Document:

EXHIBIT
10.3

     

    SHAREHOLDER
LOCK-UP AGREEMENT

     

    THIS
AGREEMENT (this “Agreement”) is dated
as of June ___, 2010 (the “Effective Date”) by
and between Bacterin International Holdings, Inc., f/k/a K-Kitz, Inc., a
Delaware corporation (the “Company”), and the
persons set forth on the signature pages hereto (each a “Management
Shareholder” and collectively, the “Management
Shareholders”).  Capitalized terms used but not defined herein
shall have the meanings ascribed to such terms in the Subscription Agreement (as
defined below).

    

    WHEREAS,
the Company has entered into an Agreement and Plan of Merger (the “Merger Agreement”)
pursuant to which Bacterin International Inc., a Nevada corporation (“Bacterin”), will
become a wholly-owned subsidiary of the Company (the “Reverse Merger”) and,
contingent upon the closing of the Reverse Merger, the Investors have agreed to
acquire from the Company (the “Offering”), either
for cash or upon conversion of certain existing promissory notes (“Bridge Notes”) of
Bacterin, (i) shares of the Company’s common stock (the “Common Stock”) and
(ii) warrants (“Warrants”) to
purchase additional shares of the Common Stock, subject to the terms and
conditions set forth in a Subscription Agreement entered into between Bacterin
and each of the Investors in connection with the Offering (the “Subscription
Agreement” and such transaction, the “Financing
Transaction”); and

    

    WHEREAS,
in order to induce the Company and the Investors to enter into the Financing
Transaction, the Management Shareholders have agreed not to sell any shares of
the Company’s Common Stock that such Management Shareholders presently own on
the date hereof, or may acquire on or after the date hereof, except in
accordance with the terms and conditions set forth herein (collectively, the
“Lock-Up
Shares”).

     

    NOW,
THEREFORE, in consideration of the covenants and conditions hereinafter
contained, the parties hereto agree as follows:

     

    1.            Restriction on Transfer;
Term. Each Management Shareholder hereby agrees with the Company that
such Management Shareholder will not offer, sell, contract to sell, assign,
transfer, hypothecate, gift, pledge or grant a security interest in, or
otherwise dispose of, or enter into any transaction which is designed to, or
might reasonably be expected to, result in the disposition of (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise, directly or indirectly) (each, a “Transfer”), any of
the Lock-Up Shares and shall not Transfer such shares until the one year
anniversary of the Effective Date; provided, however, that (a) the restrictions
set forth in this Section 1 shall not apply to any Common Stock or Warrants (or
any shares of common stock underlying the Warrants) acquired by a Management
Shareholder in the Offering which would otherwise constitute Lock Up Shares and
(b) Guy Cook shall be permitted to hypothecate, pledge and grant a security
interest in up to 5,000,000 of his Lock Up Shares (excluding any shares of
Common Stock he may acquire in the Offering which are not subject to this
Section 1 pursuant to section 1(a) above) as collateral for borrowed funds used
to acquire shares of Common Stock and warrants in the Offering and, if such
collateral is executed against, shall be permitted to assign and transfer such
Lock Up Shares to the secured party free of any restrictions set forth
herein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.            Ownership. During the
Lock-Up Period, the Management Shareholders shall retain all rights of ownership
in the Lock-Up Shares, including, without limitation, voting rights and the
right to receive any dividends that may be declared in respect thereof, except
as otherwise provided in the Subscription Agreement or the other documents to be
entered into in connection with the Offering whereby any benefits, rights, title
or otherwise shall inure to the Investors.

    

    3.            Company and Transfer
Agent. The Company is hereby authorized and required to disclose the
existence of this Agreement to its transfer agent. The Company and its transfer
agent are hereby authorized and required to decline to make any transfer of the
Common Stock if such transfer would constitute a violation or breach of this
Agreement.

     

    4.            Notices. All notices,
demands, consents, requests, instructions and other communications to be given
or delivered or permitted under or by reason of the provisions of this Agreement
or in connection with the transactions contemplated hereby shall be in writing
and shall be deemed to be delivered and received by the intended recipient as
follows: (i) if personally delivered, on the business day of such delivery (as
evidenced by the receipt of the personal delivery service), (ii) if mailed
certified or registered mail return receipt requested, two (2) business days
after being mailed, (iii) if delivered by overnight courier (with all charges
having been prepaid), on the business day of such delivery (as evidenced by the
receipt of the overnight courier service of recognized standing), or (iv) if
delivered by electronic mail or facsimile transmission, on the business day of
such delivery if sent by 6:00 p.m. in the time zone of the recipient, or if sent
after that time, on the next succeeding business day (as evidenced, in the case
of facsimile transmissions by the printed confirmation of delivery generated by
the sending party’s telecopier machine). If any notice, demand, consent,
request, instruction or other communication cannot be delivered because of a
changed address of which no notice was given (in accordance with this Section
4), or the refusal to accept same, the notice, demand, consent, request,
instruction or other communication shall be deemed received on the second
business day the notice is sent (as evidenced by a sworn affidavit of the
sender). All such notices, demands, consents, requests, instructions and other
communications will be sent to the following addresses or facsimile numbers as
applicable.

