Exhibit 10.2
THIS WARRANT HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(“ACT”), OR APPLICABLE STATE SECURITIES LAWS
(“STATE ACTS”), AND SHALL NOT BE SOLD, HYPOTHECATED, OR
OTHERWISE TRANSFERRED, UNLESS SUCH TRANSFER IS MADE IN COMPLIANCE
WITH THE ACT AND THE STATE ACTS.
STOCK PURCHASE WARRANT
This Stock
Purchase Warrant (this “Warrant”), dated June 23,
2005, is issued to DOLPHIN OFFSHORE PARTNERS, L.P. (the
“Holder”), by DIGITAL RECORDERS, INC. , a North
Carolina corporation (the “Company”).
1.
Purchase of Shares . Subject to the terms and conditions
hereinafter set forth, the Holder is entitled, upon surrender of
this Warrant at the principal office of the Company (or at such
other place as the Company shall notify the Holder hereof in
writing), to purchase from the Company 240,000 fully paid and
non-assessable shares of Common Stock, $.10 par value (the
“Common Stock”), of the Company (as adjusted pursuant
to Section 7 hereof, the “Shares”) for the
purchase price specified in Section 2 below.
2.
Purchase Price . The purchase price for the Shares is $2.21
per share. Such price shall be subject to adjustment pursuant to
Section 7 hereof (such price, as adjusted from time to time,
is herein referred to as the “Warrant
Price”).
3.
Exercise Period . This Warrant is exercisable in whole or in
part at any time from the date hereof through June 22,
2010.
4. Method
of Exercise . While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the Holder may
exercise, in whole or in part, but in increments of no less than
50,000 shares, the purchase rights evidenced hereby. Such exercise
shall be effected by tender of a duly executed copy of the form of
Exercise Notice attached hereto, to the Secretary of the Company at
its principal offices, and the payment to the Company of an amount
equal to the aggregate purchase price for the number of Shares
being purchased, unless done by cashless exercise.
5.
Certificates for Shares . Upon the exercise of the purchase
rights evidenced by this Warrant, one or more certificates for the
number of Shares so purchased shall be issued as soon as
practicable thereafter, and in any event within thirty
(30) days of the delivery of the subscription
notice.
6.
Reservation of Shares . The Company covenants that it will
at all times keep available such number of authorized shares of its
Common Stock, free from all preemptive rights with respect thereto,
which will be sufficient to permit the exercise of this Warrant for
the full number of Shares specified herein. The Company further
covenants that such Shares, when issued pursuant to the exercise of
this Warrant, will be duly and validly issued, fully paid and
non-assessable and free from all taxes, liens and charges with
respect to the issuance thereof.
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7.
Adjustment of Warrant Price and Number of Shares . The
number and kind of securities purchasable upon exercise of this
Warrant and the Warrant Price shall be subject to adjustment from
time to time as follows:
(a)
Stock Dividends, Subdivisions, Combinations and Other
Issuances . If the Company shall at any time prior to the
expiration of this Warrant subdivide its Common Stock, by stock
split or otherwise, combine its Common Stock or issue additional
shares of its Common Stock as a dividend with respect to any shares
of its Common Stock, the number of Shares issuable on the exercise
of this Warrant shall forthwith be proportionately increased in the
case of a subdivision or stock dividend and proportionately
decreased in the case of a combination. Appropriate adjustments
shall also be made to the Warrant Price payable per Share, but the
aggregate Warrant Price payable for the total number of Shares
purchasable under this Warrant (as adjusted) shall remain the same.
Any adjustment under this Section 7(a) shall become effective at
the close of business on the date the subdivision or combination
becomes effective or as of the record date of such dividend, or, in
the event that no record date is fixed, upon the making of such
dividend.
(b)
Reclassification, Reorganization, Merger, Sale or
Consolidation . In the event of any reclassification, capital
reorganization or other change in the Common Stock of the Company
(other than as a result of a subdivision, combination or stock
dividend provided for in Section 7(a) above) or in the event of a
consolidation or merger of the Company with or into, or the sale of
all or substantially all of the properties and assets of the
Company to, any person, and in connection therewith consideration
is payable to holders of Common Stock in cash, securities or other
property, then as a condition of such reclassification,
reorganization or change, consolidation, merger or sale, lawful
provision shall be made, an
