exv10w1



 







Exhibit 10.1




      



	 	 	 
	

	 	DRI Corporate Administration

Office of the Chairman & CFO

Sterling Plaza, Box 26

5949 Sherry Lane; Suite 1050

Dallas, TX 75225

(t)214-378-9429 - (f)214-378-8437

www.digrec.com







EXECUTIVE EMPLOYMENT AGREEMENT



This EXECUTIVE EMPLOYMENT AGREEMENT is effective as of the date signed as
entered with signature by the Company on its last page (the “Agreement”), by
and between Digital Recorders, Inc. (the “Company” or “DRI”) with principal
offices at 5949 Sherry Lane; Suite 1050, Dallas, TX 75225, and David N. Pilotte
(the “Executive”).


WHEREAS, Executive and Company desire to establish an Employment Agreement
in which Executive is receiving compensation, benefits and other consideration,
and in which Company is receiving benefits and consideration, related to
professional employment, non-competition and non-disclosure;


NOW THEREFORE, in consideration of the foregoing premises and mutual
covenants herein contained, the parties hereto agree as follows:




	1.	 	Employment: The Company agrees to employ Executive and Executive agrees
to serve Company as its Vice-President and Chief Financial Officer
(“CFOY”).
	 
	2.	 	Position and Responsibilities: The Executive shall exert best efforts and
devote full time and attention to the affairs of the Company. Executive
shall have the authority and responsibility given by the general
direction, approval, and control of the President and Chief Executive
Officer of the Company subject to the restrictions, limitations, and
guidelines set forth by the Board of Directors of the Company.
	 
	3.	 	Term of Employment: The term of Executive’s employment under this
Agreement shall be deemed to have commenced on the effective date as
stated above, and shall continue until one year thereafter (the “Initial
Term”), subject to extension or termination as provided in this Agreement.
Provided Executive is in compliance with all obligations of this
Agreement, the term of Executive’s employment shall be automatically
extended for additional one-year terms upon expiration of the Initial Term
unless either party to this Agreement receives 90 days’ prior written
notice from the other electing not to so extend. Compensation shall be
that set forth in Section 5 hereof, unless other provisions override.
	 
	4.	 	Duties: During the period of employment hereunder and except for illness,
specified vacation periods, and reasonable leaves of absence, Executive
shall devote best efforts and full attention and skill to the business and
affairs of the Company and its affiliates. The duties will be such as
those typical to the position as first named in paragraph #1
above, and as further defied from time to time in a position job
description to be fully established in the first thirty (30) days of
employment.
	 
	5.	 	Compensation: Commencing on the date at which Executive reports for
full-time work under this agreement, Company shall pay to Executive, as
compensation for services, the sum of $186,500 per year, payable
semi-monthly. In addition, Executive shall receive such




 









 





	 	 	 
	

	 	DRI Corporate Administration

Office of the Chairman & CFO

Sterling Plaza, Box 26

5949 Sherry Lane; Suite 1050

Dallas, TX 75225

(t)214-378-9429 - (f)214-378-8437

www.digrec.com






	 	 	additional compensation and/or bonuses or stock options as may be set by
the
President and Chief Executive Officer of the Company in accordance
with policy set by of the Human Resources and Compensation Committee of the
Board of Directors of the Company.
	 
	6.	 	Special Compensation Provision: In the event of occurrence of a
“triggering event”, which shall be defined to include:





	 	(i)	 	a change in ownership in one or a series of transactions of 50% or
more of the outstanding shares of the Company; or,
	 
	 	(ii)	 	merger,
consolidation, reorganization or liquidation of the Company;





	 	 	and, following such triggering event, Executive’s services are terminated by
the
Company or the Executive’s duties or authority are substantially
diminished, Executive shall receive lump sum compensation equal to one (1)
times Executive’s annual base compensation and incentive or bonus payments,
if any, as shall have been paid (or if the time of employment is less that
twelve months at time of trigger event then the annual base compensation
rate shall apply) to Executive during Company’s most recent 12-month period
within 30 days of the triggering event. If the total amount of such lump
sum compensation were to exceed three (3) times Executive’s base
compensation amount (defined as being the average annualized taxable
compensation of Executive for the five (5) years, or fraction thereof,
preceding the year in which the triggering event occurs), Company and
Executive agree to reduce such lump sum compensation to be received by
Executive in order to avoid imposition of the golden parachute tax, as
provided in the Tax Reform Act of 1984, as amended by the Tax Return Act of
1986.
	 
