Document:

Subordinated Promissory Note, dated June 23, 2003

  Exhibit 10.29
 Subordinated Promissory Note, Dated June 23, 2003, between Registrant and K.S. Best International Co.,
Ltd.
 TAITRON COMPONENTS INCORPORATED 
 7% SUBORDINATED PROMISSORY NOTE

		
	$1,000,000 U.S.D	June 23, 2003

 PROMISE TO PAY.  Subject to the terms and conditions of this 7% Subordinated Promissory Note (the “Note”),
TAITRON COMPONENTS INCORPORATED, a California corporation (the “Company”), for value received, promises to pay to the order of K.S Best International Co., Ltd. or its registered assigns (the “Noteholder”), whose address is
setforth in Section 8.3 below, the principal amount of ONE MILLION and 00/100 U.S. DOLLARS ($1,000,000 U.S.D.), together with simple interest on the unpaid principal balance from the date hereof at the rate of 7% (SEVEN percent) per annum until paid
in full.
 PAYMENT.  The Company will pay this loan in accordance with the following payment schedule: Such principal amount plus all accrued but previously unpaid interest will be due and payable
on the third anniversary of the Note Date. Interest only payments shall be made by the end of each fiscal quarter after the Note Date. Principal and interest payable hereunder shall be paid to the Noteholder in lawful money of the United States of
America by wire transfer to such bank account or at such other address or location, as shall be specified by the Noteholder. Overdue interest shall bear interest at the rate of SEVEN percent (7%) per annum from the date on which it is due until
paid.
          The following is a statement of the rights of the Noteholder and the terms and conditions to which this Note is subject, and to which the Company
and the Noteholder, by the acceptance of this Note, agree.
          1.    Definitions.  As used in this Note, the following terms,
unless the context otherwise requires, shall have the following meanings:

		

		
	 	1.1      “Company” shall mean the Company and shall include any corporation that shall succeed to or assume the obligations of the Company under this Note.

 

		
	 	1.2      “Note Date” shall mean the date on which this Note was originally issued, which is set forth on the first page of this Note in the heading.

		
	 	                 

		
	 	1.3      “Merger” shall mean any consolidation of the Company with, or merger of the Company with or into, another corporation (other than a consolidation or merger in which the
Company is the surviving corporation and which does not result in any reclassification of, or change in, the outstanding shares of Common Stock), or any proposed sale or transfer to another corporation of all or substantially all of the assets of
the Company. The Company shall be the “surviving corporation” in any Merger if the Company, or its shareholders immediately before the transaction, shall own (immediately after the transaction) equity securities, other than warrants,
options or similar rights to subscribe to or purchase equity securities, of the surviving or acquiring corporation, or its parent corporation, possessing more than 50% of the voting power of the surviving or acquiring corporation or its parent
corporation; and in making the determination of ownership by the shareholders of a corporation, immediately after the transaction, of equity securities pursuant to the preceding clause, equity securities which they owned immediately before the
transaction as shareholders of another party to the transaction shall be disregarded.

 
          2.    Treatment of Note. To
the extent permitted by generally accepted accounting principles consistently applied, the Company shall treat, account and report this Note as debt and not equity for accounting purposes and with respect to any returns filed with federal, state or
local tax authorities.

