Document:

exv10w4w1

Exhibit 10.4.1

FIRST AMENDMENT TO THE LOAN AND SECURITY AGREEMENT 

     First Amendment (this “First Amendment”) dated as of July 30, 2008 between 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 II, 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”) between the Loan Parties and Lender. Terms which are capitalized in this First
Amendment and not otherwise defined shall have the meanings ascribed to such terms in the Loan
Agreement.

     WHEREAS, Lender has agreed to forego the requirement of a pledge of sixty-five percent (65%)
of the Capital Stock of Mobitec Australia; and

     WHEREAS, the Loan Parties desire to correct certain Schedules to the Loan Agreement.

     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.

     (a) Section 1.1. Definitions. Section 1.1 is amended by deleting the
following definitions and substituting the following in lieu thereof:

          (i) “Mobitec Brazil” means Mobitec Industria e Comercio de Produtos Eletronicos
Ltda., a Brazilian limited liability company.

          (ii) “Pledge Agreement” means a pledge agreement, in form and substance
satisfactory to Lender, executed by a Pledgor, pursuant to which such Pledgor grants a Lien
on the Capital Stock identified therein to Lender, as the same may be amended, restated,
supplemented or otherwise modified or extended or renewed from time to time.

          (iii) “Pledged Collateral” shall have the meaning given such term in a Pledge
Agreement, and shall in any event include any and all Capital Stock issued by each Borrower
and RTI, sixty-five percent (65%) of the Capital Stock issued by each Foreign Subsidiary
(other than Mobitec Australia and, for so long as the Loan Parties and their respective
Subsidiaries own less than sixty-five percent (65%) of the Capital Stock issued by Mobitec
Brazil, Mobitec Brazil) and one hundred percent (100%) of the Capital Stock issued by
Mobitec Brazil to the Loan Parties and their respective Subsidiaries to the extent that the
Loan Parties and such Subsidiaries own sixty-five percent (65%) or less of the issued and
outstanding Capital Stock of Mobitec Brazil.

 

 

     (b) Section 6.19. Negative Pledge. Section 6.19 is hereby deleted in its
entirety and substituting the following in lieu thereof:

          No Loan Party shall, nor shall it permit any Subsidiary to (i) create, incur, assume or
suffer to exist any Lien, or any other negative pledge, on or with respect to any Capital
Stock of a Foreign Subsidiary or on or with respect to the Capital Stock of Cast Master
Mobitec that it does not own or (ii) take any action that would permit, or fail to take any
action that would allow, the owner of the Capital Stock of Mobitec Brazil that is not owned
by a Loan Party or a Subsidiary thereof to create, incur, assume or suffer to exist any
Lien, or any other negative pledge, on or with respect to such Capital Stock.

     (c) Schedules 4.1(B) and 4.21. Schedules 4.1(B) and 4.21 to the Loan
Agreement are restated in their entirety as set forth on Exhibit A hereto.

     Section Two.
Representations and Warranties. To induce Lender to enter into this
First 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 First 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 First Amendment;

     (c) upon its execution, this First Amendment shall constitute the legal, valid and binding
obligation of the Loan Parties, enforceable against the Loan Parties in accordance with its terms,
except as such enforceability may be limited by (i) bankruptcy, insolvency or similar laws
affecting creditors’ rights generally and (ii) general principles of equity;

     (d) 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 First 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
encumbrance upon any property of any of the Loan Parties, except in favor of Lender, to secure the
Obligations.

     (e) no Default or Event of Default has occurred and is continuing; and

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     (f) 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 First Amendment shall become effective
upon the satisfaction of the following conditions precedent:

     (a) Lender shall have received this First Amendment, duly executed by the Loan Parties;

     (b) 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 respective 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 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 First 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.

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     (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 First 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) This First Amendment, and matters relating hereto and arising herefrom, shall be governed
by and construed in accordance with the internal laws of the State of New York, without regard to
the conflict of laws principles thereof.

     (e) This First Amendment is a Loan Document.

     (f) Nothing contained in this First 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.

     (g) This First 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.)

