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INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made and entered
into as of January 2, 2006 (the "Effective Date"), by Medistem
Laboratories, Inc. , a Nevada corporation (the "Company") and
Chris McGuinn (the "Indemnitee").
RECITALS
WHEREAS , highly competent persons are becoming more reluctant
to serve publicly-held corporations as officers and directors
unless they are provided with adequate protection through insurance
or adequate indemnification against inordinate risks of claims and
actions against them arising out of their service to and activities
on behalf of such corporations; and
WHEREAS , the Board of Directors of the Company (the
"Board") has determined that the inability to attract and retain
such persons is detrimental to the best interests of the
Company’s stockholders and that the Company should act to
assure such persons that there will be increased certainty of such
protection in the future; and
WHEREAS, Article V of the Company’s Bylaws provides for
indemnification of directors in accordance with Section 78.751 of
the Nevada General Corporation Law; and
WHEREAS , the Board deems it to be reasonable, prudent
and necessary for the Company contractually to indemnify its
officers and directors to the fullest extent permitted by
applicable law.
AGREEMENT
NOW, THEREFORE , in consideration of the premises and the
covenants contained herein, the Company and Indemnitee do hereby
covenant and agree as follows:
1.
Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
(a)
"Change of Control" shall have the meaning set forth in
Section 5(d) .
(b)
"Corporate Status" describes the status of a person who is
serving or has served (i) as an officer or director of the Company,
including as a member of any committee of the Board, (ii) in any
capacity with respect to any employee benefit plan of the Company,
or (iii) as a director, partner, trustee, officer, employee, or
agent of any other Entity at the request of the Company. For
purposes of subsection (iii) above, an officer or director of the
Company who is serving or has served as a director, partner,
trustee, officer, employee or agent of a Subsidiary shall be deemed
to be serving at the request of the Company.
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(c)
"Disinterested Director" means a director of the Company who is
not and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.
(d)
"Entity" shall mean any corporation, partnership, limited
liability company, joint venture, trust, foundation, association,
organization or other legal entity.
(e)
"Expenses" shall mean all reasonable fees, costs and expenses
incurred in connection with any Proceeding, including, without
limitation, reasonable attorneys’ fees, disbursements and
retainers, fees and disbursements of expert witnesses, private
investigators and professional advisors, court costs, transcript
costs, travel expenses, duplicating, printing and binding costs,
telephone and fax transmission charges, postage, delivery services
and other disbursements, and expenses of the types customarily
incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, or being or preparing to be a
witness in a Proceeding.
(f)
"Indemnifiable Expenses," "Indemnifiable Liabilities" and
"Indemnifiable Amounts" shall have the meanings ascribed to those
terms in Section 3(a) below.
(g)
"Independent Counsel" means a law firm, or a member of a law
firm, that is experienced in matters of corporation law and neither
presently is, nor in the past five years has been, retained to
represent (i) the Company or Indemnitee (or any affiliate thereof)
in any matter (other than with respect to matters concerning the
rights of Indemnitee under this Agreement), or (ii) any other party
to the Proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term
"Independent Counsel" shall not include any person who, under the
applicable standards of professional conduct then prevailing, would
have a conflict of interest in representing either the Company or
Indemnitee in an action to determine Indemnitee’s rights
under this Agreement.
(h)
"Liabilities" shall mean judgments, damages, liabilities,
losses, penalties, excise taxes, fines, and amounts paid in
settlement.
(i)
"Proceeding" shall mean any threatened, pending or completed
claim, action, suit, arbitration, alternate dispute resolution
process, investigation, administrative hearing, appeal, or any
other proceeding, whether civil, criminal, administrative,
arbitrative or investigative, whether formal or informal, including
a proceeding initiated by Indemnitee pursuant to Section 9
of this Agreement to enforce Indemnitee’s rights hereunder,
but excluding a proceeding pending on or prior to the Effective
Date.
(j)
"Subsidiary" shall mean any Entity of which the Company owns
(either directly or through another Subsidiary) either (i) a
general partner, managing member or other similar interest or (ii)
50% or more of the voting power of the voting capital stock or
other voting equity interests of such Entity.
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2.
Services of Indemnitee. In consideration of the
Company’s covenants and commitments hereunder, Indemnitee
agrees to serve or continue to serve as a director and officer of
the Company. However, this Agreement shall not impose any
obligation on Indemnitee or the Company to continue
Indemnitee’s service to the Company beyond any period
otherwise required by law or by other agreements or commitments of
the parties, if any.
3.
Agreement to Indemnify. The Company agrees to indemnify
Indemnitee as follows:
(a)
Proceedings Other Than Proceedings by or in the Right of the
Company. Subject to the exceptions set forth in
Section 4 below, if Indemnitee was or is a party or is
threatened to be made a party to any Proceeding (other than an
action by or in the right of the Company) by reason of
Indemnitee’s Corporate Status, Indemnitee shall be
indemnified by the Company against all Expenses and Liabilities
actually and reasonably incurred by Indemnitee in connection with
such Proceeding (referred to herein as "Indemnifiable Expenses" and
"Indemnifiable Liabilities," respectively, and collectively, as
"Indemnifiable Amounts"), if Indemnitee (i) is not liable under
Nevada Revised Statutes Section 78.138, as such statute may
be modified, amended, or superceded from time to time ("Section
78.138"), or (ii) acted in good faith and in a manner Indemnitee
reasonably believed to be in or not opposed to the best interests
of the Company and, with respect to any criminal action or
proceeding, Indemnitee had no reasonable cause to believe that
Indemnitee’s conduct was unlawful.