           3.      Subordination. The Company, for itself and its successors and assigns, covenants and agrees, and
the Noteholder and each successive holder of this Note, by the acceptance of this Note, likewise covenants and agrees, that the payment of the principal of and interest and premium, if any, on this Note is hereby expressly subordinated, to the
extent and in the manner hereinafter set forth, in right of payment to the prior payment in full, in cash, of all the Company’s “Senior Indebtedness,” and that these subordination provisions are for the benefit of the holders of
Senior Indebtedness.
          This Section 3 shall constitute a continuing Offer to all persons who, in reliance upon such provisions, become holders of, or
continue to hold, Senior Indebtedness, and such provisions are made for the benefit of the holders of Senior Indebtedness, and such holders are made obligees hereunder and they or each of them may enforce such provisions. Without limiting the
generality of the foregoing, it is acknowledged and agreed that Comerica Bank, is a holder of Senior Indebtedness, that such provisions are made for its benefit, and that it may enforce such provisions.
          3.1      Definitions. As used in this Section 3, and also in Section 4:
                   3.1.1      “Indebtedness” of any corporation shall mean the principal of (and
premium, if any) and unpaid interest, fees and other payments due in connection with (a) indebtedness which is for money borrowed from others; (b) indebtedness of any other person for money borrowed guaranteed, directly or indirectly, in any manner
by such corporation, or in effect guaranteed, directly or indirectly, by such corporation through an agreement, contingent or otherwise; (c) all indebtedness secured by any mortgage, lien, pledge, charge or other encumbrance upon property owned by
such corporation, even though such corporation has not in any manner become liable for the payment of such indebtedness; (d) all indebtedness of such corporation created or arising under any conditional sale, lease (intended primarily as a financing
device), or other title retention agreement with respect to property acquired by such corporation wherein the rights and remedies of the seller, lessor or lender under such agreement or lease in the event of a default are limited to repossession or
sale of such properties; (e) any other obligation whether outstanding on the Note Date or thereafter created or assumed with respect to which the Company shall be or become liable which the Company shall designate as “Indebtedness”; and
(f) deferrals, amendments, refinancing, renewals, extensions and refundings of an such indebtedness.
                   3.1.2      “Senior Indebtedness” shall mean Indebtedness incurred or assumed by the
Company, either before or after the date of this Agreement, which is for money borrowed or evidenced by bonds, notes, reimbursement agreements in respect of letters of credit, debentures or similar instruments (a) pursuant to a short-term instrument
which constitutes commercial paper, or (b) the holder or holders of which are banks, savings institutions, trust companies, insurance companies, investment trusts, pension funds, pension trusts, employees’ profit-sharing trusts, financial
institutions or corporations engaged as the substantial part of their business or operations in investing funds in securities, or any other person lending the Company amounts in excess of U.S. $100,000 or any of them, or (c) obligations which
otherwise would have been considered Senior Indebtedness except that they were created or arose under a conditional sale, lease (intended primarily as a financing device) or other similar title retention agreement with respect to the property of the
Company or its Subsidiaries wherein the rights and remedies of the seller, lessor or lender under such agreement or lease are limited, in the event of default, to repossession or sale of such properties; provided, however, that there shall be
excluded from the definition of Senior Indebtedness any borrowing which by its terms ranks on a parity with or is subordinate to the Notes. “Senior Indebtedness” shall include, in any event, all obligations of the Company from time to time
(whether in respect of principal, interest, fees, charges or otherwise, including, without limitation, any interest accruing subsequent to the filing by or against Payor of any proceeding brought under Chapter 11 of the U.S. Bankruptcy Code, whether
or not such interest is allowed as a claim in such proceeding) under or pursuant to that certain Business Loan Agreement dated as of May 6, 1997, between the Company and Comerica Bank-California, and any amendment, modification, restatement
extension, renewal, refunding, replacement or refinancing thereof, together with all documents, instruments and agreements entered into from time to time in connection therewith or pursuant thereto.
          3.2      Payment in Event of Bankruptcy or Similar Event. Upon any receivership, insolvency, assignment for the benefit of creditors, bankruptcy,
reorganization or arrangements with creditors (whether or not pursuant to bankruptcy or other insolvency laws), sale of all or substantially all of the assets, dissolution, liquidation or any other marshalling of the assets and liabilities, of the
Company, or otherwise (a) no amount shall be paid by the Company in respect of the principal of or interest or premium, if any, on this Note at the time outstanding, unless and until the principal, premium, if any, and interest upon all Senior
Indebtedness shall first be paid in full, in cash, (b) no claim or proof of claim shall be filed with the company by or on behalf of the Noteholder which shall assert any right to receive any payments in respect of the principal of and interest or
premium, if any, on this Note, except subject to the payment in full of the principal of, premium, if any, 

  and interest on all of the Senior Indebtedness then outstanding, in cash, (c) any payment or distribution of assets of the Company of any kind or character, whether in cash, property or
securities to which the holders of the Notes would be entitled except for the provisions of this Section 3, shall be paid by the liquidating trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a
receiver or otherwise, directly to the holders of Senior Indebtedness (pro rata to each holder on the basis of the respective amounts of Senior Indebtedness owed to such holder), to the extent necessary to pay in full, in cash, all Senior
Indebtedness remaining unpaid after giving effect to any prior or concurrent payment or distribution to the holders of the Senior Indebtedness on the Senior Indebtedness, and (d) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash, property or securities (other than payments described in the provisos below) shall be received by the holder of any Note before all Senior Indebtedness is paid in full,
in cash, such payment or distribution shall be received and held in trust for and shall be paid over to holders of Senior Indebtedness (pro rata to each such holder on the basis of the respective amounts of Senior Indebtedness owed to such holder),
for application to the payment of all Senior Indebtedness remaining unpaid until all such Senior Indebtedness shall have been paid in full, in cash, after giving effect to any prior or concurrent payment or distribution to the holders of the Senior
Indebtedness on the Senior indebtedness; provided, however, that this Subparagraph (d) shall apply only to payments or distributions received by the holder of any Note after the commencement of proceedings relating to the winding up dissolution,
liquidation or reorganization of the Company as described in this Section.
          3.3      Subordination upon Default With Respect to
Senior Indebtedness Due, etc. The Company shall not be permitted to make any payments with respect to this Note if, at the time of the proposed payment, any default shall have occurred and be continuing with respect to the Senior Indebtedness and
written notice thereof has been given to the Company and the Noteholder invoking a payment blockage under this Note (a “Payment Blockage Notice”), unless and until such default shall have been cured or the application of this Section 3.3
to such default shall have been waived in writing by the holders of the Senior Indebtedness; provided, however, that: if such default does not relate to the payment of money to the holders of Senior Indebtedness (a “Nonpayment Default”),
this Section 3.3 shall not prevent the making of any proposed payment under this Note for a period of more than One Hundred and Eighty (180) consecutive days after the date that a Payment Blockage Notice is given relating to the occurrence of such
Nonpayment Default unless the Senior Indebtedness has been declared due and payable in its entirety, in which case no payment or distribution may be made until (i) the Nonpayment Default has been waived or cured and such acceleration has been
rescinded or annulled, or (ii) the Senior Indebtedness has been paid in full in cash.
          3.4      Effect of Subordination.
Nothing contained in this Section 3 shall impair, as between the Company and the Noteholder, the obligation of the Company, which is absolute and unconditional, to pay the Noteholder the principal hereof and interest hereon as and when the same
become due and payable, or shall prevent the Noteholder, upon default under this Note, from exercising all rights, power and remedies otherwise provided herein or by applicable law, all subject to the rights, if any, of the holders of Senior
Indebtedness under this Section 3.
          3.5      Subrogation. Subject to the payment in full, in cash, of all Senior Indebtedness
and until this Note shall be paid in full, the Noteholder shall be subrogated (equally and ratably with the holders of all Indebtedness of the Company which, by its terms, ranks on a parity with this Note) to all rights of any such holder of Senior
Indebtedness to receive payments or distributions of assets of the Company, but only to the extent the Noteholder has made any payment to any holder of Senior Indebtedness pursuant to the subordination provisions of this Note. No such payments or
distributions applicable to the Senior Indebtedness shall, as between the Company and its creditors, other than the holders of Senior Indebtedness and the Noteholder, be deemed to be a payment by the Company to or on account of this Note; and for
the purposes of such subrogation, no payments or distributions to the holders of Senior Indebtedness to which the Noteholder would be entitled except for the provisions of this Section 3 shall, as between the Company and its creditors, other than
the holders of Senior Indebtedness and the Noteholder, be deemed to be a payment by the Company to or on account of the Senior Indebtedness.
          3.6      Reliance by Note Holders. Upon any payment or distribution of assets of the Company referred to in this Section 3, the holders of the
Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending or upon a certificate of the liquidating trustee or
agent or other person making any distribution the holders of Notes for the purpose of ascertaining the amount of the Senior Indebtedness, the holders thereof, the amounts paid or distributed thereon and all other facts pertinent thereto or to this
Section 3.

