Exhibit 10.46
THIRD AMENDMENT TO THE LOAN AND SECURITY AGREEMENT
     THIS THIRD AMENDMENT dated as of August 7, 2009 (this “Amendment”) among
DIGITAL RECORDERS, INC., a North Carolina corporation (“Digital”), TWINVISION OF
NORTH AMERICA, INC., a North Carolina corporation (“TwinVision” and, together
with Digital, the “Borrowers”), DRI CORPORATION, a North Carolina corporation
(“Guarantor” and, together with the Borrowers, the “Loan Parties”), and BHC
INTERIM FUNDING III, L.P., a Delaware limited partnership (“Lender”), to that
certain Loan and Security Agreement dated as of June 30, 2008 (as amended,
modified, supplemented or restated from time to time, the “Loan Agreement”)
among the Loan Parties and Lender. Terms which are capitalized in this Amendment
and not otherwise defined shall have the meanings ascribed to such terms in the
Loan Agreement.
     WHEREAS, in connection with the Loan Agreement, Mobitec AB granted a pledge
in favor of the Lender of all of its right, title and interest in 180,000 quotas
of Mobitec Brasil Ltda, representing 50% of the issued and outstanding quotas of
Mobitec Brasil Ltda. (the “Pledged Quotas”) under that certain Quota Pledge
Agreement, dated as of August 18, 2008 (the “Brazil Pledge”);
     WHEREAS, as of the date hereof, Mobitec AB has conveyed the Pledged Quotas
to Mobitec Par;
     WHEREAS, the Loan Parties have advised the Lender that pursuant to a Quota
Purchase Agreement dated on or about July 22, 2009, Mobitec Empreendimentos e
Participações Ltda., a wholly owned subsidiary of Mobitec AB, will acquire the
remaining 50% of the equity interest (the “Demore Shares”) currently held by
Roberto Juventino Demore and Lorena Giusti Demore in Mobitec Brasil Ltda. as
described in that certain Memorandum from Barbosa, Mussnich & Aragao, dated as
of July 14, 2009 (the “Memorandum”), attached hereto as Exhibit A;
     WHEREAS, according to the Memorandum, certain transactions (the
“Transactions”) have and will take place in order to effect the purchase of the
Demore Shares by Mobitec Empreendimentos e Participações Ltda and the conveyance
of the Pledged Quotas by Mobitec AB to Mobitec Par.
     WHEREAS, in connection with the Transactions, the Loan Parties have
requested that the Lender agree to modify certain terms of the Loan Agreement,
and the Lender is willing to do so, on the terms and subject to the satisfaction
of the conditions contained herein.
     NOW, THEREFORE, in consideration of the mutual promises contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Loan Parties and Lender hereby agree as
follows:
     Section One. Amendment to Loan Agreement. Effective upon satisfaction of
the conditions precedent set forth in Section Three hereof, the Loan Agreement
is hereby amended as follows:
     (a) Section 1.3. Definitions. Section 1.3 of the Loan Agreement is hereby
amended

 

--------------------------------------------------------------------------------

 