	 	 	In the event Executive is required to hire counsel to negotiate on
Executive’s behalf in connection with termination or resignation from the
Company upon the occurrence of a triggering event, specifically in order to
enforce the rights and obligations of the Company as provided in this
paragraph number six (6), the Company shall reimburse to Executive all
reasonable attorneys’ fees which may be expended by Executive in seeking to
enforce the terms of Agreement. Such reimbursement shall be paid every 30
days after Executive provides copies of invoices from Executive’s counsel
to Company. Such invoices may be redacted to preserve attorney-client
privilege, client confidentiality, or work product.
	 
	7.	 	Expense Reimbursement: Company will reimburse Executive for all
reasonable and necessary expenses, including without limitation, travel
expenses, reasonable entertainment expenses, and reasonable expenses
related to Professional Organizations and continuing education both as
appropriate to the position as incurred by Executive in carrying out
duties under this Agreement. Executive shall present to Company each month
an account of such expenses in form reasonably required by Company.
	 
	8.	 	Insurance Coverage: Executive will be entitled to participate in
Company’s employee group insurance programs on the same basis as other
executives of Company similarly




 









 







	 	 	 
	

	 	DRI Corporate Administration

Office of the Chairman & CFO

Sterling Plaza, Box 26

5949 Sherry Lane; Suite 1050

Dallas, TX 75225

(t)214-378-9429 - (f)214-378-8437

www.digrec.com







	 	 	situated Additionally, Executive will be included in the Directors and
Officers Insurance
Coverage of the Company.
	 
	9.	 	Vacation Time & Holidays: Executive shall be entitled each year to a
reasonable
vacation in accordance with established practices of Company, and paid
Holidays, now
or hereafter in effect for its executive personnel, during which time
Executive’s base
compensation shall be paid in full.
	 
	10.	 	Benefits Payable on Disability: If Executive becomes disabled from properly
performing services under this Agreement by reason of illness or other
physical or
mental incapacity, Company shall continue to pay Executive’s then current
base
compensation for the first three (3) months of such continuous disability
commencing
with the first date of such disability. Notwithstanding any other
provision in this
paragraph number ten (10), Company payments under this clause will be
limited to that
amount necessary, if any, to combine with any Disability Insurance
payments
(regardless of source), such as to equal Executives base compensation
payments
stated in Paragraph number five (5).
	 
	11.	 	Obligations of Executive During and After Employment:





	 	(a)	 	Executive agrees during the terms of employment under this Agreement,
to engage
in no other business or activities, directly or indirectly, which detract
from the
success of Company or which are competitive with or which might place
Executive
in a competing position to that of Company, or any affiliated company.
	 
	 	(b)	 	Executive realizes that during the course of employment under this
Agreement,
Executive will have produced and/or have access to confidential business
plans,
information, business opportunity records, notebooks, data, formula,
specifications,
trade secrets, customer lists, account lists and secret inventions and
processes of
Company and its affiliated companies. Therefore, during or subsequent to
Executive’s employment by Company, or by an affiliated company, Executive
agrees to hold in confidence and not to directly or indirectly disclose or
use or copy
or make lists of any such information, except to the extent authorized in
writing by
Company. All records, files, business plans, documents, equipment and the
like, or
copies thereof, relating to Company’s business, or the business of an
affiliated
company, which Executive shall prepare, or use, or come into contact with,
shall
remain the sole property of Company, or of an affiliated company, and
shall not be
removed from the Company’s or the affiliated company’s premises without
its
written consent, and shall be promptly returned to Company upon
termination of
employment with Company and its affiliated companies. The restrictions and
obligations of Executive set forth in this Section 11 (b) shall not apply
to:





(i) information that is or becomes generally available and known to the
industry or general public (other than as a result of a disclosure
directly or
indirectly by Executive); or,




(ii) information that was known to Executive prior to Executive’s
employment
by Company or its predecessor.