           3.7        Rights of Holders of Senior Indebtedness Not to Be Impaired. Subject to Section 3.3
hereof, no right of any present or future holder of any Senior Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced or impair by any act or failure to act on the part of the Company or by any act or
failure to act, in good faith, by any such holder or by any noncompliance by the Company with the terms, provisions and covenants of this Note, regardless of any knowledge thereof which any such holder may have or otherwise be charge
with.
         3.8        When Distribution Must Be Paid Over. In the event that the Company shall make any payment to the
Noteholder on account of the principal or interest on the Note at the time when such payment is prohibited by Section 3.3, such payment shall be held by the Noteholder, in trust for the benefit of, and shall be forthwith over and delivered to, the
holders of Senior Indebtedness (pro rata as to each of such holders on the basis of the amount of Senior Indebtedness held by them) or their representative or the trustee under the indenture or other agreement (if any) pursuant to which Senior
Indebtedness may have been issued, as their respective interests may appear, for application to the payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness remaining unpaid to the extent necessary
to pay all Senior Indebtedness in full accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness.
          If a distribution is made to the holder of this Note that because of this Section 3.8 should not have been made to it, the holder of this Note who receives the distribution
shall hold it in trust for the holders of Senior Indebtedness and pay it over to them as their interests may appear.
          3.9
       Notices By Company. The Company shall promptly notify the Noteholder of any facts known to the Company that would cause a payment of principal of or interest of this Note to violate this Section 3, but
failure to give such notice shall not affect the subordination of this Note to the Senior Indebtedness provided in this Section 3.
    4.        Events of
Default. If any of the following events shall occur and be continuing (each individually referred to as an “Event of Default”), the Noteholder may declare the entire unpaid principal and accrued interest on this Note immediately due and
payable, without any other presentment, demand, protest or other notice of any kind or character, all of which are hereby expressly waived; provided, however, that with respect to the Events of Default described in Sections 4.2 and 4.3 below, the
unpaid principal and accrued interest on this Note shall automatically become immediately due and payable, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by the Company:

              4.1         Principal or Interest. (a) Any default in the payment of any part of the interest of
this Note shall occur and such default shall be continuing uncured or unwaived for 30 days after the Noteholder has given the Company written notice thereof or (b) the Company’s failure to observe any covenant or other provision contained in
this Note and such failure of observation shall be continuing uncured or unwaived for 30 days after the Noteholder has given the Company written notice thereof;
              4.2         Involuntary Bankruptcy. Within 270 days after the commencement of an action against the
Company seeking any bankruptcy, insolvency, reorganization, liquidation, dissolution or similar relief under any statute, law or regulation, such action shall not have been dismissed or all orders or proceedings thereunder affecting the operations
or the business of the Company stayed, or the stay of any such order or proceeding shall thereafter be set aside, or within 270 days after the appointment without the consent or acquiescence of the Company of any trustee, receiver or liquidator of
the Company or of all or any substantial part of the properties of the Company, such appointment shall not have been vacated;
              4.3         Voluntary Bankruptcy. The Company shall have commenced a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or shall have consented to the entry of an order for relief in an involuntary case under any such law, or shall have consented to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian or similar official, of the Company or for any substantial part of its property, or shall have made any general assignment for the benefit of creditors, or shall have failed generally to pay its
debts as they become due or shall have admitted in writing its inability to pay its debts generally as they become due, or shall have taken any corporate action in furtherance of any of the foregoing; or

