<PAGE>

                          TECHNOLOGY LICENSE AGREEMENT

The University of Washington, a public institution of higher education having
administrative offices in Seattle, Washington 98195 ("UW"), and Digital
Recorders, Inc., a for-profit company having a place of business at 4018
Patriot Drive, One Park Center, Suite 100, Research Triangle Park, NC 27709
("Company") agree as follows:

BACKGROUND          1.1   UW has developed through the efforts of Professor
                    Daniel J. Dailey ("Dr. Dailey"), an employee of UW, and
                    others in the Department of Electrical Engineering certain
                    software, algorithms, and technical information pertaining
                    to transportation information management systems
                    ("Technology").

                    1.2   UW desires to license, and Company desires to obtain,
                    rights in the Technology to promote commercial investment
                    in developing the Technology and in creating products
                    incorporating the Technology.

DEFINITIONS         2.1   "Agreement" means this Technology License Agreement
                    and any attachments referenced by this Agreement and its
                    attachments.

                    2.2   "Effective Date" means the date upon which this
                    Agreement is fully executed by both UW and Company.

                    2.3   "Technology" means the subject matter set forth on
                    Attachment A.

                    2.4   "Modification" means any work based on or derived from
                    the Technology. Modifications may include, but are not
                    limited to, corrections of software program errors,
                    translations and stylistic restructuring of the Technology,
                    addition or deletion of functions or enhancement of existing
                    functions of the Technology, changes required to integrate
                    the Technology into other applications, preparation of
                    derivative works based on one or more works comprising the
                    Technology, and other adaptations of the Technology.

                    2.5   "UW Modification" means a Modification prepared by or
                    under the direction of Dr. Dailey or any successor and
                    which makes changes involving access to Technology source
                    code statements.

                    2.6   "Company Modification" means a Modification prepared
                    by or for Company by other than UW and its personnel,
                    including Dr. Dailey.

                    2.7   "Licensed Subject Matter" means the Technology, UW
                    Modifications delivered to Company pursuant to this
                    Agreement, and Company Modifications.

                    2.8   "End User" means a customer of Company that receives
                    and uses Licensed Subject Matter for customer's internal
                    and/or public operations and not for redistribution,
                    relicensing, disclosure, or conveyance of Licensed Subject
                    Matter beyond the operationsand control of said customer.

                    2.9   "Sublicense" means (a) a license granted by Company
                    to an End User that permits the use of Licensed Subject
                    Matter by the End User for its own internal and/or public
                    operations; (b) a license granted by Company to a
                    distributor or reseller to act on behalf of Company or
                    under contract to Company to convey or sell
                    Company-branded Licensed Subject Matter to End Users under
                    an appropriate End User license consistent with
                    Article 3.1(c).

GRANT               3.1   UW hereby grants to Company, and Company accepts,
                    worldwide non-exclusive licenses, with the right to
                    sublicense to End Users, under the UW's valuable intangible
                    property rights, and providing for a limited time Company
                    with an exclusive commercial position, as follows:

TECHNOLOGY LICENSE AGREEMENT                                         PAGE 1 OF 7
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                    (a)   to install and operate the Technology and UW
                          Modifications for internal research and evaluation
                          purposes on Company owned or controlled servers and
                          workstations;

                    (b)   to create Company Modifications, and to operate
                          Licensed Subject Matter for internal Company purposes,
                          and to install, deploy, and support Licensed Subject
                          Matter for evaluation and operation by two (2) End
                          Users;

                    (c)   to incorporate the Technology and UW Modifications and
                          Company Modifications into commercial products
                          distributed directly or through third party
                          distributors (but carrying Company and not
                          third-party distributor brands and under a Sublicense
                          for distribution or resale) to customers under a
                          Sublicense for End Use;

                    (d)   to use the Identifiers as set forth on Attachment A,
                          provided that Company uses best efforts to avoid any
                          use that would result in the infringement of any
                          valid trademark held by any third party, and further
                          provided that any trademark rights that may arise from
                          Company use of Identifiers shall be owned by UW.

                    3.2   UW retains title to the Technology and to all UW
                    Modifications delivered to Company under this Agreement.
                    Company shall own Company Modifications, including but not
                    limited to any patent, copyright, and trademark rights
                    thereto, prepared pursuant to this Agreement and developed
                    without the involvement of UW and UW personnel, including
                    Dr. Dailey, provided any such Company Modifications are
                    managed under the terms and conditions of this Agreement as
                    Licensed Subject Matter.