     

    If to the
Company:

    

    Mr. Guy
S. Cook

    Chief
Executive Officer and President

    Bacterin
International, Inc.

    600
Cruiser Lane

    Belgrade,
MT  59714

    Fax:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      With a
copy to:

    

    Greenberg
Traurig, LLP

    1200
17th
Street, Suite 2400

    Denver,
CO 80202

    Attn: C.
Ben Huber

    Fax:
(720) 904-7686

    

    If to the
Investors, to the addresses listed on Schedule I
hereto:

    

    With a
copy to:

    

    Gregory
J. Osborn

    Managing
Partner, Co-Founder

    Middlebury
Group, L.L.C.

    170 East
Ridgewood Ave.

    Ridgewood
NJ 07450

    Fax:
(646) 514-3980

    

    If to the
Management Shareholders, to such Management Shareholder c/o of the Company
at the address set forth above, or to such other address as any party may
specify by notice given to the other party in accordance with this Section
4.

     

    5.            Amendment. This
Agreement may not be modified, amended, altered or supplemented, except by a
written agreement executed by each of the parties hereto following the prior
written consent of Investors holding a majority of the shares of Common Stock
acquired in the Offering through purchase or conversion.

     

    6.            Entire Agreement.
This Agreement contains the entire understanding and agreement of the parties
relating to the subject matter hereof and supersedes all prior and/or
contemporaneous understandings and agreements of any kind and nature (whether
written or oral) among the parties with respect to such subject
matter.

    

    7.            Governing Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in that
state, without regard to any of its principles of conflicts of laws or other
laws which would result in the application of the laws of another jurisdiction.
This Agreement shall be construed and interpreted without regard to any
presumption against the party causing this Agreement to be drafted.

     

    8.            Waiver of Jury Trial.
EACH OF THE PARTIES HERETO HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES THE
RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE
PARTIES UNCONDITIONALLY AND IRREVOCABLY CONSENTS TO THE EXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY AND THE
FEDERAL DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK WITH RESPECT TO ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY, AND EACH OF THE PARTIES HEREBY UNCONDITIONALLY
AND IRREVOCABLY WAIVES ANY OBJECTION TO VENUE IN NEW YORK COUNTY OR SUCH
DISTRICT, AND AGREES THAT SERVICE OF ANY SUMMONS, COMPLAINT, NOTICE OR OTHER
PROCESS RELATING TO SUCH SUIT, ACTION OR OTHER PROCEEDING MAY BE EFFECTED IN THE
MANNER PROVIDED IN SECTION 4.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    9.            Severability. The
parties agree that if any provision of this Agreement be held to be invalid,
illegal or unenforceable in any jurisdiction, that holding shall be effective
only to the extent of such invalidity, illegally or unenforceability without
invalidating or rendering illegal or unenforceable the remaining provisions
hereof, and any such invalidity, illegally or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. It is the intent of the parties that this Agreement be fully
enforced to the fullest extent permitted by applicable law.

     

    10.            Binding Effect;
Assignment. This Agreement and the rights and obligations hereunder may
not be assigned by any Management Shareholder without the prior written consent
of the Company and Investors holding a majority of the shares of Common Stock
acquired in the Offering through purchase or conversion. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.

     

    11.            Headings. The section
headings contained in this Agreement (including, without limitation, section
headings and headings in the exhibits and schedules) are inserted for reference
purposes only and shall not affect in any way the meaning, construction or
interpretation of this Agreement. Any reference to the masculine, feminine, or
neuter gender shall be a reference to such other gender as is appropriate.
References to the singular shall include the plural and vice versa.

     

    12.            Counterparts. This
Agreement may be executed in two or more counterparts, and by the different
parties hereto in separate counterparts, by facsimile or other electronic
transmission, each of which when executed shall be deemed to be an original, and
all of which, when taken together, shall constitute one and the same document.
This Agreement shall become effective when one or more counterparts, taken
together, shall have been executed and delivered by all of the parties
hereto.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    [SIGNATURE
PAGE TO LOCK-UP AGREEMENT]

    

    IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above herein.

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	
                                      BACTERIN
      INTERNATIONAL

                                      HOLDINGS,
      INC., f/k/a K-KITZ, Inc.

