exv10w3



 




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




 









 




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
	 	 






 









 






     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
	 	 






 









 






	 	 	 	 	 
	 	 	LAURUS MASTER FUND, LTD.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:






					
	 	 	 	 	 
	Grant
	 	4
	 	 






 









 








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




 









 










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

 









 









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

 









 






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





 









 








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















 











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