               4.4         Cross-Default. Any
declared default of the Company under any Senior Indebtedness of the Company for borrowed money that gives the holder thereof the right to accelerate such Senior Indebtedness, and such Senior Indebtedness is in fact accelerated by such holder, and
such acceleration is continuing unrescinded.
              4.5        
Remedies. If any of the foregoing Events of Default shall have occurred and be continuing, the Noteholder may proceed to protect and enforce its rights under this Note by an action in law, suit in equity or other appropriate proceeding, whether for
specific performance of any agreement contained in this Note or for an injunction against a violation of any terms of this Note or in aid of the exercise of any power granted by this Note or by law. In case any action is brought arising from a
breach of any provision of this Note, the non-prevailing party shall pay to the prevailing party all of the prevailing party’s fees and expenses, including without limitation reasonable attorneys’ fees, relating to such action. No course
of dealing and no delay on the part of the Noteholder in exercising any right shall operate as a waiver thereof or otherwise prejudice the Noteholder’s rights, powers or remedies. No right, power or remedy conferred by this Note upon the
Noteholder shall be exclusive of any right, power or remedy referred to in this Note, or now or hereafter available at law, in equity, by statute or otherwise.
              4.6        Unpaid Interest. In case any one or more Events of Default shall occur and be continuing, any due but
unpaid interest shall continue to remain due and accrue interest thereon at the rate of SEVEN percent (7%) per annum from the date on which it is due until paid.
    5.
       No Shareholder Rights. This Note shall not entitle the Noteholder to any voting rights or other rights as a shareholder of the Company, prior to conversion hereof.
    6.         Redemption. This Note shall be subject to redemption under the circumstances set forth in this Section 6.
                6.1        Optional Redemption. The Company, at its option, may redeem in whole or in part the
principal amount of this Note at any time or from time to time. Upon redemption of this Note, the Company also shall pay to the Noteholder the interest relating to such redeemed principal amount which is accrued and unpaid to the date of redemption
plus a premium as set forth below in Section 6.2.
               6.2
        Premium. There shall be no pre-payment premium
               6.3         Notice of Redemption. No notice of redemption is necessary.
               6.4         Cessation of Rights. From and after the Redemption Date,
unless there has been a default in redemption, all interest on the redeemed principal amount shall cease to accrue and all rights of the Noteholder as a holder of this Note shall cease with respect to the principal amount redeemed and, with respect
to such amount, this Note thereafter shall not be deemed to be outstanding for any purpose whatsoever.
               6.5         Undertaking. By acceptance of this Note, the Noteholder agrees to execute and deliver
such documents as may reasonably be requested from time to time by the Company in order to implement the foregoing provisions of this Section 6.
     7.
        Registration, Transfer and Exchange of the Note. The Company shall keep at its principal office a register in which it will provide for the registration and transfer of this Note, at its own expense
(excluding transfer taxes). Subject to compliance with applicable laws and the restrictions on transfer described herein, this Note and all rights hereunder are transferable and assignable at the office of the Company, by the Noteholder in person or
by the duly authorized representative of the Noteholder, upon surrender of this Note. If this Note is surrendered at said office for registration of transfer or exchange (accompanied in the case of a registration) or transfer by a written instrument
of transfer in satisfactory to the Company, at its expense, shall deliver in exchange one or more new Notes in denominations as requested by the Noteholder (but in no case less than U.S. $100,000), for the aggregate unpaid principal amount. Any note
or notes issued in a transfer or exchange shall carry the same rights to interest (unpaid and to accrue) carried by this Note so transferred or exchanged so that there will not be any loss or gain of interest on the Note surrendered. Prior to due
presentation for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner and holder of this Note for the purpose of receiving payment of principal of and interest on this Note and for all other
purposes whatsoever.

