**Exhibit 10.16****WAIVER AND CONSENT**     This WAIVER (this “**Waiver**”), dated as of April 30, 2007, is entered into by and between by andbetween Digital Recorders, Inc., a North Carolina corporation (the “Company”), Twinvision of NorthAmerica, Inc., a North Carolina corporation (“Twinvision”), Digital Audio Corporation, a NorthCarolina corporation (“DAC”), and Robinson-Turney International, Inc., a Texas corporation (“RTI”and together with the Company, Twinvision and DAC, the “Credit Parties” and each a “Credit Party”)and Laurus Master Fund, Ltd., a Cayman Islands company (the “Purchaser”), for the purpose ofamending and amending and restating and waiving certain terms of that certain Security Agreement,dated as of March 15, 2006 (the “Initial Closing Date”), by and between the Credit Parties andPurchaser (as amended, modified or supplemented from time to time, the “Security Agreement”); thatcertain Secured Non-Convertible Revolving Note, dated March 15, 2006 made by the Company in favorof Purchaser for the total principal amount of $6,000,000 (as amended and restated, amended,modified or supplemented from time to time, the “Revolving Note”); that certain Warrant issued bythe Company to Purchaser to purchase up to 550,000 shares of Common Stock of the Purchaser datedMarch 15, 2006 (as amended, modified or supplemented from time to time, “Warrant 1”); that certainSecurities Purchase Agreement dated April 28, 2006 by and between the Credit Parties and thePurchaser (as amended, modified or supplemented from time to time, the “SPA”); that certain SecuredTerm Note dated April 28, 2006, made by the Credit Parties in favor of Purchaser for the totalprincipal amount of $1,600,000 (as amended, modified or supplemented from time to time, the “TermNote”); that certain Warrant issued by the Company to Purchaser to purchase up to 80,000 shares ofCommon Stock of the Company dated April 28, 2006 (as amended, modified or supplemented from time totime, “Warrant 2”), and that certain Amended and Restated Registration Rights Agreement, datedApril 28, 2006, by and between the Company and the Purchaser (as amended, modified or supplemented,the “Registration Rights Agreement” and, together with the Security Agreement, the Revolving Note,Warrant 1, the SPA, the Term Note, Warrant 2 and the other Ancillary Agreements (as defined in theSecurities Agreement), and Restated Agreements (as defined in the SPA) the “Funding Documents”).Capitalized terms used but not defined herein shall have the meanings given them in the SecurityAgreement.     WHEREAS, The Company intends to sell all of the capital stock of its wholly-owned subsidiary,Digital Audio Corporation, (“DAC”), to Dolphin Direct Equity Partners, LP (“Purchaser”) pursuant tothat certain Share Purchase Agreement by and between the Company and Purchaser (the “PurchaseAgreement”) and the documents ancillary thereto (the “Share Purchase Agreements”).     WHEREAS, the Company and Laurus have agreed to make certain changes to the Funding Documentsas set forth herein, and that Laurus will waive certain provisions of the Funding Documents.     NOW, THEREFORE, in consideration of the above, and for other good and valuable consideration,the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
 

 
**WAIVERS**     1. Laurus hereby consents to consummation of the transactions contemplated by the SharePurchase Agreements (the “Stock Transaction”); provided that, upon consummation of the ShareTransaction, $1,100,000 of the net proceeds otherwise payable to DAC by Purchaser as a result ofthe Share Purchase Transaction shall instead be applied (the “Repayment”) via direct wire transferfrom Purchaser to Laurus (pursuant to wire instructions set forth by Laurus in writing) to repayindebtedness owing to Laurus by the Company and its subsidiaries (receipt of such Repayment, the“Repayment Funding”)     2. On and after the Repayment Funding, (i) all of Laurus’s security interests, liens,mortgages and/or other charges or encumbrances created on or with respect solely to the capitalstock of DAC, with respect to the underlying assets solely of DAC, and with respect to patents andtrademarks solely owned by DAC under the Funding Documents are, without further action, foreverreleased and discharged; and (ii) Laurus shall return any stock certificates of DAC in itspossession and amend any UCC filings in need of amendment to reflect that it no longer has asecurity interest in the underlying assets of DAC or in the patents and trademarks owned by DAC.In addition to the requirements set forth above, the Company agrees to deliver to Laurus, andLaurus’ obligations hereunder are conditioned upon its receipt, prior to consummation of the ShareTransaction, of a true and complete copy of the Purchase Agreement and all related documents,schedules and exhibits, relating to the assignment and sale, which documents shall each be in formand substance reasonably satisfactory to Laurus.     3. Effective on the Repayment Funding, Laurus on behalf of itself and any affiliates herebyreleases and forever discharges DAC and its successors and assigns of and from any and all mannerof action or actions, cause or causes of action, in law or in equity, suits, debts, liens,agreements, promises, liabilities, claims, demands, damages, loss, cost, or expense of any naturewhatsoever, whether known or unknown by Laurus.     3. Nothing in this letter shall be deemed to release or discharge Laurus’s security interests,liens, pledges, mortgages and/or other charges or encumbrances created on or with respect to anyassets of the Company or the Company’s Subsidiaries other than the capital stock of DAC and theunderlying assets of DAC, including patents and trademarks owned by DAC.**MISCELLANEOUS**     1. The Company understands that the Company has an affirmative obligation to make promptpublic disclosure of material agreements and material amendments to such agreements. It is ourdetermination that neither this letter nor the terms and provisions of this letter, (collectively,the “Information”) are material. Company has had an opportunity to consult with counsel concerningthis determination. Company hereby agrees that Laurus shall not be in violation of any duty toCompany or its shareholders, nor shall Laurus be deemed to be misappropriating any information ofCompany, if Laurus sells shares of common stock of Company, or otherwise engages in transactionswith respect to securities of Company, while in possession of the Information.
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     2. Except as specifically set forth in this Waiver, there are no other amendments,modifications or waivers to the Funding Documents, and all of the other forms, terms and provisionsof the Funding Documents remain in full force and effect.     3. This Waiver shall be binding upon the parties hereto and their respective successors andpermitted assigns and shall inure to the benefit of and be enforceable by each of the partieshereto and their respective successors and permitted assigns. **THIS WAIVER SHALL BE CONSTRUED ANDENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.**This Waiver may beexecuted in any number of counterparts, each of which shall be an original, but all of which shallconstitute one instrument.**[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]**
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     **IN WITNESS WHEREOF**, each of the Company and Laurus has caused this Amendment to be signed inits name effective as of this 30th day of April, 2007.         **DIGITAL RECORDERS, INC.**           By: /s/ David L. Turney     Name: David L. Turney    Title: Chairman, President and CEO    **DIGITAL AUDIO CORPORATION**           By: /s/ David L. Turney     Name: David L. Turney    Title: Chairman, President and CEO           **TWIN VISION OF NORTH AMERICA INC.**           By: /s/ David L. Turney     Name: David L. Turney    Title: Chairman, President and CEO           **ROBINSON TURNEY INTERNATIONAL INC.**           By: /s/ David L. Turney     Name: David L. Turney    Title: Chairman, President and CEO           **LAURUS MASTER FUND, LTD.**           By: /s/ David Grin     Name: David Grin    Title: Fund Manager  
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