THIRD AMENDMENT TO THE LOAN AND SECURITY AGREEMENT

Exhibit 10.46

THIRD AMENDMENT TO THE LOAN AND SECURITY AGREEMENT

      THIS THIRD AMENDMENT dated as of August 7, 2009 (this “ Amendment ”) among 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 III, 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 ”) among the Loan Parties and Lender. Terms which are capitalized in this Amendment and not otherwise defined shall have the meanings ascribed to such terms in the Loan Agreement.

      WHEREAS , in connection with the Loan Agreement, Mobitec AB granted a pledge in favor of the Lender of all of its right, title and interest in 180,000 quotas of Mobitec Brasil Ltda, representing 50% of the issued and outstanding quotas of Mobitec Brasil Ltda. (the “ Pledged Quotas ”) under that certain Quota Pledge Agreement, dated as of August 18, 2008 (the “ Brazil Pledge ”);

      WHEREAS , as of the date hereof, Mobitec AB has conveyed the Pledged Quotas to Mobitec Par;

      WHEREAS , the Loan Parties have advised the Lender that pursuant to a Quota Purchase Agreement dated on or about July 22, 2009, Mobitec Empreendimentos e Participações Ltda., a wholly owned subsidiary of Mobitec AB, will acquire the remaining 50% of the equity interest (the “ Demore Shares ”) currently held by Roberto Juventino Demore and Lorena Giusti Demore in Mobitec Brasil Ltda. as described in that certain Memorandum from Barbosa, Mussnich & Aragao, dated as of July 14, 2009 (the “ Memorandum ”), attached hereto as Exhibit A ;

      WHEREAS , according to the Memorandum, certain transactions (the “ Transactions ”) have and will take place in order to effect the purchase of the Demore Shares by Mobitec Empreendimentos e Participações Ltda and the conveyance of the Pledged Quotas by Mobitec AB to Mobitec Par.

      WHEREAS, in connection with the Transactions, the Loan Parties have requested that the Lender agree to modify certain terms of the Loan Agreement, and the Lender is willing to do so, on the terms and subject to the satisfaction of the conditions contained herein.

      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 . Effective upon satisfaction of the conditions precedent set forth in Section Three hereof, the Loan Agreement is hereby amended as follows:

     (a)  Section 1.3. Definitions . Section 1.3 of the Loan Agreement is hereby amended

          (i) by adding the following new defined terms in their appropriate alphabetical order:

     “ Demore Shares ” means 50% of the issued and outstanding quotas held prior to the completion of the Transactions, by Roberto Juventino Demore and Lorena Giusti Demore in Mobitec Brazil.

     “ DRI Europa German Pledge ” means that certain Share Pledge Agreement, dated as of August 22, 2008, made by DRI Europa in favor of Lender, as the same may be amended, restated, supplemented or otherwise modified or extended or renewed from time to time.

     “ DRI Europa Swedish Pledge ” means that certain Pledge Agreement, dated as of August 19, 2008, made by DRI Europa in favor of Lender, as the same may be amended, restated, supplemented or otherwise modified or extended or renewed from time to time

     “ DRI Pledge ” means that certain Stock Pledge Agreement, dated as of June 30, 2008, made by Parent in favor of Lender, as the same may be amended, restated, supplemented or otherwise modified or extended or renewed from time to time.

     “ Memorandum ” that certain Memorandum from Barbosa, Mussnich & Aragao, dated as of July 14, 2009.

     “ Mobitec AB Shares ” means the 1,944,825 quotas of Mobitec Brazil, representing 50% of the issued and outstanding quotas of Mobitec Brazil owned by Mobitec AB prior to the completion of the Transactions.

     “ Mobitec Par ” means Mobitec Empreendimentos e Participações Ltda., a limited liability company organized under the laws of Brazil.

     “ Mobitec Par Pledge ” means that certain Quota Pledge Agreement, dated as of July 22, 2009, made by Mobitec Par in favor of Lender, as the same may be amended, restated, supplemented or otherwise modified or extended or renewed from time to time.

     “ Mobitec AB Pledge ” means that certain Quota Pledge Agreement, dated as of August 19, 2008, made by Mobitec AB in favor of Lender, as the same may be amended, restated, supplemented or otherwise modified or extended or renewed from time to time.

     “ Quota Purchase Agreement ” means that certain Quota Purchase Agreement dated on or about July 22, 2009, among Mobitec AB, Roberto Juventino Demore and Lorena Giusti Demore, relating to the purchase by Mobitec Par of the Demore Shares, as the same may be amended, restated, supplemented or otherwise modified or extended or renewed from time to time.

     “ Third Amendment ” means that certain Third Amendment to the Loan and Security Agreement, dated as of August 7, 2009, among the Loan Parties and the Lender, as the same may be amended, restated, supplemented or otherwise modified or extended or renewed from time to time.

     “ Third Amendment Effective Date ” has the meaning set forth in the Third Amendment.