           Prior to the sale or transfer of any Note, the Noteholder shall surrender said Note to the Company in exchange for a new Note in
the principal amount equal to the unpaid balance of principal of the Note surrendered.
    8.      Miscellaneous.
              8.1         Successors and Assigns. Subject to the foregoing terms and conditions, the rights and obligations of
the Company and the Noteholder shall inure to the benefit of and be binding upon the respective executors, administrators, heirs, transferees, successors and assigns of the Company and the Noteholder.
             8.2         Governing Law.     THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS BETWEEN CALIFORNIA RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN CALIFORNIA. ANY US PERSON WHO HOLDS THIS NOTE IS SUBJECT TO LIMITATIONS UNDER THE US INCOME
TAX LAWS.
             8.3         Notices. Except as otherwise provided
herein, all communications hereunder shall be in writing or by either telecopier of telegraph and, if to the Company, shall be mailed, telecopied or telegraphed or delivered to Taitron Components Incorporated, 28040 West Harrison Parkway, Valencia,
CA 91355; and if to the Noteholder, shall be mailed, telecopied, telegraphed or delivered to K.S. Best International Co., Ltd., Room 704 Kowloon Building, 555 Nathan Rd, Kowloon, Hong Kong. All notices given by telecopy or telegraph shall be
promptly confirmed by letter. Any party hereto may by notice so given change its address for future notice hereunder.
             8.4         Severability. In case any provision of this Note shall be invalid, illegal or unenforceable, it
shall, to the extent practicable, be modified so as to make it valid, legal and enforceable and to retain as nearly as practicable, the intent of the parties, and the validity, legality and enforceability of the remaining provisions of this Note
shall not in any way be affected or impaired thereby.
             8.5
       Waiver and Amendment. Any provision of this Note may be amended, waived or modified upon the written consent of the transferee, successor or assign of the Noteholder or, if such Note has been transferred by
the Noteholder, the holders of at least fifty-one per cent (51%) of the aggregate principal amount of all of the Notes then outstanding.
             8.6         Lost, Stolen, Mutilated or Destroyed Note. If this Note is lost, stolen, mutilated or destroyed, the
Company shall, on such terms as to indemnity or otherwise as it may reasonable impose (which shall, in the case of a mutilated Note, include the surrender and cancellation thereof), issue a new Note of like denomination and tenor as the Note so
lost, stolen, mutilated or destroyed.
             8.7         Titles and
Headings. The titles and headings contained in this Note are intended for reference and shall not by themselves determine the construction or interpretation of this Note.
             8.8        Entire Agreement. This Note delivered pursuant hereto and thereto, constitute the full and entire
understanding and agreement between the parties with respect to the subjects hereof and thereof.
          IN WITNESS WHEREOF, the Company has caused this Note to
be issued as of the date first written above.

		 
	TAITRON COMPONENTS INCORPORATED
	 
	 
	
	 
	By: Stewart Wang	 
	Title: President & CEOForm of Executive Employment Agreement

  EXHIBIT 10.1
  EMPLOYMENT AGREEMENT
            AGREEMENT made this ___ day of _____________, 2003, by and between ITXC Corp., a corporation formed under the laws of the State of Delaware (the “Company”),
and _________________  (the “Executive”). 
  W I T N E S S E T H:
            WHEREAS, the Company wishes to retain the continuing services of the Executive and the Executive wishes to continue such employment, and each desires to enter into an
agreement to provide for the terms and conditions of such employment set forth herein;
            NOW, THEREFORE, in consideration of the premises
and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows:
            1. 
Employment
            The Company agrees to employ the Executive during the Term specified in section 2, and the Executive agrees to accept
such continued employment, upon the terms and conditions hereinafter set forth.
            2.  Term
            Subject to Section 6 below and the other terms and conditions of this Agreement, the Executive’s employment by the Company shall be for a term (the
“Term”) commencing on the date this Agreement is last executed (the “Effective Date”) and expiring on the Expiration Date. For purposes of this Agreement, the term “Expiration Date” shall mean July 1, 2004, except that
(a) if a Trigger Event occurs prior to July 1, 2004 (or December 31, 2003 if the Trigger Event relates to a change in the Chief Executive Officer of the Company), the term “Expiration Date” shall mean the date which is one year after the
first such Trigger Event and (b) if the parties agree in writing to extend the Term beyond the period provided herein, the term “Expiration Date” shall mean the last day of such extended Term. Notwithstanding anything contained herein to
the contrary, in the event that the Executive’s employment with the Company continues after the Expiration Date, the Executive’s employment shall be deemed to be “at will” after the Expiration Date. The effective date of the
termination of the Executive’s employment with the Company, regardless of the reason therefor, is referred to in this Agreement as the “Date of Termination”.  The term “Trigger Event” shall mean (a) a Change in Control
of the Company, as that term is defined in the Company’s 1998 Stock Incentive Plan, or (b) a change in the Chief Executive Officer of the Company, but only if such change in chief executive officer occurs prior to December 31, 2003.

          3.  Duties and Responsibilities
            (a) During the Term, the Executive shall retain his current title of [__________] or shall have such other title as may be agreed between the Executive and the
Company.  The Executive shall perform such duties and responsibilities as may be assigned to him from time to time consistent with his position, and in the absence of such assignment, such duties as are customary and commensurate with such
position.  The Executive further agrees to accept election, and to serve during all or any part of the Term, as a director of the Company and as an officer or director of any subsidiary of the Company, without any additional compensation
therefor.