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     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 II, 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/ Stephen P. Slay

	 
	 

	 	 	 	 

Name: Stephen P. Slay
	 	 
	 

	 	 	 	Title: VP & Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	TWINVISION OF NORTH AMERICA, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Stephen P. Slay

	 
	 

	 	 	 	 

Name: Stephen P. Slay
	 	 
	 

	 	 	 	Title: VP & Secretary	 	 
	 
	 	 	 	 	 	 
	GUARANTOR:	 	DRI CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Stephen P. Slay

	 
	 

	 	 	 	 

Name: Stephen P. Slay
	 	 
	 

	 	 	 	Title: CFO & Secretary	 	 

Signature
Page to First Amendment

 

 

EXHIBIT A

SCHEDULE 4.1(B)

CAPITALIZATION

	 	 	 	 	 
	Parent: Common Stock authorized –
	 	 	25,000,000	 
	Preferred Stock authorized –
	 	 	4,967,700	 
	Series AAA authorized –
	 	 	20,000	 
	Series D authorized –
	 	 	30,000	 
	Series E authorized –
	 	 	500	 
	Series F authorized –
	 	 	400	 
	Series G authorized –
	 	 	600	 
	Series H authorized –
	 	 	600	 
	Series I authorized –
	 	 	200	 
	Series J authorized –
	 	 	250	 

     See outstanding capitalization table below

TwinVision of North America, Inc. – common stock authorized – 100,000 – 100% owned by Parent

Digital Recorders, Inc. – common stock authorized – 100,000 – 100% owned by Parent

RTI – common stock authorized 100,000 – 100% owned by Parent

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Shares Issued and	 	DRI	 	 
	 	 	Shares authorized	 	Outstanding	 	Ownership %	 	DRI Shares
	DRI Europa
	 	 	 	 (A)	 	 	100,000	 	 	 	100	%	 	 	100,000	 
	Mobitec AB – sub of DRI Europa AB and DRI
	 	 	 	 (B)	 	 	100,000	 	 	 	100	%	 	 	100,000	*
	Mobitec GMBH – sub of DRI Europa AB
	 	 	30,000	 	 	 	30,000	 	 	 	100	%	 	 	30,000	 
	Mobitec Australia – subsidiary of Mobitec AB
	 	 	1	 	 	 	1	 	 	 	100	%	 	 	1	 
	Mobitec Brazil – subsidiary of Mobitec AB
	 	 	360,000	 	 	 	360,000	 	 	 	50	%	 	 	180,000	 
	Cast Master
Mobitec - Subsidiary of Mobitec AB
	 	 	250,000	 	 	 	250,000	 	 	 	51	%	 	 	127,500	 

 

			
	(A):	 	The Articles of Association authorize stock in a monetary value with
a minimum of 5,000,000 SEK and a maximum of 20,000,000 SEK.
	 
	(B):	 	The Articles of Association authorize stock in a monetary value with
a minimum of 100,000 SEK and a maximum of 400,000 SEK.
* DRI Europa owns 90,802 shares of Mobitec AB and Parent owns
9,198 shares of Mobitec AB

 

 

 

Parent Common Stock, Warrants, Convertibles and Preferred Stock

Potential “All-In” Calculation Summary — As of May 31, 2008

	 	 	 	 	 	 	 
	Instrument	 	Quantity	 	Remarks
	Common:
	 	 	 	 	 	 
	Common – Beginning of Year

	 	 	11,187,993	 	 	 
	Common stock issued to Directors and key
executive managers in lieu of compensation
- October-December 2007

	 	 	6,855	 	 	 
	Series AAA Conversion (6 shares at $5.50)

	 	 	5,454	 	 	 
	Series E Conversion (5 shares at $3.00)

	 	 	8,333	 	 	 
	Employee stock option conversion

	 	 	1,980	 	 	 
	Common stock issued to Directors and key
executive managers in lieu of compensation
- January-March 2008

	 	 	10,815	 	 	 
	Total Common

	 	 	11,221,430	 	 	 
	 
	 	 	 	 	 	 
	Convertibles:
	 	 	 	 	 	 
	Higgins ‘02 Conv Debt ($0.25M)

	 	 	227,273	 	 	Converts at $1.10; converted at Closing
	Series E Conv Preferred

	 	 	133,333	 	 	Conv. at $3.00; Face $5K; 80 Shares; 7% Div.
	Series AAA Preferred

	 	 	150,909	 	 	$5.50 Conversion Price (166 Shares Remaining Outstanding)
	Series G Conv Preferred