 









 





	 	 	 
	

	 	DRI Corporate Administration

Office of the Chairman & CFO

Sterling Plaza, Box 26

5949 Sherry Lane; Suite 1050

Dallas, TX 75225

(t)214-378-9429 - (f)214-378-8437

www.digrec.com






	 	(c)	 	Because of employment by Company, Executive shall have access to trade
secrets
and confidential information about Company, its business plans, its
business
accounts, its business opportunities, its expansion plans, and its methods
of doing
business. Executive agrees that for a period of one (1) year after
termination or
expiration of employment, Executive will not, directly or
indirectly, compete with
Company in its then present business, including, but without limitation,
accepting
employment or consulting with any company or business that competes with
the
Company, or its anticipated lines of business.
	 
	 	(d)	 	In the event a court of competent jurisdiction finds any provision of
this Section 11
to be so over-broad as to be unenforceable, such provision shall be
reduced in
scope by the court, but only to the extent deemed necessary by the court,
to render
the provision reasonable and enforceable, it being Executive’s intention
to provide
Company with the broadest protection possible against harmful competition.





	12.	 	Termination for Cause by the Company: The Company may, without liability,
terminate Executive’s employment hereunder for cause at any time upon
written notice
from the President and Chief Executive Officer of Company specifying such
cause, and
thereafter Company’s obligations under this Agreement shall cease and
terminate;
provided, however, that such written notice shall not be delivered until
after the
President and Chief Executive Officer shall have given Executive written
notice
specifying the conduct alleged to have constituted such cause and the
Executive has
failed to cure, if curable, such conduct to the complete satisfaction of
Company.
	 
	 	 	Grounds for termination “for cause” may be, but are not limited to, one or
more of
the following:





	 	(a)	 	A willful breach of a material duty by Executive during course of
employment; or,
	 
	 	(b)	 	Habitual neglect of a material duty by Executive; or,
	 
	 	(c)	 	Actions which place Company in a materially unfavorable public
relations or
regulatory position; or,
	 
	 	(d)	 	Action or inaction by Executive which places Company in circumstances
of
financial peril; or,
	 
	 	(e)	 	Fraud on Company or conviction of a crime or felony the nature of
which, in the
sole discretion of Company, is deemed by Company to place, or potentially
place,
Company in an unfavorable public relations or regulatory position or
light.





	13.	 	Termination by the Executive Without Cause: Executive, without cause, may
terminate this Agreement upon 90 days prior written notice to Company. In
such event,
Executive shall be required to render services required under this
Agreement during
such 90-day period unless otherwise directed by the President and
Chief Executive
Officer. Compensation for earned vacation time not taken by Executive
shall be paid to
Executive at the date of termination. Other than such earned vacation pay,
Executive




 









 





	 	 	 
	

	 	DRI Corporate Administration

Office of the Chairman & CFO

Sterling Plaza, Box 26

5949 Sherry Lane; Suite 1050

Dallas, TX 75225

(t)214-378-9429 - (f)214-378-8437

www.digrec.com






	 	 	shall be paid for only the ninety (90) day notice period pursuant to
normal pay practices
and then all obligations regarding pay shall cease.
	 
	14.	 	Termination by the Company in absence of a Triggering Event: The Company,
in
absence of a triggering event (as defined in Paragraph six (6)), without
cause, may
terminate this Agreement. In such event, for such actions by the Company
occurring
during the initial two years of this Agreement, the Company shall pay a
severance
allowance equal to nine (9) months’ salary to Executive; following that
initial two years,
six (6) months’ salary shall apply. No other benefits will be provided
once this
Agreement is terminated.
	 