                    3.3   Company acknowledges that UW is active in the
                    development of the Technology, and Company agrees that UW
                    may prepare UW Modifications substantially similar to
                    Company Modifications, and that UW shall not be
                    constrained other than by this Agreement in UW's management
                    of such UW Modifications.

                    3.4   Provided Company is in full compliance with this
                    Agreement, UW shall not grant, for a period of thirty
                    (30) months from the Effective Date, additional licenses to
                    the Technology to for-profit commercial entities other than
                    to former and existing for-profit sponsors of research at
                    UW to which UW has obligations to grant non-exclusive
                    licenses to any or all of the Technology. UW shall promptly
                    inform Company of any obligations that come to the attention
                    of UW's Office of the Vice Provost for Intellectual Property
                    and Technology Transfer regarding such commercial licensing
                    of the Technology.

                    3.5   UW and Company will, at Company's request, negotiate
                    in good faith an extension of the period set forth in
                    Article 3.4, provided that Company (i) has granted
                    Sublicenses to at least five (5) End Users under
                    Section 3.1(c); (ii) there are no unresolved disputes
                    between UW and Company regarding this Agreement or other
                    agreements between UW and Company; and (iii) Company
                    presents a commercialization plan to UW showing Company
                    investment in developing and supporting the Technology and
                    a continued commitment to serve the transportation
                    information services marketplace.

                    3.6   UW may grant non-exclusive End User licenses to the
                    Technology and UW Modifications to non-profit organizations
                    and to governments providing regional transportation and
                    transportation information services.

DELIVERY            4.1   UW shall provide to Company the Technology within
                    ten (10) days of the Effective Date to

                    Bill McFarland
                    Digital Recorders, Inc.

Technology License Agreement                                         Page 2 of 7
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                    4018 Patriot Drive, One Park Center, Suite 100
                    P.O. Box 14068
                    Research Triangle Park, NC 27709

                    who shall serve as Company's technical liaison with UW.

                    4.2   UW shall provide to Company UW Modifications for a
                    period determined as the longer of (a) one (1) year from
                    the Effective Date of this Agreement and (b) ninety
                    (90) days following the completion of any research
                    sponsored by Company at UW pertaining to the Technology
                    and Modifications commenced within one (1) year of this
                    Agreement. Company and UW may upon mutually agreeable terms
                    and conditions extend the term for provision of UW
                    Modifications.

CONSIDERATION       5.1   Company shall provide to UW consideration for the
                    licenses granted herein as set forth on Attachment B.

DILIGENCE           6.1   Company shall utilize commercially reasonable efforts
                    in proceeding with the development, manufacture, sale, and
                    other commercial exploitation of Licensed Rights, and in
                    creating a supply and demand for Licensed Subject Matter.

                    6.2   Company shall mark, and shall require any
                    Sublicensee(s) to mark, any and all material forms of
                    Licensed Subject Matter or packaging pertaining thereto
                    distributed, transmitted, or displayed by Company (and/or
                    by its Sublicensees) in the United States with appropriate
                    copyright notices and other notices or disclaimers as
                    reasonably required to preserve UW rights in the Technology
                    and UW-prepared Modifications.

                    6.3   Company shall have Licensed Subject Matter in
                    commercial use with more than one (1) End User by August 31,
                    2002.

                    6.4   Company shall keep complete and accurate records and
                    books of account containing all information necessary for
                    the computation and verification of the amounts to be paid
                    hereunder. Company shall keep these records and books for a
                    period of five (5) years following the end of the accounting
                    period to which the information pertains.

                    6.5   If a dispute arises between UW and Company with regard
                    to the accuracy of reports or the amounts owed by Company
                    pursuant to this Agreement, Company shall, at the request
                    of UW, permit one or more accountants selected by UW
                    ("Accountant") to have access to Company's records and books
                    of account during ordinary working hours to audit with
                    respect to any payment period ending prior to such
                    request, the correctness of any report or payment made under
                    this Agreement, or to obtain information as to the payments
                    due for any such period in the case of failure of the
                    Company to report or make payment pursuant to the terms of
                    this Agreement.

                    6.6   The Accountant shall not disclose to UW any
                    information relating to the business of Company except that
                    which is necessary to inform UW of: (a) the accuracy or
                    inaccuracy of Company's reports and payments; (b) compliance
                    or noncompliance by Company with the terms and conditions
                    of this Agreement; and (c) the extent of any inaccuracy or
                    noncompliance.