          (i) by adding the following new defined terms in their appropriate
alphabetical order:
     “Demore Shares” means 50% of the issued and outstanding quotas held prior
to the completion of the Transactions, by Roberto Juventino Demore and Lorena
Giusti Demore in Mobitec Brazil.
     “DRI Europa German Pledge” means that certain Share Pledge Agreement, dated
as of August 22, 2008, made by DRI Europa in favor of Lender, as the same may be
amended, restated, supplemented or otherwise modified or extended or renewed
from time to time.
     “DRI Europa Swedish Pledge” means that certain Pledge Agreement, dated as
of August 19, 2008, made by DRI Europa in favor of Lender, as the same may be
amended, restated, supplemented or otherwise modified or extended or renewed
from time to time
     “DRI Pledge” means that certain Stock Pledge Agreement, dated as of
June 30, 2008, made by Parent in favor of Lender, as the same may be amended,
restated, supplemented or otherwise modified or extended or renewed from time to
time.
     “Memorandum” that certain Memorandum from Barbosa, Mussnich & Aragao, dated
as of July 14, 2009.
     “Mobitec AB Shares” means the 1,944,825 quotas of Mobitec Brazil,
representing 50% of the issued and outstanding quotas of Mobitec Brazil owned by
Mobitec AB prior to the completion of the Transactions.
     “Mobitec Par” means Mobitec Empreendimentos e Participações Ltda., a
limited liability company organized under the laws of Brazil.
     “Mobitec Par Pledge” means that certain Quota Pledge Agreement, dated as of
July 22, 2009, made by Mobitec Par in favor of Lender, as the same may be
amended, restated, supplemented or otherwise modified or extended or renewed
from time to time.
     “Mobitec AB Pledge” means that certain Quota Pledge Agreement, dated as of
August 19, 2008, made by Mobitec AB in favor of Lender, as the same may be
amended, restated, supplemented or otherwise modified or extended or renewed
from time to time.
     “Quota Purchase Agreement” means that certain Quota Purchase Agreement
dated on or about July 22, 2009, among Mobitec AB, Roberto Juventino Demore and
Lorena Giusti Demore, relating to the purchase by Mobitec Par of the Demore
Shares, as the same may be amended, restated, supplemented or otherwise modified
or extended or renewed from time to time.

-2-

--------------------------------------------------------------------------------

 

     “Third Amendment” means that certain Third Amendment to the Loan and
Security Agreement, dated as of August 7, 2009, among the Loan Parties and the
Lender, as the same may be amended, restated, supplemented or otherwise modified
or extended or renewed from time to time.
     “Third Amendment Effective Date” has the meaning set forth in the Third
Amendment.
     “Transactions” means those certain transactions described in the Memorandum
and Quota Purchase Agreement, including, but not limited to, the contribution by
Mobitec AB of the Mobitec AB Shares to Mobitec Par, the purchase of the Demore
Shares by Mobitec Par and the merger of Mobitec Par with and into Mobitec
Brazil.
          (ii) deleting the defined terms “Change of Control”, “Pledgor” and
“Pledge Agreement” and inserting the following in lieu thereof:
     “Change of Control” means any of the following: (a) the failure of David
Turney to remain actively engaged in the management of Borrowers or Parent and
to hold the positions held on the Closing Date, including as an officer and
director; (b) any Person or “group” (within the meaning of Rules 13d-3 and 13d-5
under the Exchange Act), shall have acquired beneficial ownership of 20% or more
on a fully diluted basis of the voting and/or economic interest in Parent’s
Capital Stock, (b) the Board of Parent shall cease to consist of a majority of
Continuing Directors, (c) other than as permitted by Section 6.5, any merger or
consolidation of or with any Loan Party or sale of all or substantially all of
the property or assets of any Loan Party or (d) Parent ceases to own (i) 100% of
the Capital Stock of either Borrower, (ii) directly or indirectly, 100% of any
Foreign Subsidiary (other than Cast Master Mobitec), or (iii) at least 51% of
Cast Master Mobitec.
     “Pledgor” means, collectively, Parent, DRI Europa, Mobitec AB, Mobitec Par
and each other Person who shall from time to time hereafter become a party to
the Pledge Agreement, and shall extend to all heirs, estates, successors and
permitted assigns (in each case as applicable) of each such Person.
     “Pledge Agreement” means that certain DRI Europa German Pledge, DRI Europa
Swedish Pledge, DRI Pledge, Mobitec Par Pledge, Mobitec AB Pledge, and any other
collateral pledge agreement executed by the Pledgor in favor of Lender, as the
same may be amended, restated, supplemented or otherwise modified or extended or
renewed from time to time.
     (b) Section 6.1. Indebtedness and Liabilities. Section 6.1 of the Loan
Agreement is deleted in its entirety and the following is inserted in lieu
thereof:
     Indebtedness and Liabilities. No Loan Party shall, nor shall it permit any
Subsidiary to, directly or indirectly create, incur,