	 	 	945,701	 	 	$2.21 Conversion Price (418 Shares Remaining Outstanding)
	Series H Conv Preferred

	 	 	144,230	 	 	$2.08 Conversion Price (60 Shares Remaining Outstanding)
	Series J Conv Preferred

	 	 	199,115	 	 	$2.26 Conversion Price (90 Shares Remaining Outstanding)
	Total Convertibles:

	 	 	1,800,561	 	 	 
	Potential With Conversion

	 	 	13,021,991	 	 	Outstanding & Potentially Outstanding w/ Conversion
	 
	 	 	 	 	 	 
	Warrants and Options:
	 	 	 	 	 	 
	Warrants

	 	 	1,036,998	 	 	Ave Exercise ±$4.65 (See below)
	Stock Option Plan (Old)

	 	 	322,600	 	 	Ave Exercise Price approx $2.69; Plan now expired
	Stock Option Plan (New)

	 	 	484,870	 	 	Out of 675,000 Authorized; Wtd Ave Strike Price @ $2.37
	Total Warrants & Options

	 	 	1,844,468	 	 	 
	Potential “All-In”

	 	 	14,866,459	 	 	 
	Authorized Common Shares

	 	 	25,000,000	 	 	 

 

 

Warrants & Weighted-Average Exercise Price — as of May 31, 2008

	 	 	 	 	 	 	 
	Holder	 	Quantity	 	Strike @
	Roth Capital I

	 	 	62,500	 	 	@ $10.25 = $640,625 (Expires 09) (6 months before
trading possible!; + placement fee)
	Roth Placements

	 	 	125,000	 	 	@ $8.80 = $1,100,000 (Expires 09) (8 Entities – rights
under private placement; S-3)
	Roth Capital II

	 	 	120,773	 	 	@ $5.28 = $637,681 (Expires 09) (6 months before trading
possible!; + placement fee)
	Riverview Group LLC

	 	 	241,546	 	 	@ $6.00 = $1,449,276 (Expires 09) ( 6 months before
trading possible)
	K. Laday

	 	 	2,500	 	 	@ $3.19 = $7,975 (Expire 10) (SBP service)
	Dolphin Offshore Partners, L.P.

	 	 	240,000	 	 	@ $2.21 = $530,400 (Expire 10) (related to Series G)
	John D. Higgins

	 	 	55,000	 	 	@ $2.02 = $111,100 (Expire 10) (related to Series H)
	Transit Vehicle Technology Investments, Inc.

	 	 	93,750	 	 	@ $1.60 = $150,000 (Expire 11) (related to Series I)
	Laurus Master Fund, Ltd.

	 	 	80,000	 	 	@ $2.00 = $160,000 (Expire 11) (related to Term note)
	Fairview Capital Ventures, LLC.

	 	 	15,929	 	 	@ $2.26 = $35,999 (Expire 12) (related to Series J)
	   

	 	 	 	 	 	 
	Total Warrants

	 	 	1,036,998	 	 	Average Exercise Price Approximately $4.65

Under the 2003 Stock Option Plan 984,000 options can be issued of which 600,000 will be issued
before 6/30/08 with the balance to be issued over the next 2 years.
365,000 new warrants are to be issued to BHC Interim Funding III, L.P.

 

 

SCHEDULE 4.21

SUBSIDIARIES

Digital Recorders, Inc. — a North Carolina corporation (Subsidiary of Parent)

TwinVision of North America, Inc. – a North Carolina corporation (Subsidiary of Parent)

RTI. – a Texas corporation (Subsidiary of Parent — shell)

DRI Europa, foreign subsidiary of Parent

DRI Europa has the following subsidiaries:

Mobitec AB – DRI Europa owns 90,802 of the 100,000 outstanding shares; Parent owns 9,198
shares

Mobitec Australia – is wholly-owned subsidiary of Mobitec AB
Mobitec GMBH

Mobitec Brazil (50% ownership) by Mobitec AB

Cast Master Mobitec (51% ownership by Mobitec AB and Mobitec GMBH)exv10w5

Exhibit 10.5

The payment of and security for the principal amount of the indebtedness evidenced by this
instrument and the interest accruing thereon is subordinated to other indebtedness pursuant to, and
to the extent provided in, and is otherwise subject to the terms of, the Intercreditor Agreement,
dated as of June 30, 2008, between BHC Interim Funding III L.P., as Junior Creditor, and PNC Bank,
National Association, as Agent under the Revolving Credit and Security Agreement, as Senior
Creditor, as the same may be amended, restated, supplemented or otherwise modified or extended or
renewed from time to time.

