EXHIBIT 10.3
GRANT OF SECURITY INTEREST
IN PATENTS AND TRADEMARKS
     THIS GRANT OF SECURITY INTEREST (“Grant”), effected as of March 15, 2006,
is executed by Digital Recorders, Inc., a North Carolina corporation, Digital
Audio Corporation, a North Carolina corporation and Twin Vision of North
America, Inc. (collectively, the “Grantor”), in favor of Laurus Master Fund,
Ltd. (the “Secured Party”).
     A. Pursuant to a Security Agreement dated as of the date hereof (as
amended, restated, supplemented or otherwise modified from time to time, the
“Security Agreement”) among the Grantor, certain other Companies (as defined in
the Security Agreement), and the Secured Party, the terms and provisions of
which are hereby incorporated herein as if fully set forth herein, the Grantor
and the other Companies have granted a security interest to the Secured Party in
consideration of the Secured Party’s agreement to provide financial
accommodations to Digital Recorders, Inc.
     B. The Grantor (1) has adopted, used and is using the trademarks reflected
in the trademark registrations and trademark applications in the United States
Patent and Trademark Office more particularly described on Schedule 1 annexed
hereto as part hereof (the “Trademarks”), and (2) has registered or applied for
registration in the United States Patent and Trademark Office of the patents
more particularly described on Schedule 2 annexed hereto as part hereof (the
“Patents”).
     C. The Grantor wishes to confirm its grant to the Secured Party of a
security interest in all right, title and interest of the Grantor in and to the
Trademarks and Patents, and all proceeds thereof, together with the business as
well as the goodwill of the business symbolized by, or related or pertaining to,
the Trademarks, and the customer lists and records related to the Trademarks and
Patents and all causes of action which may exist by reason of infringement of
any of the Trademarks and Patents (collectively, the “T&P Collateral”), to
secure the payment, performance and observance of the Obligations (as that term
is defined in the Security Agreement).
     NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged:
     1. The Grantor does hereby further grant to the Secured Party a security
interest in the T&P Collateral to secure the full and prompt payment,
performance and observance of the Obligations.
     2. The Grantor agrees to perform, so long as the Security Agreement is in
effect, all acts deemed necessary or desirable by the Secured Party to permit
and assist it, at the Grantor’s expense, in obtaining and enforcing the
Trademarks and Patents in any and all countries. Such acts may include, but are
not limited to, execution of documents and assistance or cooperation in legal
proceedings. The Grantor hereby appoints the Secured Party as the Grantor’s
attorney-in-fact to execute and file any and all agreements, instruments,
documents and papers as the
Grant

 

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Secured Party may determine to be necessary or desirable to evidence the Secured
Party’s security interest in the Trademarks and Patents or any other element of
the T&P Collateral, all acts of such attorney-in-fact being hereby ratified and
confirmed.
     3. The Grantor acknowledges and affirms that the rights and remedies of the
Secured Party with respect to the security interest in the T&P Collateral
granted hereby are more fully set forth in the Security Agreement and the rights
and remedies set forth herein are without prejudice to, and are in addition to,
those set forth in the Security Agreement. In the event that any provisions of
this Grant are deemed to conflict with the Security Agreement, the provisions of
the Security Agreement shall govern.
     4. The Grantor hereby authorizes the Secured Party to file all such
financing statements or other instruments to the extent required by the Uniform
Commercial Code and agrees to execute all such other documents, agreements and
instruments as may be required or deemed necessary by the Secured Party, in each
case for purposes of affecting or continuing Secured Party’s security interest
in the T&P Collateral.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

          Grant   2    

 

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     IN WITNESS WHEREOF, the Grantor has caused this instrument to be executed
as of the day and year first above written.

              DIGITAL RECORDERS, INC.
 
       
 
  By:    
 
       
 
      Name:
 
      Title:
 
            DIGITAL AUDIO CORPORATION
 
       
 
  By:    
 
       
 
      Name:
 
      Title:
 
            TWIN VISION OF NORTH AMERICA, INC.
 
       
 
  By:    
 
       
 
      Name:
 
      Title:

          Grant   3    

 

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              LAURUS MASTER FUND, LTD.
 