-3-

--------------------------------------------------------------------------------

 

assume, guaranty, or otherwise become or remain directly or indirectly liable,
on a fixed or contingent basis, with respect to any Indebtedness except: (i) the
Indebtedness to Lender; (ii) (A) Indebtedness incurred for Capital Expenditures
permitted under Section 6.18(E) hereof and (B) Indebtedness represented by the
promissory note permitted by Section 6.18(A)(i).; (iii) Indebtedness under the
Senior Lien Financing Documents; (iv) Indebtedness which consists of loans
permitted by Section 6.16(b) or (c), (v) Indebtedness set forth on Schedule 4.4
and any refinancing, refunding or extension thereof, provided that in connection
with any such refinancing, refunding or extension: (x) the aggregate principal
amount of such Indebtedness is not increased, (y) the scheduled maturity date of
such Indebtedness is not shortened, and (z) the covenants or defaults are not
materially more restrictive or more onerous than analogous provisions in the
documentation of such Indebtedness as in effect on the date hereof;
(vi) Indebtedness consisting of loans by any Foreign Subsidiary of Parent to any
Loan Party, so long as such Indebtedness is subordinated to the Obligations on a
basis satisfactory to Lender; (vii) trade payables and normal accruals in the
ordinary course of business not yet due and payable or with respect to which are
being Properly Contested; (viii) Subordinated Debt (including any subordinated
shareholder debt) to which Lender has consented and which is subject to a
subordination agreement in favor of and acceptable to Lender all in accordance
with the requirements of the definition of Subordinated Debt; (ix) any
Indebtedness consisting of guaranty obligations permitted by Section 6.2;
(x) unsecured or, to the extent Senior Lien Lender is the counterparty, secured
Indebtedness of Loan Parties under any Hedging Agreements, but only to the
extent any such Hedging Agreements are entered into by Loan Parties to protect
against the risks of interest rate fluctuations affecting Indebtedness permitted
hereunder or to protect against the risks of currency or commodity fluctuations
in connection with the ordinary business operations of Loan Parties in the
ordinary course of their respective businesses and not for speculative or
investment purposes; and (xi) Indebtedness incurred in connection with the
issuance of letters of credit, surety bonds (other than bonds related to
judgments or litigation), performance bonds and other obligations of a like
nature incurred in the normal course of business.
     (c) Section 6.2. Guaranties. Section 6.2 of the Loan Agreement is deleted
in its entirety and the following is inserted in lieu thereof:
     Guaranties. No Loan Party shall, nor shall it permit any Subsidiary to,
become liable upon the obligations or liabilities of any Person by assumption,
endorsement or guaranty thereof or

-4-

--------------------------------------------------------------------------------

 