(b)
Proceedings by or in the Right of the Company. To
the extent permitted by applicable law and subject to the
exceptions set forth in Section 4 below, if Indemnitee was
or is a party or is threatened to be made a party to any
threatened, pending or completed Proceeding by or in the right of
the Company to procure a judgment in its favor by reason of
Indemnitee’s Corporate Status, Indemnitee shall be
indemnified by the Company against all Indemnifiable Expenses
actually and reasonably incurred by Indemnitee or on
Indemnitee’s behalf in connection with such Proceeding if
Indemnitee (i) is not liable under Section 78.138, or (ii) acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company; provided ,
however , that if applicable law prohibits such
indemnification, no indemnification against such expenses shall be
made in respect of any claim, issue or matter in such Proceeding as
to which Indemnitee shall have been adjudged to be liable to the
Company unless and to the extent that the court in which such
Proceeding shall have been brought or is pending shall determine
that such indemnification may be made.
(c)
Indemnification for Expenses as a Witness. Subject
to the exceptions set forth in Section 4 below, to the
extent that Indemnitee is, by reason of Indemnitee’s
Corporate Status, a witness in any Proceeding to which Indemnitee
is not a party, the Company shall indemnify Indemnitee against all
expenses actually and reasonably incurred by Indemnitee in
connection therewith.
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(d)
Settlements . The Company shall not be liable to
indemnify Indemnitee under the Agreement for any amounts paid in
settlement of any action or claim effected without its written
consent, which consent shall not be unreasonably withheld or
delayed. The Company shall not settle any action or claim in
any manner which would impose any material penalty or limitation on
Indemnitee without Indemnitee’s consent, which consent may be
withheld in Indemnitee’s sole and absolute discretion.
4.
Exceptions to Indemnification.
(a)
Indemnitee as Plaintiff. Except as provided in
Section 9(b) of this Agreement and in the next sentence,
Indemnitee shall not be entitled to payment of Indemnifiable
Amounts or advancement of Indemnifiable Expenses with respect to
any Proceeding brought by Indemnitee against the Company, any
Entity that it controls, any director or officer thereof, or any
third party, unless the Company has consented to the initiation of
such Proceeding. This Section 4(a) shall not apply to
counterclaims or affirmative defenses asserted by Indemnitee in an
action brought against Indemnitee.
(b)
Other Limitations to Indemnification.
Notwithstanding anything contained in this Agreement or in
the Company’s Articles of Incorporation or Bylaws (as either
or both may be amended from time to time) to the contrary, the
Company shall not be obligated to indemnify or hold harmless
Indemnitee:
(i)
if and to the extent that such indemnification shall be
prohibited by applicable law;
(ii)
except to the extent the aggregate of losses to be indemnified
hereunder exceeds the amount of the losses for which Indemnitee is
indemnified pursuant to any policy of insurance purchased and
maintained by the Company and such amounts are actually paid to or
for the benefit of Indemnitee pursuant to such insurance
policy(ies);
(iii)
in respect to remuneration paid to Indemnitee if it shall be
determined by a final judgment or other final adjudication that
such remuneration was in violation of law;
(iv)
on account of any suit in which final judgment is rendered
against Indemnitee for an accounting of profits made from the
purchase or sale by Indemnitee of securities of the Company
pursuant to the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar provisions
of any law;
(v)
if and to the extent that a claim in a Proceeding is decided
adversely to Indemnitee based upon or attributable to Indemnitee
gaining in fact any personal profit or advantage to which
Indemnitee was not legally entitled; or
(iv)
if and to the extent that the indemnifiable event or
Indemnitee’s acts or omissions constituted or arose out of
Indemnitee’s fraudulent or dishonest or intentional
misconduct, knowing violation of the law or gross negligence.
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5.
Procedure for Payment of Indemnifiable Amounts.
(a)
Written Request for Indemnification. To obtain
indemnification under this Agreement, Indemnitee shall submit to
the Chief Executive Officer of the Company a written request,
including therein or therewith such documentation and information
as is reasonably available to Indemnitee and is reasonably
necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company
shall, promptly upon receipt of such a request for indemnification,
advise the Board in writing that Indemnitee has requested
indemnification.
(b)
Determination of Entitlement to Indemnification.
Upon written request by Indemnitee for indemnification
pursuant to the first sentence of Section 5(a) hereof, a
determination, if required by applicable law, with respect to
Indemnitee’s entitlement thereto shall be made in the
specific case:
(i) if a Change in Control shall have occurred, by Independent
Counsel in a written opinion to the Board, a copy of which shall be
delivered to Indemnitee; or
(ii) if a Change in Control shall not have occurred, (A) by the
Board by a majority vote of a quorum consisting of Disinterested
Directors, or (B) if a quorum of the Board consisting of
Disinterested Directors is not obtainable, or even if such quorum
is obtainable, if such quorum of Disinterested Directors so
directs, either (x) by Independent Counsel in a written opinion to
the Board, a copy of which shall be delivered to Indemnitee, or (y)
by the securityholders of the Company, as determined by such quorum
of Disinterested Directors or a quorum of the Board, as the case
may be.
If it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee (or on behalf of Indemnitee)
shall be made within fifteen (15) days after such determination.
Indemnitee s
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