       
 
  By:    
 
       
 
      Name:
 
      Title:

          Grant   4    

 

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SCHEDULE 1 TO GRANT OF SECURITY INTEREST
REGISTERED TRADEMARKS AND TRADEMARK APPLICATIONS

                                                                         
Registration                                 Application   Application   or
Grant             Title   Country   Business Unit   Owner/Applicant   Docket No.
  Number   Date   Number   Grant Date   Type   Status
DAC & Design
  USA   Digital Audio Corporation   Digital Recorders, Inc.   700800/3013  
75/763,900   7/29/1999     2,391,432     10/3/2000   Trademark   Registered
Digital Recorders & Design
  USA   Digital Recorders   Digital Recorders, Inc.   700800/3022   76/354,124  
12/31/2001     2,683,020     2/4/2003   Trademark   Registered
DR500C+
  USA   Digital Recorders   Digital Recorders, Inc.   700800/3026   76/551,985  
10/14/2003     2,902,980     11/16/2004   Trademark   Registered
DR600
  USA   Digital Recorders   Digital Recorders, Inc.   700800/3027   76/545,891  
9/22/2003     3,018,300     11/22/2005   Trademark   Registered
ELYSE
  USA   TwinVision na, Inc.   Digital Recorders, Inc.   700800/3005   75/181,268
  10/15/1996     2,166,496     6/16/1998   Trademark   Registered
QuickEnhance
  USA   Digital Audio Corporation   Digital Audio Corporation   700800/3023  
78/105,184   1/28/2002     2,972,648     7/19/2005   Trademark   Registered
 
                                           
Retainer Clip for Ribbon Cable
Connectors
  USA   TwinVision na, Inc.   Digital Recorders, Inc.   700800/1011   10/822,974
  4/13/2004     6,851,964     2/8/2005   U.S. Patent   Granted
SSABR
  USA   Digital Audio Corporation   Digital Audio Corporation   700800/3018  
78/045,100   1/26/2001     2,644,546     10/29/2002   Trademark   Registered
SSABR & Design
  USA   Digital Audio Corporation   Digital Audio Corporation   700800/3021  
78/063,631   5/15/2001     2,644,607     10/29/2002   Trademark   Registered
Talking Bus
  USA   Digital Recorders   Digital Recorders, Inc.   700800/3009   74/247,475  
2/19/1992     1,796,858     10/5/1993   Trademark   Registered
TwinVision
  USA   TwinVision na, Inc.   Digital Recorders, Inc.   700800/3004   75/157,950
  8/29/1996     2,166,426     6/16/1998   Trademark   Registered
Urban Transit Vehicle Microphone
Housing
  USA   Digital Recorders   Digital Recorders   700800/4002   29/113,345  
11/4/1999   DES429719   8/22/2000   U.S. Patent   Granted

Grant

 

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SCHEDULE 2 TO GRANT OF SECURITY INTEREST
PATENTS AND PATENT APPLICATIONS

                                                                             
Registration                                 Application   Application   or
Grant             Title   Country   Business Unit   Owner/Applicant   Docket No.
  Number   Date   Number   Grant Date   Type   Status
Advanced Technology. Enhancing Mobility. Enabling Security
  USA   DRI Public Company   Digital Recorders, Inc.   700800/3031    
78/635,663     5/24/2005           Trademark   Pending
DR Generation-600
  USA   Digital Recorders   Digital Recorders, Inc.   700800/3034     78/709,995
    9/9/2005           Trademark   Pending
LED Sign Cover and Method of Manufacture
  USA   TwinVision na, Inc.   Digital Recorders, Inc.   700800/1012    
10/869,305     6/16/2004           U.S. Patent   Pending
LiveLook-In
  USA   Digital Recorders   Digital Recorders, Inc.   700800/3041     78/771,572
    12/12/2005           Trademark   Pending
Public Address System and Method for an Urban Transit Vehicle
  USA   Digital Recorders   Digital Recorders, Inc.   700800/1013     10/880,811
    6/30/2004           U.S. Patent   Pending
Public Address System and Method for an Urban Transit Vehicle
  USA   Digital Recorders   Digital Recorders, Inc.   700800/1008     10/417,383
    4/16/2003           U.S. Patent   Pending
 