otherwise (other than to Lender) except (a) as set forth on Schedule 6.2,
(b) guarantees made in the Ordinary Course of Business up to an aggregate amount
of Two Hundred Fifty Thousand Dollars ($250,000), (c) the endorsement of checks
in the Ordinary Course of Business, and (d) guarantees in an aggregate amount
not to exceed 2,000,000 Brazilian Reais made by Mobitec Brazil or Mobitec Par
for the purposes of asset-based working capital and capital lease financing of
Mobitec Brazil.
     (d) Section 6.4. Restricted Payments. Section 6.4 of the Loan Agreement is
deleted in its entirety and the following is inserted in lieu thereof:
     Restricted Payments. No Loan Party shall, nor shall it permit any
Subsidiary to, declare, pay or make any dividend or distribution on any shares
of the common stock or preferred stock of any Loan Party (other than dividends
or distributions payable in its stock, or split-ups or reclassifications of its
stock and, with respect to preferred stock, dividends that are capitalized,
compounded and added to the preference amount of the preferred stock) or apply
any of its funds, property or assets to the purchase, redemption or other
retirement of any common stock or preferred stock, or of any options to purchase
or acquire any such shares of common stock or preferred stock of any Loan Party;
provided that (A) Borrowers shall be permitted to make dividends or
distributions to Parent, to enable Parent to pay (i) professional fees,
franchise and other taxes and other Ordinary Course of Business operating
expenses incurred by Parent and (ii) up to $150,000 in the aggregate in any
Fiscal Year of dividends or distributions with respect to Parent’s preferred
stock, so long as after giving effect to the payment of such dividend or
distribution the Borrowers have at least $750,000 of undrawn availability (as
defined in the Senior Lien Financing Documents); provided, however, that after
giving effect to the payment of such dividends or distributions there shall not
exist any Default or Event of Default, and (B) Mobitec Par shall be permitted to
purchase the Demore Shares as part of the Transactions and as set forth in the
Quota Purchase Agreement.
     (e) Section 6.5. Restriction on Fundamental Changes. Section 6.5 of the
Loan Agreement is deleted in its entirety and the following is inserted in lieu
thereof:
     Restriction on Fundamental Changes. No Loan Party shall, nor shall it
permit any Subsidiary to, enter into any merger, consolidation or other
reorganization with or into any other Person or acquire all or a substantial
portion of the assets or Capital Stock of any Person or permit any other Person
to consolidate with or merge with it; provided that the Borrowers shall be
permitted to

-5-

--------------------------------------------------------------------------------

 

merge or consolidate into each other; and provided, further, that in order to
consummate the Transactions (A) Mobitec AB shall be permitted to (i) acquire
Mobitec Par for the purpose of acquiring the Demore Shares, and (ii) contribute
the Mobitec AB Shares to Mobitec Par and (B) Mobitec Par shall be permitted to
merge with and into Mobitec Brazil, so long as Mobitec Brazil is the successor
company to such merger.
     (f) Section 6.14. Organizational Documents. Section 6.14 of the Loan
Agreement is deleted in its entirety and the following is inserted in lieu
thereof:
     Organizational Documents. No Loan Party shall, nor shall it permit any
Subsidiary to, amend, modify or waive any term or material provision of its
Organization Documents or any certificate of designation unless required by law;
provided, that, in order to consummate the Transactions, (i) Mobitec Brazil may
change its Organizational Documents in connection with the contribution of the
Mobitec AB Shares to Mobitec Par and related changes to the Mobitec AB Pledge,
and (ii) each of Mobitec Brazil and Mobitec Par may change its Organizational
Documents solely in connection with the merger of Mobitec Par with and into
Mobitec Brazil, so long as Mobitec Brazil is the successor company to such
merger.
     (g) Section 6.16. Advances, Loans or Investments. Section 6.16 of the Loan
Agreement is deleted in its entirety and the following is inserted in lieu
thereof:
     Advances, Loans or Investments. No Loan Party shall, nor shall it permit
any Subsidiary to (i) purchase or acquire obligations or Capital Stock of, or
any other interest in, any Person, except for those Permitted Investments listed
on Schedule 6.16 and as otherwise expressly permitted hereunder, including but
not limited to, (y) the purchase by Mobitec Par of the Capital Stock of Mobitec
Brazil as contemplated by the Quota Purchase Agreement, and (z) the contribution
by Mobitec AB of the Capital Stock held by Mobitec AB in Mobitec Brazil to
Mobitec Par, in each case, in connection with the consummation of the
Transactions; or (ii) make advances, loans or extensions of credit to any
Person, including any Subsidiary or Affiliate, except with respect to (a) the
extension of commercial trade credit in connection with the sale of Inventory in
the Ordinary Course of Business, (b) the Mobitec Loan, (c) so long as no Default
or Event of Default has occurred and is continuing or would result therefrom,
loans by any Loan Party to another Loan Party (other than Parent) and (d) loans
or extensions of credit by the Borrowers or Parent to Foreign Subsidiaries of
Parent (inclusive of (i) amounts utilized for the Mobitec AB Loan Repayment and
(ii) any and all expenses incurred by a Loan Party and allocated to the Foreign
Subsidiaries of Parent for purposes of calculating the net income of the Loan
Parties on a consolidated basis, unless such Loan Party has been reimbursed in
cash for