                    6.7   Should the Accountant establish with reasonable
                    clarity that there is an inaccuracy in any of the Company's
                    payments or noncompliance by the Company with any of such
                    terms and conditions, the Accountant shall have the right
                    to make and retain copies (including photocopies) of any
                    pertinent portions of the records and books of account.

                    6.8   In the event that Company's financial obligations
                    calculated for any semi-annual period are under reported by
                    more than Ten Percent (10%), the costs of any audit and

Technology License Agreement                                         Page 3 of 7
<PAGE>

                    review initiated by UW will be borne by Company; otherwise,
                    UW shall bear the costs of any audit initiated by UW.

NOTICES             7.1   Any notice or other communication required or
                    permitted to be given by either party hereto shall be
                    deemed to have been properly given and be effective upon
                    the date of delivery if delivered in writing to the
                    respective addresses set forth below, or to such other
                    address as either party shall designate by written notice
                    given to the other party. If notice or other communication
                    is given by facsimile transmission, said notice shall be
                    confirmed by prompt delivery of the hardcopy original.

                    7.2   In the case of Company:

                    All correspondence regarding this Agreement should be
                    addressed to Tanya Johnson.

                    Postal Address:    Digital Recorders, Inc.
                    Address:           4018 Patriot Drive, One Park Center,
                                       Suite 100
                                       PO Box 14068
                                       Research Triangle Park, NC 27709

                    Facsimile Address: (919) 361-2947

                    7.3   In the case of UW:

                    All correspondence regarding this Agreement should be
                    addressed to Dr. Robert C. Miller, Jr.

                    Postal Address:    University of Washington
                                       Office of IP & Technology Transfer
                                       Box 354810
                                       Seattle WA 98195

                    Street Address:    University of Washington
                                       Office of IP & Technology Transfer
                                       1101 N.E. 45th Street, Suite 200
                                       Seattle WA 98105

                    Facsimile Address: (206) 685-4767

TERM                8.1   This Agreement shall be effective until the last
                    to expire of UW's copyrights or patent rights in the
                    Technology and UW-prepared and Company-prepared
                    Modifications, unless sooner terminated as provided by
                    this Agreement.

                    8.2   Company may terminate this Agreement at any time
                    upon ninety (90) days' written notice to UW and provided
                    that Company has paid to UW fees as specified in
                    Attachment B.

                    8.3   UW may terminate this Agreement upon notice if Company
                    is in material breach of this Agreement and fails within
                    thirty (30) days of a written demand for performance to
                    cure such breach.

                    8.4   UW may terminate this Agreement and the license
                    granted to Company herein, effective immediately upon
                    written notice of termination to Company if (i) Company
                    seeks liquidation, reorganization, dissolution or winding-up
                    of itself, is insolvent or evidence exists as to its
                    insolvency, or Company makes any general assignment for the
                    benefit of its creditors; or (ii) a petition is filed by or
                    against Company, or any proceeding is initiated by or
                    against Company, or any proceeding is initiated against
                    Company as a debtor, under any bankruptcy or insolvency law,
                    unless the laws then in effect void the


TECHNOLOGY LICENSE AGREEMENT                                         PAGE 4 OF 7
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                    effectiveness of this provision; or (iii) a receiver,
                    trustee, or any similar officer is appointed to take
                    possession, custody, or control of all or any part of
                    Company's assets or property.

                    8.5   The provisions under which this Agreement may be
                    terminated shall be in addition to any and all other legal
                    remedies which either party may have for the enforcement of
                    any and all terms hereof, and do not in any way limit any
                    other legal remedy such party may have.

                    8.6   Termination of this Agreement shall terminate all
                    rights and licenses granted to Company relating to the
                    Technology and to UW Modifications, and Company shall
                    cease use, distribution, licensing, and other exploitation
                    of Licensed Subject Matter. Upon termination, any and all
                    then in force Sublicenses shall be handled as described
                    on Attachment C.

RISK                9.1   UW represents that UW has the right to enter into
                    this Agreement and that to the best of UW's knowledge, UW
                    is not aware of any claim or notice that the Technology
                    infringes any patents, copyrights, other intellectual
                    property rights of any third parties.

                    9.2   UW EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES, WHETHER
                    EXPRESS OR IMPLIED, PERTAINING TO THE MERCHANTABILITY OR
                    FITNESS FOR A PARTICULAR PURPOSE OF THE TECHNOLOGY,
                    MODIFICATIONS, AND LICENSED SUBJECT MATTER.

