THE CHILDREN’S
INTERNET, INC.
EXECUTIVE EMPLOYMENT
AGREEMENT
This Employment Agreement (the
“Agreement”) is dated as of April 2, 2007 (the
“Effective Date”), by and between Tim T. Turner
(“Employee”) and The Children’s Internet, Inc., a
Nevada corporation (the “Company”).
1.
Term of
Agreement . This Agreement shall commence on the date hereof
and shall automatically terminate on April 2, 2010, unless earlier
terminated pursuant to the terms herein.
2.
Duties .
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(1)
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Position
.
Employee shall be employed as the
Director of Finance and Operations. It is the Company’s
intent to acquire a Directors and Officers insurance policy. Upon
attaining Directors and Officers insurance, the Company will
promote the Employee to the position of an Officer of the Company.
In addition, at that time, the Employee will be nominated to serve
as a member of the Board of Directors of the Company.
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(b)
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Report . Employee will report to the Company’s
Board of Directors and Chief Executive Officer.
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(c)
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Obligations to the Company
. Employee agrees to the best of his
ability and experience that he will at all times loyally and
conscientiously perform all of the duties and obligations required
of and from Employee pursuant to the express and implicit terms
hereof. At such time as the Employee is promoted to the position of
an Officer of the Company, and subject to the control and oversight
of the Board of Directors, Employee shall be responsible for
general supervision, direction, and control of the business and
officers of the Company. Employee shall preside at all meetings of
the shareholders and in the absence of the Chairman of the Board,
or if there be none, at all meetings of the Board of Directors.
Employee shall have the general powers and duties of management
usually vested in the office of an Officer of the Company of a
Corporation, and shall have such other powers and duties as may be
prescribed by the Board of Directors or the Bylaws. During the term
of Employee’s employment relationship with the Company,
Employee further agrees that he will devote all of his business
time and attention (except for vacation periods as set forth herein
and reasonable periods of illness or other incapacities permitted
by the Company's general employment policies) to the affairs of the
Company and promotion of its interests, and will spend at least
three (3) days per each work week at the Company’s
headquarters, unless travel or other meetings on the
Company’s behalf prevent his presence at the
headquarters.
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(d)
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Indemnification : At such time as the Employee is promoted to
the position of an Officer of the Company, the Company agrees to
indemnify and defend the Employee to the fullest extent possible
under the law for all actions taken by the Employee while acting on
the Company’s behalf. In addition, the Company will use its
best efforts to obtain, for the benefit of the Employee,
indemnification and hold harmless agreements from related parties
including Sholeh Hamedani, Nasser Hamedani, Shadrack Films and Two
Dog Net, Inc.
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(d)
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Performance of Services for
Others . The
Company will be entitled to all of the benefits and profits arising
from or incident to all such work services and advice described in
Section 2(c) above, Employee will not render commercial or
professional services of any nature to any person or organization,
whether or not for compensation, without the prior written consent
of the Company’s Board of Directors if such service impacts
in any way the Employee’s ability to fully and completely
perform his duties to the Company under this agreement and Employee
will not directly or indirectly engage or participate in any
business that is competitive in any manner with the business of the
Company during the term of this Agreement.
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3 .
Compensation
.
For the duties and services to be
performed by Employee hereunder, the Company shall pay Employee,
and Employee agrees to accept, the salary, stock options, bonuses
and other benefits described below in this
Section 4.
(a)
Base
Salary
. Employee shall
receive a yearly salary of $157,500. Employee shall earn a monthly
salary of $13,125 of which $5,000 will be paid in cash and $8,125
shall be deferred and accrued for a maximum period of twelve months
from the date of this Agreement. In the event that the Company
raises, during this twelve-month period, additional capital,
through loans, equity investment or both, in the aggregate sum of
one million dollars, the Employee’s monthly cash compensation
shall be increased to $6,562.50. The balance of the Employees
monthly compensation of $6,562.50 shall be deferred and accrued. At
the end of the twelve month period, the total amount of the
Employee’s deferred compensation shall be payable by the
Company, and the Employee’s cash compensation will be
increased to $13,125 per month. In the event that the Company,
acting in good faith, determines that it does not have the
resources to pay the Employee’s deferred compensation, the
Employee and the Company agree that the total amount of deferred
compensation will be converted into a note payable to the Employee
by the Company. The Note shall have a term of one year and shall
accrue interest at the annual rate of 7.75%, or 2.5 % above the
Federal Funds Rate then in effect, whichever amount is higher,
payable at the end of each calendar month. At the end of the Note
term, the principal amount and any unpaid earned interest shall be
due and payable. The Note will have a Warrant attached to it that
will enable the holder to purchase shares of the Company’s
common stock. The number of shares of the Company’s common
stock that will be purchasable under the terms of the Warrant will
be equal to the principal amount of the Note multiplied by four and
divided by the then current market price of the Company’s
common stock. The Warrant Shares will be unregistered and subject
to Rule 144. The Warrant Shares shall have piggyback registration
rights. The term of the Warrant will be five years from the date of
issue.