                                           
Rapid Messaging Protocol Wireless
Network Data Communication
System
  USA   Digital Recorders   Digital Recorders, Inc.   700800/1017     60/749,740
    12/13/2005           Patent   Pending
 
                                           
Security System for Urban Transit
Vehicles
  USA   Digital Recorders   Digital Recorders, Inc.   700800/1016     60/713,414
    9/1/2005           Patent   Pending
Tomorrow’s Technology Coloring
Today’s Transit
  USA   TwinVision na, Inc.   TwinVision na, Inc.   700800/3030     76/636,317  
  4/18/2005           Trademark   Pending
VacTell
  USA   Digital Recorders   Digital Recorders, Inc.   700800/3033     78/688,045
    8/8/2005           Trademark   Pending
VacTell
  Australia   Digital Recorders   Digital Recorders, Inc.   700800/3037    
1083428     10/31/2005           Trademark   Pending
VacTell
  Brazil   Digital Recorders   Digital Recorders, Inc.   700800/3038    
827964331     12/2/2005           Trademark   Pending
VacTell
  European
Community   Digital Recorders   Digital Recorders, Inc.   700800/3036    
4689543     10/28/2005           Trademark   Pending
VacTell
  Mexico   Digital Recorders   Digital Recorders, Inc.   700800/3039     748788
    11/4/2005           Trademark   Pending
VacTell
  Canada   Digital Recorders   Digital Recorders, Inc.   700800/3035     1277913
    11/1/2005           Trademark   Pending

Grant

 

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STATE OF                                         )
                                                            ) ss.:
COUNTY OF                                     )
          On this                      day of
                                        ,                     , before me
personally came                         who, being by me duly sworn, did state
as follows: that [s]he is                                          of [Insert
Name of Grantor] that [s]he is authorized to execute the foregoing Grant on
behalf of said corporation and that [s]he did so by authority of the [Board of
Directors] of said corporation.
                                                                      
Notary Public                          
Grant

 

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STATE OF                                         )
                                                            ) ss.:
COUNTY OF                                     )
          On this                     day of
                                        ,                     , before me
personally came                           who, being by me duly sworn, did state
as follows: that [s]he is                                          of Laurus
Master Fund, Ltd., that [s]he is authorized to execute the foregoing Grant on
behalf of said corporation and that [s]he did so by authority of the Board of
Directors of said corporation.
                                                                      
Notary Public                          
Grant

 

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SCHEDULE 1 TO GRANT OF SECURITY INTEREST
REGISTERED TRADEMARKS AND TRADEMARK APPLICATIONS

                                                                  Application  
Application   Registration             Title   Country   Business Unit  
Owner/Applicant   Docket No.   Number   Date   Grant Number   Grant Date   Type
  Status
DAC& Design
  USA   Digital Audio Corporation   Digital Recorders, Inc.   700800/3013  
75/763,900   7/29/1999     2,391,432     10/3/2000   Trademark   Registered
Digital Recorders & Design
  USA   Digital Recorders   Digital Recorders, Inc.   700800/3022   76/354,124  
12/31/2001     2,683,020     2/4/2003   Trademark   Registered
DR500C+
  USA   Digital Recorders   Digital Recorders, Inc.   700800/3026   76/551,985  
10/14/2003     2,902,980     11/16/2004   Trademark   Registered
DR600
  USA   Digital Recorders   Digital Recorders, Inc.   700800/3027   76/545,891  
9/22/2003     3,018,300     11/22/2005   Trademark   Registered
ELYSE
  USA   Twin Vision na, Inc.   Digital Recorders, Inc.   700800/3005  
75/181,268   10/15/1996     2,166,496     6/16/1998   Trademark   Registered
QuickEnhance
  USA   Digital Audio Corporation   Digital Audio Corporation   700800/3023  
78/105,184   1/28/2002     2,972,648     7/19/2005   Trademark   Registered
 