                    9.3   Except with regard to the representations set forth
                    in Article 9.1 above, Company shall indemnify and hold
                    harmless UW, and its officers, Software developers,
                    employees, students, and agents, against any and all
                    claims, suits, losses, damages, costs, fees, and expenses
                    resulting from Company's possession and/or use of the
                    Technology, Licensed Rights, or Licensed Subject Matter,
                    including but not limited to any damages, losses, or
                    liabilities whatsoever with respect to death or injury to
                    any person and damage to any property. This indemnification
                    clause shall survive the termination of this Agreement.

GENERAL             10.1   This Agreement shall be construed in accordance with,
                    and its performance shall be governed by, the laws of the
                    State of Washington without giving effect to any conflict of
                    laws provisions. Headings are provided for convenience only.

                    10.2   If any dispute should arise between Company and UW
                    regarding this Agreement, Company and UW shall attempt to
                    resolve such dispute through good faith negotiations, to
                    commence promptly upon notice of one party to the other that
                    there is a breach or other significant area of disagreement
                    with regard to the interpretation of, or performance
                    pursuant, to this Agreement. If either Company or UW
                    requests, subsequent to such notice and at least thirty
                    (30) days' effort to resolve such dispute, either party may
                    request arbitration or alternative dispute resolution, and
                    such request shall not be unreasonably refused by the other
                    party.

                    10.3   Any suit, action, or proceeding arising out of or
                    relating to this Agreement shall be decided in King County,
                    Washington. Company and UW accept the venue and jurisdiction
                    of the Federal District Court of Western Washington,
                    Seattle, or the King County Superior Courts.

                    10.4   No omission or delay of either party hereto in
                    requiring due and punctual fulfillment of the obligations
                    of any other party hereto shall be deemed to constitute a
                    waiver by such party of its rights to require such due
                    and punctual fulfillment, or of any other of its remedies
                    hereunder. Amendments to this Agreement must be in
                    writing, reference this Agreement, and be signed by duly
                    authorized representatives of UW and Company.

TECHNOLOGY LICENSE AGREEMENT                                         PAGE 5 OF 7
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                    10.5   In the event either party hereto is prevented from
                    or delayed in the performance of any of its obligations
                    hereunder by reason of acts of God, war, strikes, riots,
                    storms, fires, or any other cause whatsoever beyond the
                    reasonable control of the non-performing party, the
                    non-performing party shall be excused from the
                    performance of any such obligation to the extent and during
                    the period of such prevention or delay.

                    10.6   This Agreement and the rights and benefits conferred
                    upon Company hereunder may not be assigned or otherwise
                    transferred by Company without the prior written consent of
                    UW which shall not be unreasonably withheld.

                    10.7   UW and Company are independent contractors and
                    neither has the authority to obligate the other or shall
                    act as an agent or representative of the other.

                    10.8   Nothing contained in this Agreement shall be
                    construed as conferring any right to use in advertising,
                    publicity, or other promotional activities any name,
                    trade name, trademark or other designation of the other
                    party or of any identifying technology of the other party,
                    including any contraction, abbreviation, or simulation of
                    the foregoing. The foregoing notwithstanding, Company and
                    UW each may include in written and other communications
                    that the Technology has been obtained by the Company
                    under a license from the University of Washington. UW and
                    Company will use best efforts to inform the other party
                    prior to any public releases or announcements conveying
                    such information. Any mark used and owned by Company as
                    of the date of this Agreement shall remain with Company
                    whether or not used in conjunction with any other
                    trademarks.

                    10.9   This Agreement embodies the entire understanding
                    of the parties and supersedes all previous communications,
                    representations, or understandings, either oral or
                    written, between the parties relating to the subject
                    matter hereof.

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TECHNOLOGY LICENSE AGREEMENT                                         PAGE 6 OF 7
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The University of Washington and Digital Recorders, Inc. have executed this
Agreement by their respective duly authorized representatives on the dates
given below.