            (b) The Executive’s employment by the Company shall be full-time and exclusive, and during the Term, the Executive
agrees that he will (i) devote substantially all of his business time and attention, his best efforts, and all his skill and ability to promote the interests of the Company and its affiliates; (ii) carry out his duties in a competent and
professional manner; (iii) work with other employees of the Company and its affiliates in a competent and professional manner; and (iv) generally promote the interests of the Company and its affiliates.  Notwithstanding the foregoing, the
Executive shall be permitted to engage in civic or charitable activities and manage his personal investments, provided that such activities (individually or collectively) do not materially interfere with the performance of his duties or
responsibilities under this Agreement and provided that Executive shall not make personal investments that result in his owning more than 5% of the voting stock of any entity that competes with the Company.
            (c) The Executive’s principal office shall initially be located in Plainsboro, New Jersey, subject to necessary travel requirements of his position and duties
hereunder.  The Company reserves the right to move Executive’s principal office to a location within a 50 miles of said location.
           4.  Compensation
            (a) As compensation for
his services hereunder, the Company shall pay the Executive, in accordance with its normal payroll practices, base salary compensation at an annual rate not less than Executive’s base salary on the Effective Date.
            (b) Subject to the attainment of such individual and Company objectives as the Company shall establish, the Executive shall be awarded a cash bonus for each three
month period of employment with a target bonus percentage of base salary equal to not less than the Executive’s target bonus percentage of base salary in effect on the Effective Date.
            (c) The Executive has received and will continue to be eligible for the grant of non-qualified options under the ITXC Corp. Stock Incentive Plan.
            (d) All compensation paid to the Executive shall be subject to applicable tax withholding requirements.
            5.  Expenses; Fringe Benefits
            During the
Term, the Executive shall be eligible for all benefits in accordance with the Company policies in effect from time to time and shall be subject to policies applicable to expenses and benefits of the Company.   Notwithstanding anything
contained herein to the contrary, the Company reserves the right to modify, amend or terminate any employee benefit plan or policy as it deems appropriate in its discretion; provided that unless required by law, the Company shall not amend, modify
or terminate any such plan or policy in a manner that treats the Executive differently from other similarly situated employees.
            6. 
Termination
          (a) The Company, by direction of its Board of Directors and/or Chief Executive Officer, shall be entitled to terminate the
Term prior to the Expiration Date and to discharge the Executive for “Cause” effective upon the giving of written notice.  The term “Cause” shall be limited to the following grounds:
                 (i) The willful and continued failure by the Executive to substantially perform any of his material duties hereunder or to follow the
reasonable and lawful orders of the Board of Directors of the Company or the Chief Executive Officer of the Company;
                 (ii)  The Executive’s misappropriation of material assets of the Company;
  2

                  (iii) Use of alcohol or illegal drugs, materially interfering with the performance of
the Executive’s obligations under this Agreement;
                 (iv) Indictment, arraignment or conviction of a
felony or of any crime involving moral turpitude, dishonesty or theft;
                 (v) The commission by the Executive
of any willful or intentional act, or the Executive’s willful or intentional failure to act, which could reasonably be expected to injure the reputation, business or business relationships of the Company; provided, however, that no act or
failure to act on the part of the Executive shall be deemed to be willful or intentional if it was due primarily to an error of judgment or negligence, but shall be deemed willful or intentional if done, or omitted to be done, by the Executive not
in good faith and without reasonable belief that his action or omission was in or not opposed to the best interests of the Company.  Failure to meet performance standards or objectives of the Company by itself shall not constitute Cause for
purposes of this Agreement; and
                (vi) Any material breach (not covered by any of the clauses (i) 
through (v)) of any term, provision or condition of this Agreement or of any Company policy.
            (b) Upon the termination of the employment
of the Executive with the Company pursuant to Section 6(a) or by virtue of a voluntary resignation other than pursuant to a termination under section 6(d) below, or upon termination of the Executive by the Company subsequent to the Expiration Date,
the Company shall pay the Executive, subject to appropriate offsets, as permitted by applicable law, for debts or money due to the Company (collectively, “Offsets”), (i) any earned but unpaid salary compensation, (ii) any earned but unpaid
cash bonus, (iii) any unused accrued vacation and (iv) any unpaid reimbursable expenses, in each case as of the Date of Termination.  Any benefits to which the Executive or his beneficiaries may be entitled to under the plans and programs
described in Section 5 above, or any other applicable plans and programs, as of his Date of Termination shall be determined in accordance with the terms of such plans and programs.  Except as provided in this Section 6(b), and except for
indemnification obligations and obligations to pay advances under the Company’s Certificate of Incorporation, upon the termination of the Executive’s employment under the circumstances set forth in this Section 6(b), the Company shall have
no further liability to the Executive or the Executive’s heirs, beneficiaries or estate for damages, compensation, benefits, severance, indemnities or other amount of whatever nature.
            (c) A “Termination Event” shall mean the occurrence of any of the following, provided that the Termination Event occurs either after a Trigger Event or in
anticipation of an expected Trigger Event: (i) actual termination of the Executive’s employment by the Company without Cause; (ii) a demotion of the Executive or a material diminution in the Executive’s responsibilities or authority; (iii)
the Executive’s being required to relocate more than 50 miles from his current place of employment; or (iv) a reduction of the Executive’s base compensation or total target compensation.   The Executive shall be entitled to
terminate his employment and such termination shall be deemed a Termination Without Cause in the event that a Termination Event occurs or if, prior to the Expiration Date the Company is in default of a material term of this Agreement, which default
remains uncured for a period of 30 days after written notice of such default from the Executive to the Company, such notice to specify the specific nature of the claimed default and the manner in which the Executive requires such default to be
cured. Notwithstanding any such termination, or in the event the Executive suffers a Termination Event prior to the Expiration Date (hereinafter referred to as a “Termination Without Cause”), the restrictions set forth in Section 8 shall
remain in full force and effect.
           (d) In the event of a Termination Without Cause, as liquidated damages, the Executive shall be entitled
to receive from the Company, subject to any Offsets and provided that the Executive is not in breach of his obligations to the Company under Section 8 hereof, (i) the Executive’s Salary and Bonus Component (as hereinafter defined), reduced by
any income earned by the Executive, from any entity determined in the sole judgment of the Company’s Board of Directors to be in competition with the Company, as a result of gainful 
  3