Employee’s monthly salary will otherwise
be payable pursuant to the Company’s normal payroll
practices. The Note will continue to be due and payable with
interest from the date issued.
(b)
Bonus. In addition to the Base Salary, the Employee
shall participate in a bonus program in which the Employee will
earn an annual bonus equal to 50% of the Employees Base Salary
subject to the Employee meeting the performance objectives
established by the Company.
(c)
Option
Grant . In connection with the commencement of
Employee’s employment, the Board of Directors shall grant to
Employee a combination of qualified Incentive Stock Options (ISOs)
and nonqualified stock options (the Stock Option) to purchase up to
Two Million, Six Hundred and Eighty Seven Thousand, Three Hundred
and Seventy Four, (2,687,374) shares of common stock (the
“Option Shares”) at a price per share (the Purchase
Price) equal to fair market value per share. The Employee may
exercise the Option at any time during a period of one hundred and
twenty (120) months from the Date of Grant. The Employee may elect
to exchange all or some of the options for shares of Common stock
using the Net Issue Exercise method. If the Employee elects to
exchange all or some of the options using the Net Issue Exercise
method, as provided herein, the Employee shall tender to the
Company written notice of his election to exchange all or some of
his shares and the number of options he wished to exchange and the
Company shall issue to the Employee the number of shares of Common
Stock computed using the following formula:
X=(Y(A-B))/A
Where:
X= the number of share of Common Stock to be
issued
Y= the number
of share of Common Stock purchasable under the options being
exchanged.
A= the Fair Market Value of one share of the
Common Stock
B= Purchase Price as defined herein
The Stock Option will vest as follows:
300,000 shares of the Option Shares, at fair market value, shall
vest immediately upon the commencement date of employment. The
remainder of the Option Shares shall be qualified Incentive Stock
Options and will vest at the rate of 1/36 each month until fully
vested. Subject to the discretion of the Company’s
Board of Directors, Employee may be eligible to receive additional
grants of purchase rights or stock options from time to time in the
future, at a purchase or exercise price equal to the price of the
Company stock on the date of grant.
The Company warrants that it has established or
will establish a qualified Incentive Stock Option Plan pursuant to
Section 422 of the Internal Revenue Service code.
(d)
Acceleration of
Vesting . In the
event Employee’s employment is terminated Without Cause or
Resignation with Good Reason, the Option Shares shall become fully
vested. In addition, The Option Shares shall become fully vested at
such time as the Company executes an agreement in which the Company
is sold or the Company enters into a business combination with
another entity or person in which the surviving entity is no longer
controlled by a majority of the Company’s shareholders
holding shares immediately prior to the business
combination.
(e)
Additional
Benefits . Employee will be eligible to participate in the
Company’s employee benefit plans of general application, if
any, including without limitation, those plans covering medical,
disability and life insurance in accordance with the rules
established for individual participation in any such plan and under
applicable law. Employee will receive four weeks of paid vacation
per year and shall be accorded sick leave in accordance with the
policies in effect during the term of this Agreement and will
receive such other benefits as the Company generally provides to
its other employees of comparable position and
experience.
(f)
Reimbursement of
Expenses . Employee shall be authorized to incur on behalf
and for the benefit of, and shall be reimbursed by, the Company for
reasonable expenses, provided that such expenses are substantiated
in accordance with Company policies.
4.
Termination of Employment
and Severance Benefits .
(a)
Termination of
Employment . This Agreement may be terminated upon the
occurrence of any of the following events:
(i) The Company’s determination in good faith
that it is terminating Emp