-6-

--------------------------------------------------------------------------------

 

such allocated expenses), so long as (x) no Default or Event of Default has
occurred and is continuing or would result therefrom, (y) Borrowers have at
least $750,000 of Undrawn Availability (as defined in the Senior Lien Financing
Documents) after giving effect to such loan or extension of credit and (z) the
aggregate amount of such loans and extensions of credit by Borrowers to Foreign
Subsidiaries do not exceed $1,000,000 in the aggregate at any time outstanding.
     (h) Section 6.18(A). Aggregate Indebtedness. Section 6.18(A) of the Loan
Agreement is hereby amended by deleting “$1,500,000” from clause (i) of the
second proviso, and inserting in lieu thereof “$1,950,000”.
     Section Two. Representations and Warranties. To induce Lender to enter into
this Amendment, the Loan Parties hereby warrant and represent to Lender as
follows:
     (a) all of the representations and warranties contained in the Loan
Agreement and each other Loan Document to which the Loan Parties are a party
continue to be true and correct in all material respects as of the date hereof,
as if repeated as of the date hereof, except for such representations and
warranties which, by their terms, are expressly made only as of a previous date;
     (b) the execution, delivery and performance of this Amendment by each of
the Loan Parties is within their corporate powers, has been duly authorized by
all necessary corporate action on their part, and each of the Loan Parties has
received all necessary consents and approvals (if any are required) for the
execution and delivery of this Amendment;
     (c) the Organizational Documents of Borrowers and Guarantor previously
delivered to Lender by the Loan Parties have not been amended or modified in any
respect as of the date hereof;
     (d) upon execution of this Amendment, the Loan Agreement as amended by this
Amendment shall constitute the legal, valid and binding obligation of the Loan
Parties, enforceable against the Loan Parties in accordance with their terms as
so amended, except as such enforceability may be limited by (i) bankruptcy,
insolvency or similar laws affecting creditors’ rights generally and
(ii) general principles of equity;
     (e) except as set forth herein or as the Loan Parties or their
representatives shall have notified Lender of in writing, none of the Loan
Parties are in default under any indenture, mortgage, deed of trust, or other
material agreement or material instrument to which they are a party or by which
they may be bound which could have a Material Adverse Effect. Neither the
execution and delivery of this Amendment, nor the consummation of the
transactions herein contemplated, nor compliance with the provisions hereof will
(i) violate any law or regulation applicable to any of the Loan Parties,
(ii) cause a violation by any of the Loan Parties of any order or decree of any
court or government instrumentality applicable to them, (iii) conflict with, or
result in the breach of, or constitute a default under, any indenture, mortgage,
deed of trust, or other material agreement or material instrument to which any
of the Loan Parties is a party or by which they may be bound, or (iv) result in
the creation or imposition of any lien, charge, or

-7-

--------------------------------------------------------------------------------

 