DIGITAL RECORDERS, INC.                UNIVERSITY OF WASHINGTON

By:                                    By:
   ------------------------------         ------------------------------
Name:                                  Name:
     ----------------------------           ----------------------------
Title:                                 Title:
      ---------------------------            ---------------------------
Date:                                  Date:
     ----------------------------           ----------------------------

                                       CONCURRENCE:

                                       ---------------------------------
                                       Daniel J. Dailey






























TECHNOLOGY LICENSE AGREEMENT                                         PAGE 7 OF 7
<PAGE>

                         Technology License Agreement
                                  Attachment A
                                   Technology

BUSVIEW

Software inventory: on CDR

Identifier: BUSVIEW

Technical documentation: on CDR



MYBUS

Software inventory: on CDR

Identifier: MYBUS

Technical documentation: on CDR





















TECHNOLOGY LICENSE AGREEMENT                                        PAGE A1 OF 1
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                         TECHNOLOGY LICENSE AGREEMENT
                                  ATTACHMENT B
                                 CONSIDERATION

LICENSE FEE         B.1   Company shall pay to UW an Initial License Fee of
                    Fifteen Thousand Dollars ($15,000), payable upon execution
                    of this Agreement.

ROYALTY             B.2   Commencing on January 1, 2001, Company shall pay to
                    UW within thirty (30) days of January 1 and July 1, of each
                    year, a royalty of Seven Thousand Five Hundred Dollars
                    ($7,500) per customer End User Sublicense. The two End User
                    licenses identified in Section 3.1(b) are exempted from the
                    royalty if entered into prior to December 31, 2001.

                    B.3   If Company has (a) commenced Sublicensing under 3.1(c)
                    of the Agreement or (b) files (whether directly or through
                    UW) for patent protection on the Technology, a Modification,
                    or any aspect thereof, including any new use, Company shall
                    pay the greater of the royalty specified above or a
                    semi-annual minimum royalty of Fifteen Thousand Dollars
                    ($15,000).

                    B.4   If Company grants a total of more than five (5) such
                    Sublicenses to End Users under 3.1(c), the semi-annual
                    minimum license fee shall be Thousand Dollars ($30,000).

EQUITY              B.5   The Initial License Fee shall be paid by Company in
                    the form of a grant of warrants for Five Thousand (5,000)
                    shares of Company stock at a strike price of three dollars
                    ($3.00) per share and a term of five (5) years, and a cash
                    payment of Seven Thousand Five Hundred Dollars ($7,500).
                    The first Fifteen Thousand Dollars ($15,000) of the annual
                    minimum fee for 2001, if applicable, shall be paid by
                    Company by two grants of warrants for Two Thousand Five
                    Hundred (2,500) shares each of Company stock with a term of
                    five (5) years and a strike price to be negotiated, and a
                    cash payment of Two Thousand Five Hundred Dollars ($2,500)
                    within thirty (30) days of January 1 and July 1.

PAYMENT             B.6   All non-equity payments under this agreement shall be
                    made in United States dollars by check or money order
                    payable to the University of Washington, and delivered to
                    the University of Washington, Office of Technology
                    Transfer, 1107 NE 45 th Street, Suite 200, Seattle, WA
                    98105. Equity consideration in the form of warrants shall be
                    delivered to the University of Washington, Office of
                    Financial Management, Attn: Douglas Breckel, 280 Gerberding
                    Hall, Box 351248, Seattle, WA 98195.

REFERENCE           B.7   Company shall identify payments and equity
                    consideration to UW as 10798CA.

TECHNOLOGY AND LICENSE AGREEMENT                                    PAGE B1 OF 1
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                         TECHNOLOGY LICENSE AGREEMENT
                                  ATTACHMENT C
                                   SUBLICENSES

END USERS           C.1   Sublicenses as defined at Article 2.9(a) to End
                    Users shall remain in effect. Sublicenses as defined at
                    Article 2.9(b) to distributors and resellers shall
                    terminate upon termination of this Agreement.

COMPANY SUPPORT     C.2 Company shall not provide to End Users further updates,
                    modifications, or other work product that would come within
                    the scope of Licensed Subject Matter. Company may provide
                    other forms of support to End Users, however, such as
                    instruction, installation, and bug fixes for Company
                    Modifications.

REVERSION OF RIGHTS C.3   Sublicenses to End Users shall revert to UW, and UW
                    shall have the right to manage such Sublicenses according
                    to UW policies and regulations, provided that:

                    (a)   Company obligations in the form of assistance,
                          hosting, contract services, or any other such
                          obligations to End Users, provided the conditions of
                          Article C.2 are met, shall not revert to UW;

                    (b)   End Users accept the risk language and obligations as
                          set forth in Article 9;

                    (c)   Any obligation to provide updates, modifications, or
                          contract services involving Licensed Subject Matter
                          which reverts to UW management will be undertaken
                          by UW to End Users only at UW's sole discretion,
                          consistent with UW's public mission and policies.




















TECHNOLOGY AND LICENSE AGREEMENT                                    PAGE C1 OF 1