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. NO TRANSFER OF THIS NOTE SHALL BE VALID OR EFFECTIVE UNLESS MADE IN ACCORDANCE
WITH THE APPLICABLE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND STATE SECURITIES
LAWS, OR ANY AVAILABLE EXEMPTION THEREUNDER.

SENIOR SECURED TERM NOTE

			
	$5,000,000
	 	June 30, 2008

     FOR VALUE RECEIVED, DIGITAL RECORDERS, INC., a North Carolina corporation (“Digital”), and
TWINVISION OF NORTH AMERICA, INC., a North Carolina corporation (“TwinVision” together with
Digital, the “Borrowers” and each individually a “Borrower”), hereby promise to pay
to the order of BHC INTERIM FUNDING III, L.P. (together with its successors in interest or assigns,
if any, the “Lender”), the principal sum of Five Million Dollars ($5,000,000), together
with interest thereon at the rates and at the times hereinafter provided. The liability of the
Borrowers hereunder is joint and several.

     1. Loan Agreement. This Senior Secured Term Note (“Term Note”) is delivered
pursuant and subject to the Loan and Security Agreement, dated as of the date hereof, by and among
the Borrowers, the Company Guarantor (as defined therein) and the Lender (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the “Loan and Security
Agreement”). All terms and conditions of the Loan and Security Agreement are hereby
incorporated by reference into this Term Note, and reference is made to the Loan and Security
Agreement for, among other things, the security for this Term Note, Events of Default hereunder,
and the Lender’s rights and remedies upon the occurrence of any Event of Default. All capitalized
terms used herein shall have the same meanings ascribed to them in the Loan and Security Agreement
unless otherwise expressly stated.

     2. Interest and Fees.

          (a) Rates of Interest; Computation. The Term Loan shall bear interest on the unpaid
principal balance thereof from the date of the borrowing thereof to the date of payment thereof, as
set forth in Section 2.3 of the Loan and Security Agreement. All interest payable
hereunder shall be computed on the basis of a 360-day year for the actual number of days
elapsed.

 

 

          (b) Interest Payments. The Borrowers shall pay interest on the unpaid principal
balance of the Term Loan and the Obligations at the interest rates set forth in Section 2.3 of the
Loan and Security Agreement. Interest shall be paid by the Borrowers monthly in arrears on the
first Business Day of each month by automatic wire transfer to the Lender’s bank account commencing
on August 1, 2008, and on the date of any prepayment of the Term Loan and at maturity, whether by
acceleration or otherwise.

          (c) Post Default Interest. Any installment of principal of the Term Loan not paid
when due and, to the extent permitted by applicable law, any installment of interest thereon not
paid when due at any time, whether by acceleration, after commencement of bankruptcy or insolvency
proceedings or otherwise, shall continue to bear interest payable on demand at the Default Rate.

          (d) Fees. The Borrowers shall pay, when due, all fees set forth in the Loan and
Security Agreement and the other Loan Documents.

     3. Payments of Principal; Optional Prepayments. The Term Loan shall be due and
payable in full on the Maturity Date. The Borrowers shall have the obligation to make mandatory
payments of principal of the Term Loan, and the right to make voluntary prepayments of principal of
the Term Loan, in accordance with Section 2.5 of the Loan and Security Agreement.

     4. Acceleration. The outstanding principal balance of, and any accrued and unpaid
interest on, the Term Loan shall be payable in full upon the occurrence and during the continuance
of an Event of Default and acceleration of the Obligations pursuant to Section 7.2 of the Loan and
Security Agreement.

     5. Payments. All payments of principal, interest, fees and expenses hereunder shall
be made by the Borrowers without defense, set off or counterclaim and in same day funds and
delivered to the Lender at its office (or wire transferred to the Lender’s bank account) specified
in the Loan and Security Agreement. The Borrowers hereby authorize the Lender, at the Lender’s
option, to draw against any deposit or disbursement account of the Borrowers and maintained with
the Lender (or subject to a control agreement in favor of the Lender), on account of such amounts,
when payment of same shall be due.