     “ Transactions ” means those certain transactions described in the Memorandum and Quota Purchase Agreement, including, but not limited to, the contribution by Mobitec AB of the Mobitec AB Shares to Mobitec Par, the purchase of the Demore Shares by Mobitec Par and the merger of Mobitec Par with and into Mobitec Brazil.

          (ii) deleting the defined terms “Change of Control”, “Pledgor” and “Pledge Agreement” and inserting the following in lieu thereof:

     “ Change of Control ” means any of the following: (a) the failure of David Turney to remain actively engaged in the management of Borrowers or Parent and to hold the positions held on the Closing Date, including as an officer and director; (b) any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act), shall have acquired beneficial ownership of 20% or more on a fully diluted basis of the voting and/or economic interest in Parent’s Capital Stock, (b) the Board of Parent shall cease to consist of a majority of Continuing Directors, (c) other than as permitted by Section 6.5 , any merger or consolidation of or with any Loan Party or sale of all or substantially all of the property or assets of any Loan Party or (d) Parent ceases to own (i) 100% of the Capital Stock of either Borrower, (ii) directly or indirectly, 100% of any Foreign Subsidiary (other than Cast Master Mobitec), or (iii) at least 51% of Cast Master Mobitec.

     “ Pledgor ” means, collectively, Parent, DRI Europa, Mobitec AB, Mobitec Par and each other Person who shall from time to time hereafter become a party to the Pledge Agreement, and shall extend to all heirs, estates, successors and permitted assigns (in each case as applicable) of each such Person.

     “ Pledge Agreement ” means that certain DRI Europa German Pledge, DRI Europa Swedish Pledge, DRI Pledge, Mobitec Par Pledge, Mobitec AB Pledge, and any other collateral pledge agreement executed by the Pledgor in favor of Lender, as the same may be amended, restated, supplemented or otherwise modified or extended or renewed from time to time.

     (b)  Section 6.1 . Indebtedness and Liabilities . Section 6.1 of the Loan Agreement is deleted in its entirety and the following is inserted in lieu thereof:

      Indebtedness and Liabilities . No Loan Party shall, nor shall it permit any Subsidiary to, directly or indirectly create, incur,

assume, guaranty, or otherwise become or remain directly or indirectly liable, on a fixed or contingent basis, with respect to any Indebtedness except: (i) the Indebtedness to Lender; (ii) (A) Indebtedness incurred for Capital Expenditures permitted under Section 6.18(E) hereof and (B) Indebtedness represented by the promissory note permitted by Section 6.18(A)(i) .; (iii) Indebtedness under the Senior Lien Financing Documents; (iv) Indebtedness which consists of loans permitted by Section 6.16(b) or (c) , (v) Indebtedness set forth on Schedule 4.4 and any refinancing, refunding or extension thereof, provided that in connection with any such refinancing, refunding or extension: (x) the aggregate principal amount of such Indebtedness is not increased, (y) the scheduled maturity date of such Indebtedness is not shortened, and (z) the covenants or defaults are not materially more restrictive or more onerous than analogous provisions in the documentation of such Indebtedness as in effect on the date hereof; (vi) Indebtedness consisting of loans by any Foreign Subsidiary of Parent to any Loan Party, so long as such Indebtedness is subordinated to the Obligations on a basis satisfactory to Lender; (vii) trade payables and normal accruals in the ordinary course of business not yet due and payable or with respect to which are being Properly Contested; (viii) Subordinated Debt (including any subordinated shareholder debt) to which Lender has consented and which is subject to a subordination agreement in favor of and acceptable to Lender all in accordance with the requirements of the definition of Subordinated Debt; (ix) any Indebtedness consisting of guaranty obligations permitted by Section 6.2 ; (x) unsecured or, to the extent Senior Lien Lender is the counterparty, secured Indebtedness of Loan Parties under any Hedging Agreements, but only to the extent any such Hedging Agreements are entered into by Loan Parties to protect against the risks of interest rate fluctuations affecting Indebtedness permitted hereunder or to protect against the risks of currency or commodity fluctuations in connection with the ordinary business operations of Loan Parties in the ordinary course of their respective businesses and not for speculative or investment purposes; and (xi) Indebtedness incurred in connection with the issuance of letters of credit, surety bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature incurred in the normal course of business.

     (c)  Section 6.2 . Guaranties . Section 6.2 of the Loan Agreement is deleted in its entirety and the following is inserted in lieu thereof:

      Guaranties . No Loan Party shall, nor shall it permit any Subsidiary to, become liable upon the obligations or liabilities of any Person by assumption, endorsement or guaranty thereof or

otherwise (other than to Lender) except (a) as set forth on Schedule 6.2 , (b) guarantees made in the Ordinary Course of Business up to an aggregate amount of Two Hundred Fifty Thousand Dollars ($250,000), (c) the endorsement of checks in the Ordinary Course of Business, and (d) guarantees in an aggregate amount not to exceed 2,000,000 Brazilian Reais made by Mobitec Brazil or Mobitec Par for the purposes of asset-based working capital and capital lease financing of Mobitec Brazil.

     (d)  Section 6.4 . Restricted Payments . Section 6.4 of the Loan