                                           
Retainer Clip for Ribbon Cable Connectors
  USA   Twin Vision na, Inc.   Digital Recorders, Inc.   700800/1011  
10/822,974   4/13/2004     6,851,964     2/8/2005   U.S.Patent   Granted
SSABR
  USA   Digital Audio Corporation   Digital Audio Corporation   700800/3018  
78/045,100   1/26/2001     2,644,546     10/29/2002   Trademark   Registered
SSABR& Design
  USA   Digital Audio Corporation   Digital Audio Corporation   700800/3021  
78/063,631   5/15/2001     2,644,607     10/29/2002   Trademark   Registered
Talking Bus
  USA   Digital Recorders   Digital Recorders, Inc.   700800/3009   74/247,475  
2/19/1992     1,796,858     10/5/1993   Trademark   Registered
Twin Vision
  USA   Twin Vision na, Inc.   Digital Recorders, Inc.   700800/3004  
75/157,950   8/29/1996     2,166,426     6/16/1998   Trademark   Registered
Urban Transit Vehicle Microphone
Housing
  USA   Digital Recorders   Digital Recorders   700800/4002   29/113,345  
11/4/1999   DES429719   8/22/2000   U.S. Patent   Granted

Grant

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SCHEDULE 2 TO GRANT OF SECURITY INTEREST
PATENTS AND PATENT APPLICATIONS

                                                                  Application  
Application   Registration             Title   Country   Business Unit  
Owner/Applicant   Docket No.   Number   Date   Grant Number   Grant Date   Type
  Status
Advanced Technology, Enhancing Mobility, Enabling Security.
  USA   DRI Public Company   Digital Recorders, Inc.   700800/3031    
78/635,663     5/24/2005           Trademark   Pending
DR Generation-600
  USA   Digital Recorders   Digital Recorders, Inc.   700800/3034     78/709,995
    9/9/2005           Trademark   Pending
LED Sign Cover and Method of Manufacture
  USA   Twin Vision na. Inc.   Digital Recorders, Inc.   700800/1012    
10/869,305     6/16/2004           U.S. Patent   Pending
LiveLook-In
  USA   Digital Recorders   Digital Recorders, Inc.   700800/3041     78/771,572
    12/12/2005           Trademark   Pending
Public Address System and Method for an Urban Transit Vehicle
  USA   Digital Recorders   Digital Recorders, Inc.   700800/1013     10/880,811
    6/30/2004           U.S. Patent   Pending
Public Address System and Method for an Urban Transit Vehicle
  USA   Digital Recorders   Digital Recorders, Inc.   700800/1008     10/417,383
    4/16/2003           U.S. Patent   Pending
 
                                           
Rapid Messaging Protocol Wireless Network Data Communication System
  USA   Digital Recorders   Digital Recorders, Inc.   700800/1017     60/749,740
    12/13/2005           Palent   Pending
 
                                           
Security System for
Urban Transit
Vehicles
  USA   Digital Recorders   Digital Recorders, Inc.   700800/1016     60/713,414
    9/1/2005           Patent   Pending
Tomorrow’s Technology Coloring Today’s Transit
  USA   TwinVision na, Inc.   TwinVision na, Inc.   700800/3030   76/636,317  
4/18/2005           Trademark   Pending
VacTell
  USA   Digital Recorders   Digital Recorders, Inc.   700800/3033     78/688,045
    8/8/2005           Trademark   Pending
VacTell
  Australia   Digital Recorders   Digital Recorders, Inc.   700800/3037    
1083428     10/31/2005           Trademark   Pending
VacTell
  Brazil   Digital Recorders   Digital Recorders, Inc.   700800/3038    
827964331     12/2/2005           Trademark   Pending
VacTell
  European Community   Digital Recorders   Digital Recorders, Inc.   700800/3036
    4689543     10/28/2005           Trademark   Pending
VaeTell
  Mexico   Digital Recorders   Digital Recorders, Inc.   700800/3039     748788
    11/4/2005           Trademark   Pending
VacTell
  Canada   Digital Recorders   Digital Recorders, Inc.   700800/3035     1277913
    11/1/2005           Trademark   Pending

Grant