   activity during the remainder of the Term whether as an employee, principal, partner, agent, consultant, co-venturer or in any other capacity, (ii) any unpaid reimbursable
expenses outstanding, and (iii) any unused accrued paid personal time off days, as of the Date of Termination. Further, for purposes of the Company’s 1998 Stock Incentive Plan and the stock options granted to the Executive thereunder, in the
event of a Termination Without Cause, the Executive shall be deemed to be employed through the last day of the Term. In the event that the Termination Without Cause occurs less than three months prior to the end of the Term, the Term shall be deemed
extended until three months after the date of Termination Without Cause, solely for purposes of this paragraph. Except as otherwise expressly stated herein with respect to the Company’s 1998 Stock Incentive Plan, any benefits to which Executive
or his beneficiaries may be entitled to under the plans and programs described in section 5 above, or any other applicable plans and programs, as of his Date of Termination shall be determined in accordance with the terms of such plans and programs;
provided, however, that the first six months of the Executive’s cost of continued “COBRA” medical coverage, should such coverage be elected, shall be the same as the cost paid by active executives of the Company for group health
coverage.  Except as provided in this section 6(d) in connection with a Termination Without Cause, and except for indemnification obligations under the Company’s Certificate of Incorporation, (x) the Company shall have no further liability
to the Executive or the Executive’s heirs, beneficiaries or estate for damages, compensation, benefits, severance, indemnities or other amounts of whatever nature and (y) the Executive shall be under no obligation to mitigate his damages or to
seek other employment.  It is agreed that the provision of this Section 6(d) shall lapse as of the Expiration Date and shall not be deemed to continue as a result of continued employment of the Executive unless provided for in a written
agreement.
           (e) The term “Executive’s Salary and Bonus Component” shall mean, for the Executive:
                  (i)  all earned but unpaid salary accrued through the date on which a Termination Without Cause occurs and all
bonuses earned but unpaid for periods up to, but not including, the calendar quarter in which such termination occurs;
                  (ii)  the Executive’s then current salary, payable during the period from the day after the date of such termination
through the last day of the Term and payable at such intervals as shall have applied immediately prior to such termination; 
                  (iii)  a bonus under the Company’s incentive compensation program for the calendar quarter in which such termination
occurs, payable within 30 days after the end of such quarter and in an amount equal to 90% of the Executive’s then current quarterly target bonus; 
                  (iv)  a bonus under the Company’s incentive compensation program for the period beginning on the first day of the
calendar quarter (the “Second Quarter”) immediately following the calendar quarter in which such termination occurs and ending on the sooner of (x) the last day of the Second Quarter or (y) the later of (1) the last day of the Term or (2)
the Final Date, payable within 30 days after the end of such period and in an amount equal to 90% of the Executive’s then current quarterly target bonus multiplied by a fraction, the numerator of which is the number of days in such period and
the denominator of which is the number of days in the Second Quarter; and
                  (v)  in the event
that the last day of the Term occurs prior to the Final Date (as defined herein), a lump sum amount equal to the Executive’s then current annual salary multiplied by a fraction, the numerator of which shall be the number of days from the day
after the last day of the Term through and including the Final Date and the denominator of which shall be 365.
           (f) Thus, by way of
example, if (a) a Trigger Event were to occur on December 15, 2003, (b) this Agreement were to terminate as a result of a Termination Without Cause on March 15, 2004, (c) at the time of such termination, the Executive’ salary is $150,000 per
year and(d) at the time of such termination, the
  4

   Executive’s target bonus is $28,000 per quarter, then the Executive’s Salary and Bonus Component would equal:
                  (i) all earned but unpaid salary accrued through March 15, 2004 and all bonuses earned but unpaid through December 31
,2003;
                  (ii)  salary at the rate of $150,000 per year, payable during the period from March 16,
2004 through December 15, 2004; 
                  (iii)  a bonus for the quarter ending March 31, 2004 in an
amount equal to $25,200; and
                  (iv)  a bonus for the quarter ending June 30, 2004 in an amount
equal to $25,200.
            (g) The term “Final Date” shall mean the date which is a specified number of weeks after the Date of
Termination.  Such specified number shall be the lesser of (x) 26 and (y) two times the number of full six month periods during which the Executive shall have been employed by the Company as of the Date of Termination.
            7.  Disability; Death
            (a) In the
event the Executive shall be unable to perform his duties hereunder by virtue of illness or physical or mental incapacity or disability (from any cause or causes whatsoever) in substantially the manner and to the extent required hereunder prior to
the commencement of such disability (all such causes being herein referred to as “disability”), the Company shall have the right to terminate the Executive’s employment hereunder as at the end of any calendar month during the
continuance of such disability upon at least 30 days’ prior written notice to him.  In the event of the Executive’s death during the Term, the Date of Termination shall be the date of such death. 
           (b) In the event the Executive’s employment terminates pursuant to section 7(a), the Executive, or in the case of his death, the Executive’s estate, shall
be entitled to receive, subject to any Offsets, (i) all salary and bonus compensation earned but unpaid as of the Date of Termination, (ii) any unpaid reimbursable expenses outstanding and (iii) any unused accrued vacation, as of such date. 
Any benefits to which the Executive or his beneficiaries may be entitled under the plans and programs described in Section 5 above, or any other applicable plans and programs, as of his Date of Termination shall be determined in accordance with the
terms of such plans and programs.  Except as provided in this Section 7(b), in the event of the Executive’s termination due to disability or death, the Company shall have no further liability to the Executive or the Executive’s heirs,
beneficiaries or estate for damages, compensation, benefits, severance, indemnities or other amounts of whatever nature.
            8. 
Confidential Information and Noncompete 
            The Executive acknowledges that the provisions of the employee confidentiality,
intellectual property and noncompete agreement (the “Employee Agreement”) previously executed by him remain in full force and effect, except that the noncompete provisions shall, unless waived by the Company, expire twelve months after the
date on which the Executive is last paid by the Company.  Executive may voluntarily elect to stop payments from the Company at any time.
            9.  Enforceability
            The failure of any
party at any time to require performance by another party of any provision hereunder shall in no way affect the right of that party thereafter to enforce the same, nor shall it affect any other party’s right to enforce the same, or to enforce
any of the other provisions in this Agreement; nor shall the waiver by 
 5