encumbrance upon any property of any of the Loan Parties, except in favor of
Lender, to secure the Obligations.
     (f) no Default or Event of Default has occurred and is continuing; and
     (g) since the date of the Loan Parties’ most recent financial statements
delivered to Lender, no change or event has occurred which has had, or is
reasonably likely to have, a Material Adverse Effect.
     Section Three. Conditions Precedent. This Amendment shall become effective
(the “Third Amendment Effective Date”) upon the satisfaction of the following
conditions precedent:
     (a) Lender shall have received this Amendment, in form and substance
satisfactory to Lender, duly executed by the Loan Parties;
     (b) Lender shall have received the Quota Purchase Agreement, duly executed
by the parties thereto;
     (c) Lender shall have received the first amendment to the Mobitec AB
Pledge, in form and substance satisfactory to Lender, duly executed by the
parties thereto and registered with all necessary Governmental Authorities;
     (d) Lender shall have received the Mobitec Par Pledge, in form and
substance satisfactory to Lender, duly executed by the parties thereto and
registered with all necessary Governmental Authorities;
     (e) no Default or Event of Default shall have occurred be continuing, and
no event or development which has had or is reasonably likely to have a Material
Adverse Effect shall have occurred, in each case, since the date of the Loan
Parties’ most recent financial statements delivered to Lender.
     Section Four. Release. The Loan Parties hereby acknowledge and agree that:
(a) neither they nor any of their Affiliates have any claim or cause of action
against Lender (or any of Lender’s Affiliates, officers, directors, employees,
attorneys, consultants or agents) and (b) Lender has heretofore properly
performed and satisfied in a timely manner all of its obligations to the Loan
Parties under the Loan Agreement and the other Loan Documents. Notwithstanding
the foregoing, Lender wishes (and the Loan Parties agree) to eliminate any
possibility that any past conditions, acts, omissions, events or circumstances
would impair or otherwise adversely affect any of Lender’s rights, interests,
security and/or remedies under the Loan Agreement and the other Loan Documents.
Accordingly, for and in consideration of the agreements contained in this
Amendment and other good and valuable consideration, the Loan Parties (for
themselves and their Affiliates and the successors, assigns, heirs and
representatives of each of the foregoing) (each a “Releasor” and collectively,
the “Releasors”) does hereby fully, finally, unconditionally and irrevocably
release and forever discharge Lender and each of its Affiliates, officers,
directors, employees, attorneys, consultants and agents (each a “Released Party”
and collectively, the “Released Parties”) from any and all debts, claims,
obligations, damages, costs, attorneys’ fees, suits, demands, liabilities,
actions, proceedings and causes of action, in each case, whether known or
unknown, contingent of fixed, direct or indirect, and of whatever nature

-8-

--------------------------------------------------------------------------------

 

or description, and whether in law or in equity, under contract, tort, statute
or otherwise, which any Releasor has heretofore had or now or hereafter can,
shall or may have against any Released Party by reason of any act, omission or
thing whatsoever done or omitted to be done on or prior to the date hereof
arising out of, connected with or related in any way to this Amendment, the Loan
Agreement or any other Loan Document, or any act, event or transaction related
or attendant thereto, or Lender’s agreements contained therein, or the
possession, use, operation or control of any of the assets of agreements
contained therein, or the possession, use, operation or control of any of the
assets of the Loan Parties, or the making of any advance, or the management of
such advance or the Collateral.
     Section Five. General Provisions.
     (a) Except as herein expressly amended, each of the Loan Agreement and all
of the other Loan Documents are ratified and confirmed in all respects and shall
remain in full force and effect in accordance with their respective terms.
     (b) All references to the Loan Agreement in the Loan Agreement and each
other Loan Document shall mean such Loan Agreement as amended as of the
effective date hereof, and as amended hereby and as hereafter amended,
supplemented and modified from time to time.
     (c) This Amendment embodies the entire agreement between the parties hereto
with respect to the subject matter hereof and supersedes all prior agreements,
commitments, arrangements, negotiations or understandings, whether written or
oral, of the parties with respect thereto.
     (d) Section and subsection headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose or be given any substantive effect.
     (e) THIS AMENDMENT AND ALL MATTERS RELATING HERETO AND ARISING HEREFROM
(WHETHER ARISING UNDER CONTRACT LAW, TORT LAW OR OTHERWISE) SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
     (f) EACH LOAN PARTY FOR ITSELF AND ON BEHALF OF ITS SUBSIDIARIES HEREBY
CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE
COUNTY OF NEW YORK, STATE OF NEW YORK, AND IRREVOCABLY AGREES THAT, SUBJECT TO
LENDER’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AMENDMENT SHALL BE LITIGATED IN SUCH COURTS. EACH LOAN PARTY FOR ITSELF AND ON
BEHALF OF ITS SUBSIDIARIES ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AMENDMENT. IF ANY LOAN PARTY OR ANY SUBSIDIARY PRESENTLY IS, OR IN THE FUTURE