	15.	 	Probationary Period: Notwithstanding any other termination provision of
this
agreement, the initial 90 days of employment will be regarded as a
probationary period.
During this period, either party may terminate the employment relationship
on a basis of
“no-fault”. Should this occur for the convenience of the Company, the
Company will pay
Executive 90 days of compensation. Should this occur for the convenience
of
Executive, no compensation or other benefits, beyond the last date of
employment, will
be paid.
	 
	16.	 	Termination upon Death of Executive: In addition to any other provision
relating to
termination, this Agreement shall terminate upon Executive’s death. In
such event, the
Company shall pay a severance allowance equal to three (3) months’ salary
to
Executive’s estate.
	 
	17.	 	Arbitration: Any controversy, dispute or claim arising out of, or relating
to, this
Agreement and/or its interpretation shall, unless resolved by agreement of
the parties,
be settled by binding arbitration in Dallas, Texas in accordance with the
Rules of the
American Arbitration Association then existing. This Agreement to
arbitrate shall be
specifically enforceable under the prevailing arbitration law of the State
of North
Carolina. The award rendered by the arbitrators shall be final and
judgment may be
entered upon the award in any court of the State of North Carolina having
jurisdiction of
the matter.
	 
	18.	 	General Provisions:
	 
	 	 	(a) The Executive’s rights and obligations under this Agreement shall not
be
transferable by assignment or otherwise, nor shall Executive’s rights be
subject to
encumbrance or to the claims of Company’s creditors. Nothing in this
Agreement shall
prevent the consolidation of Company with, or its merger into, any other
corporation, or
the sale by Company of any of its property or assets.
	 
	 	 	(b) This Agreement and the rights of Executive with respect to the
benefits of
employment referred to herein constitute the entire Agreement between the
parties in
respect of the employment of Executive by Company and supersede any and
all other
agreements, either oral or in writing, between the parties with respect to
employment of
Executive.
	 
	 	 	(c) The provisions of this Agreement shall be regarded as divisible, and
if any of its
provisions, or any part thereof, are declared invalid or unenforceable by
a court of




 









 







	 	 	 
	

	 	DRI Corporate Administration

Office of the Chairman & CFO

Sterling Plaza, Box 26

5949 Sherry Lane; Suite 1050

Dallas, TX 75225

(t)214-378-9429 - (f)214-378-8437

www.digrec.com






	 	 	competent jurisdiction, or an arbitration proceeding, the validity and
enforceability of the
remainder of such provisions or parts of this Agreement, and
applicability, shall not be
affected.
	 
	 	 	(d) This Agreement may not be amended or modified except by a written
instrument
executed by Company and Executive.
	 
	 	 	(e) This Agreement, and rights and obligations under this Agreement, shall
be governed
by and construed in accordance with the laws of the State of North
Carolina.
	 
	19.	 	Construction: Throughout this Agreement the singular shall include the
plural, and the
plural shall include the singular, and the masculine and neuter shall
include the
feminine, wherever the context so requires.
	 
	20.	 	Text to Control: The headings of paragraphs and sections are included
solely for convenience of reference. If any conflict between any heading and the text of this
Agreement exists, the text shall control.
	 
	21.	 	Authority: The officer executing this agreement on behalf of the Company
has been
empowered and directed to do so by the Board of Directors of the Company.
	 
	22.	 	Effective Date: This Agreement shall be effective on the date first entered
below.




	 	 	 	 	 	 	 
	FOR THE COMPANY:

	 	/s/ DAVID L. TURNEY
	 	Dated:
	 	25 October 04
	

	 	
 
	 	 	 	
 
	By:

	 	David L. Turney	 	 	 	 
	

	 	
 	 	 	 	 
	Title:

	 	Chairman, CEO & President	 	 	 	 
	

	 	
 	 	 	 	 
	 
	 	 	 	 	 	 
	FOR THE EXECUTIVE:

	 	 David N. Pilotte
	 	Dated:
	 	14 October 2004
	

	 	
 
	 	 	 	
 
	By:

	 	/s/ DAVID N. PILOTTE