   any party of the breach of any provision hereof be taken or held to be a waiver of any subsequent breach of such provision or as a waiver of the provision itself.

           10.  Assignment
            This
Agreement is a personal contract and the Executive’s rights and obligations hereunder may not be sold, transferred, assigned, pledged or hypothecated by the Executive.  The rights and obligation of the Company hereunder shall be binding
upon and run in favor of the successors and assigns of the Company; provided, however, the Company may not assign or transfer its rights or obligations under this Agreement unless such assignee or transferee assumes the liabilities, obligations and
duties of the Company, as contained in this Agreement, either contractually or as a matter of law.
            11. 
Modification
            This Agreement may not be orally canceled, changed, modified or amended, and no cancellation, change, modification
or amendment shall be effective or binding, unless in writing and signed by the parties to this Agreement.
            12.  Severability;
Survival
            In the event any provision or portion of this Agreement is determined to be invalid or unenforceable for any reason, in
whole or in part, the remaining provisions of this Agreement shall nevertheless be binding upon the parties with the same effect as though the invalid or unenforceable part had been severed and deleted. The respective rights and obligations of the
parties hereunder shall survive the termination of the Executive’s employment to the extent necessary to the intended preservation of such rights and obligations.
           15.  Notice
            Any notice, request,
instruction or other document to be given hereunder by any party hereto to another party shall be in writing and shall be deemed effective (a) upon personal delivery, if delivered by hand, or (b) three days after the date of deposit in the mails,
postage prepaid, if mailed by certified or registered mail, or (c) on the next business day, if sent by facsimile transmission or prepaid overnight courier service, and in each case, addressed as follows:

	   
 	  If to the Executive:
 	   
 
	   
 	   
 	   
 
	   
 	 
 	   
 
	   
 	 
 	   
 
	  
 	 
 	   
 
	   
 	   
 	   
 
	   
 	  If to the Company:
 	   
 
	   
 	   
 	   
 
	   
 	  ITXC Corp.
 	   
 
	   
 	  750 College Road East
 	   
 
	   
 	  Princeton, New Jersey 08540
 	   
 
	   
 	  Attention:  Chief Executive Officer
 	   
 

 Any party may change the address to which notices are to be sent by giving notice of such change of
address to the other party in the manner herein provided for giving notice.
  6

             16.  Applicable Law
            This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey, without application of conflict or law provisions applicable
herein.
            17.  Subsidiaries and Affiliates
            As used herein, the term “subsidiary” shall mean any corporation or other business entity controlled directly or indirectly by the corporation or other
business entity in question, and the term “affiliate” shall mean and include any corporation or other business entity directly or indirectly controlling, controlled by or under common control with the corporation or other business entity
in question.
            18.  No Conflict
            The Executive represents and warrants that he is not subject to any agreement, instrument, order, judgment or decree of any kind, or any other restrictive agreement
of any character, which would prevent him from entering into this Agreement or which would be breached by the Executive upon his performance of his duties pursuant to this Agreement.
            19.  Entire Agreement
            This Agreement and
the Employee Agreement represent the entire agreement between the Company and the Executive with respect to the subject matter hereof, and all prior agreements, plans and arrangements relating to the employment of the Executive the Company are
nullified and superseded hereby.
           20.  Headings
            The headings contained in this Agreement are for reference purposes only, and shall not affect the meaning or interpretation of this Agreement.
            IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

	   
 	  ITXC CORP.
 	   
 
	   
 	   
 	   
 
	   
 	  By:
 	  /s/
 	   
 
	   
 	   
 	 
 	   
 
	  
 	  Name:
 	   
 	   
 
	   
 	  Title:
 	   
 	   
 
	   
 	   
 	   
 	   
 
	   
 	   
 	   
 	   
 
	   
 	  Executive’s Signature
 	   
 
	   
 	   
 	   
 
	   
 	   
 	  /s/
 	   
 
	  
 	  
 	 
 	  
 

 7

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