-9-

--------------------------------------------------------------------------------

 

BECOMES, A NONRESIDENT OF THE STATE OF NEW YORK, EACH LOAN PARTY FOR ITSELF AND
ON BEHALF OF ITS SUBSIDIARIES HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH PERSON
BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO SUCH
PERSON AT SUCH PERSON’S ADDRESS AS SET FORTH IN SECTION 8.6 OF THE LOAN
AGREEMENT OR AS MOST RECENTLY NOTIFIED BY SUCH PERSON IN WRITING PURSUANT TO
SECTION 8.6 OF THE LOAN AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN
(10) DAYS AFTER THE SAME HAS BEEN POSTED AS AFORESAID.
     (g) EACH LOAN PARTY FOR ITSELF AND ON BEHALF OF ITS SUBSIDIARIES AND LENDER
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AMENDMENT. EACH LOAN PARTY FOR ITSELF
AND ON BEHALF OF ITS SUBSIDIARIES AND LENDER FURTHER WARRANT AND REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY
AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.
     (h) This Amendment is a Loan Document.
     (i) Nothing contained in this Amendment shall operate as a waiver of any
right, power, or remedy to which Lender may be entitled, nor constitute a waiver
of any provision of the Loan Agreement or any of the other Loan Documents, or
any other documents, instruments or agreements executed and/or delivered under
or in connection therewith.
     (j) This Amendment may be executed by the parties hereto in one or more
counterparts, each of which when so executed shall be deemed an original; and
such counterparts taken together shall constitute one and the same agreement.
Any signatures delivered by a party by facsimile or electronic transmission
shall be deemed an original signature hereto.
(This space intentionally left blank – signature page follows.)

-10-

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, Loan Parties and Lender have signed below to indicate
their agreement with the foregoing and their intent to be bound thereby.

              LENDER:   BHC INTERIM FUNDING III, L.P.,    
 
           
 
  By:   BHC Interim Funding Management III, L.P.,    
 
      its General Partner    
 
           
 
  By:   BHC Investors III, L.L.C.,    
 
      its Managing Member    
 
           
 
  By:   GHH Holdings III, L.L.C.    
 
           
 
  By:   /s/ Gerald H. Houghton
 
Name: Gerald H. Houghton    
 
      Title: Managing Member    
 
            BORROWERS:   DIGITAL RECORDERS, INC.    
 
           
 
  By:   /s/ David L. Turney
 
Name: David L. Turney    
 
      Title: CEO, President    
 
                TWINVISION OF NORTH AMERICA, INC.    
 
           
 
  By:   /s/ David L. Turney
 
Name: David L. Turney    
 
      Title: CEO, President    
 
            GUARANTOR:   DRI CORPORATION    
 
           
 
  By:   /s/ David L. Turney
 
Name: David L. Turney    
 
      Title: CEO, President    

Signature Page to Third Amendment to Loan and Security Agreement

 

--------------------------------------------------------------------------------

 

          Consented to and Acknowledged by:    
 
        DRI EUROPA AKTIEBOLAG    
 
       
By:
Name:
  /s/ David L. Turney
 
David L. Turney    
Title:
  Chairman    
 
        MOBITEC AB        
By:
Name:
  /s/ Stephen P. Slay
 
Stephen P. Slay    
Title:
  Director    

Acknowledgement to Third Amendment to Loan and Security Agreement