered in the name of the
Buyer or in such name as may be designated by the Buyer.
Section 2.3
Deliveries by the Buyer. Buyer will deliver to DRI the
Consideration and a copy of the Registration Rights Agreement,
executed by Buyer.
Section 2.4 Further
Assurances. DRI shall execute and deliver on the Closing Date
or thereafter any and all such other instruments, and take or cause
to be taken all such further action as may be necessary or
appropriate to vest fully and confirm to the Buyer title to and
possession of the Shares delivered hereunder by DRI.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF DRI
As a material inducement to the Buyer
to (i) enter into this Agreement, and (ii) purchase and
acquire the Shares, DRI represents and warrants to the Buyer,
except as disclosed in the Exhibits to this Agreement or in the
documents filed by DRI with the SEC (the “SEC Filings”)
pursuant to the requirements of the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder, as the same may be amended from time-to-time (the
“1934 Act”), that:
(a) DRI is a corporation duly
formed, validly existing and in good standing under the laws of the
State of North Carolina, and has full power and authority to own,
lease and operate its assets and to carry on its business as
presently conducted. DRI is duly qualified, licensed or admitted to
transact business, has all necessary government and regulatory
approvals, and is in good standing, in all of the jurisdictions in
which the
2
ownership, leasing or operation of its assets, or the conduct or
nature of its business, makes such qualification, licensing,
approvals or admission necessary, except where the failure to be so
qualified, licensed, approved or admitted would not, individually
or in the aggregate, reasonably be expected to have a Material
Adverse Effect (as defined below) as of the date hereof and as of
the Closing Date. For purposes of this Agreement, “Material
Adverse Effect” shall mean any event, change, condition or
effect which, when considered either individually or in the
aggregate together with other events, changes, conditions or
effects, is or is reasonably likely to be, materially adverse to
DRI or DRI’s business.
(b) The audited financial
statements of DRI for the year ended December 31, 2006 and
unaudited financial statements of DRI for March 31, 2007 that
have been filed with the SEC Filings (hereinafter collectively
referred to as the “DRI Financial Statements”) include,
as applicable to the relevant period, a balance sheet and related
statements of net income (loss), shareholders’ equity and
cash flows for the periods ended on such dates. The DRI Financial
Statements and other public disclosures/filings fairly present the
financial position, results of operations and other information
purported to be shown therein at the respective dates and for the
respective periods to which they apply. Since March 31, 2007,
there has been no undisclosed material change in the nature of the
business of DRI, nor any material undisclosed adverse change in its
financial condition or property, nor have any warrants, options,
shares of common stock or securities or instruments convertible
into or exchangeable for common stock been issued (other than as
properly disclosed), and DRI has incurred no material obligations
or liabilities or made any commitments other than as disclosed in
the DRI Financial Statements, the SEC Filings, or otherwise to
Buyer.
(c) DRI is not a party to any
material litigation, pending or threatened, nor has any claim been
made or, to the best knowledge of DRI’s executive officers,
asserted against DRI nor are there any proceedings threatened or
pending before any federal, state or municipal government, or any
department, board, body or agency thereof, involving DRI that
would, if resolved adversely to DRI, have a Material Adverse Effect
on DRI or its financial condition or operations.
(d) DRI is not in violation or
default of any provision of its Articles of Incorporation or Bylaws
or of any provision of any material instrument or contract to which
it is a party or by which it is bound or, to the best knowledge of
its executive
3
officers, of any provision of any federal, state or local judgment,
writ, decree, order, law, statute, rule or government regulation,
applicable to it. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
hereby and thereby will not result in any such violation or be in
conflict with or constitute, with or without the passage of time
and giving of notice, either a violation or default under any such
provision or an event which results in the creation of any lien,
charge or encumbrance upon any asset of DRI. DRI has all requisite
power and authority to execute, deliver and perform this Agreement
and has all requisite power and authority to execute and deliver
the certificates representing the Shares. All necessary corporate
proceedings of DRI have been duly taken to authorize the execution,
delivery and performance by DRI of this Agreement and the sale and
issuance of the Shares. This Agreement has been duly authorized,
executed and delivered by DRI, is the legal, valid and binding
obligation of DRI, and is enforceable as to DRI in accordance with
their respective terms. No consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration or
filing with, any federal, state, local or other governmental
authority or any court or other tribunal is required by DRI for the
execution, delivery or performance by DRI of this Agreement. No
consent of any party to any contract, agreement, instrument, lease,
license, arrangement or understanding to which DRI is a party, or
to which any of its properties or assets are subject, is required
for the execution, delivery or performance of this Agreement.
(e) DRI is in compliance with
its lending agreement with Laurus Masterfund, LLC.
(f) The preferred stock
outstanding of DRI is set forth on Exhibit III(f).
Series AAA and Series E are junior to Series J.
Series G and Series H are pari passu with
Series J. There are no other series issued and outstanding of
DRI.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
As a material inducement to DRI to
enter into this Agreement and to sell and issue the Shares, the
Buyer represents and warrants to DRI that:
(a) The Buyer is voluntarily
entering this Agreement with full power and authority.
4
(b) Neither the execution and
delivery of this Agreement or the Registration Rights Agreement nor
the consummation of the transactions herein or therein
contemplated, will conflict with or result in the breach of, or
accelerate the performance required by, any terms of any agreement,
or result in the creation of any lien, charge or encumbrance upon
any of the propert
|