     6. Invalidity. The invalidity, illegality or unenforceability in any jurisdiction of
any provision in or obligation under this Term Note shall not affect or impair the validity,
legality or enforceability of the remaining provisions or obligations under this Term Note or of
such provision or obligation in any other jurisdiction.

     7. Collection Costs. Without limiting the generality of Section 8.3 of the Loan and
Security Agreement, the Borrowers shall pay, on demand, all reasonable fees, costs and expenses
incurred by the Lender after an Event of Default in connection with any action, proceeding or
effort taken or commenced by the Lender to enforce this Term Note, including, without limitation,
reasonable attorney’s fees and expenses.

     8. Waivers. The Borrowers each hereby waive presentment, demand, protest and notice
of nonpayment. The liabilities and obligations of the Borrowers hereunder shall

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be unconditional
without regard to the liability or obligations of any other party. No failure or delay on the part
of the Lender in the exercise of any power, right or privilege shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude other or further exercise
thereof or of any other right, power or privilege. No amendment, modification or waiver of any
provision of this Term Note, or consent to any departure by the Borrowers therefrom, shall be
effective unless the same shall be in writing and signed by the Lender and the Borrowers. Each
amendment, modification or waiver shall be effective only in the specific instance and for the
specific purpose for which it was given.

     9. Security. The payment of this Term Note is secured as provided in the Loan and
Security Agreement.

     10. Seniority. The payment of this Term Note is senior to all other obligations of
the Borrowers, whether now existing or hereinafter incurred.

     11. APPLICABLE LAW; CONSENT TO JURISDICTION. THE VALIDITY AND EFFECT OF THIS TERM
NOTE 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 ANY CONFLICT OF LAWS PRINCIPLES. EACH BORROWER 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 THE LENDER’S ELECTION, ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS TERM NOTE, OR THE OTHER LOAN DOCUMENTS SHALL BE
LITIGATED IN SUCH COURTS. EACH BORROWER 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 TERM NOTE, THE OTHER LOAN DOCUMENTS OR THE OBLIGATIONS. IF ANY
BORROWER PRESENTLY IS, OR IN THE FUTURE BECOMES, A NONRESIDENT OF THE STATE OF NEW YORK, SUCH
BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE UPON SUCH BORROWER BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED,
DIRECTED TO SUCH BORROWER, AT SUCH BORROWER’S ADDRESS SET FORTH IN SECTION 8.6 OF THE LOAN AND
SECURITY AGREEMENT OR AS MOST RECENTLY PROVIDED BY SUCH BORROWER TO THE LENDER IN WRITING, AND
SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED AS AFORESAID.

     12. WAIVER OF JURY TRIAL. EACH BORROWER AND THE LENDER HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS TERM NOTE
OR ANY
OTHER DOCUMENTS EXECUTED IN CONNECTION WITH THIS TERM NOTE OR ANY DEALINGS BETWEEN ANY
BORROWER AND LENDER RELATING TO THIS TERM

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NOTE. EACH BORROWER AND THE LENDER ACKNOWLEDGE THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED
ON THE WAIVER IN ENTERING INTO THIS TERM NOTE AND THE OTHER LOAN DOCUMENTS AND THAT EACH WILL
CONTINUE TO RELY ON THE WAIVER IN ITS RELATED FUTURE DEALINGS. EACH BORROWER AND THE LENDER
WARRANT AND REPRESENT THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.

     13. Successors in Interest or Assigns. All of the Lender’s rights hereunder shall
accrue for the benefit of the Lender, its successors in interest or assigns.

[Remainder of Page Intentionally Left Blank]

 - 4 - 

 

     IN WITNESS WHEREOF, and intending to be legally bound hereby, the Borrowers have executed this
Term Note the day and year first above written.

	 	 	 	 	 	 	 
	 

	 	DIGITAL
	 	RECORDERS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/S/ DAVID L. TURNEY
 

David L. Turney
	 	 
	 

	 	Title:
	 	CEO/President	 	 
	 
	 	 	 	 	 	 
	 

	 	TWINVISION OF NORTH AMERICA,
INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/S/ DAVID L. TURNEY
 

David L. Turney
	 	 
	 

	 	Title:
	 	CEO/President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00146-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00146-of-00352.parquet"}]]