                                    
	 
      	 
      
	
                                      By:

                                    	
                                        
      

                                    
	 
      	
                                      Name:
      Guy Cook

                                    
	 
      	
                                      Title:
      President and CEO

                                    
	 
      	 
      
	
                                      SHAREHOLDER

                                    
	 
      	 
      
	
                                      By:

                                    	
                                          
      

                                    
	 
      	
                                      Name:
      Guy Cook

                                    
	 
      	 
      
	
                                      SHAREHOLDER

                                    
	 
      	 
      
	
                                      By:

                                    	
                                          
      

                                    
	 
      	
                                      Name:
      Kent Swanson

                                    
	 
      	 
      
	
                                      SHAREHOLDER

                                    
	 
      	 
      
	
                                      By:

                                    	
                                        
      

                                    
	 
      	
                                      Name:
      Ken Calligar

                                    
	 
      	 
      
	
                                      SHAREHOLDER

                                    
	 
      	 
      
	
                                      By:

                                    	
                                        
      

                                    
	 
      	
                                      Name:
      Mitch Godfrey

                                    
	 
      	 
      
	
                                      SHAREHOLDER

                                    
	 
      	 
      
	
                                      By:

                                    	
                                        
      

                                    
	 
      	
                                      Name:
      Jesus Hernandez

                                    
	 
      	 
      
	
                                      SHAREHOLDER

                                    
	 
      	 
      
	
                                      By:

                                    	
                                        
      

                                    
	 
      	
                                      Name:
      Darrel Holmes

                                    
	 
      	 
      
	
                                      SHAREHOLDER

                                    
	 
      	 
      
	
                                      By:

                                    	
                                       
      

                                    
	 
      	
                                      Name:
      John P.
Gandolfo

                                    

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    [SIGNATURE
PAGE TO LOCK-UP AGREEMENT CONTINUED]

    

    
      
        
          
            
              	
                      SHAREHOLDER

                    
	 
      
	
                         
      

                    
	
                      Name:
      Daniel Frank

                    
	 
      
	
                      SHAREHOLDER

                    
	 
      
	
                        
      

                    
	
                      Name:
      Gary SimonEXHIBIT
10.4

    

    INDEMNIFICATION
AGREEMENT

    

    This
Indemnification Agreement (the “Agreement”) is made and entered as of June ___,
2010 by and between Bacterin International Holdings, Inc., a  Delaware
corporation, f/k/a K-Kitz, Inc., with its principal place of business at 600
Cruiser Lane, Belgrade, Montana 59714 (the “Company”), and
________________________________ (“Indemnitee”) and the parties agree as
follows:

    

    1.           Services by
Indemnitee.  Indemnitee agrees to serve as a director of the
Company so long as he is duly appointed or elected and qualified in accordance
with the applicable provisions of the Articles of Incorporation and Bylaws of
the Company or any subsidiary of the Company and until such time as
he  resigns or fails to stand for election or is removed from
his  position.  Indemnitee may, at any time and for any
reason, resign or be removed from such position (subject to any other
contractual obligation or other obligation imposed by operation of law), in
which event the Company shall have no obligation under this Agreement to
continue Indemnitee in any such position.

    

    2.           Indemnification.

    

    (a)           Subject
to the limitations set forth herein and in Sections 2(b) and 4 below, the
Company shall indemnify Indemnitee against Expenses and Liabilities in
connection with any Proceeding (as hereinafter defined in Section 13) associated
with Indemnitee’s being a director of the Company to the fullest extent
permitted by applicable law, the Articles of Incorporation or the bylaws of the
Company in effect on the date hereof or as such law, Articles of Incorporation
or bylaws may from time to time be amended (but, in the case of any such
amendment, only to the extent such amendment permits the Company to provide
broader indemnification rights than the law, the Articles of Incorporation or
the bylaws permitted the Company to provide before such
amendment).  The right to indemnification provided in the Company’s
bylaws shall be presumed to have been relied upon by Indemnitee in serving or
continuing to serve the Company and shall be enforceable as a contract
right.  Without diminishing the scope of the indemnification provided
by this Section 2, the Company shall indemnify Indemnitee whenever he is or was
a party or is threatened to be made a party to any Proceeding, including without
limitation any such Proceeding brought by or in the right of the Company,
because he is or was a director of the Company or because of anything done or
not done by him in such capacity, against Expenses and Liabilities actually and
reasonably incurred by Indemnitee or on his behalf in connection with such
Proceeding, including the costs of any investigation, defense, settlement or
appeal.  In addition to, and not as a limitation of, the foregoing,
the rights of indemnification of Indemnitee provided under this Agreement shall
include those rights set forth in Sections 3, 7, 8, and 12
below.  Notwithstanding the foregoing, the Company shall only be
required to indemnify and hold Indemnitee harmless in connection with a
Proceeding commenced by Indemnitee (other than a Proceeding commenced by
Indemnitee to enforce Indemnitee's rights under this Agreement) if the
commencement of such Proceeding was authorized by the board of directors of the
Company (the “Board of Directors”).

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

    (b)           Notwithstanding
anything in this Agreement to the contrary, the Company shall not be obligated
under this Agreement to continue to indemnify Indemnitee with respect
to:

    

    
      	
               
      

            	
              (i)

            	
              any
      claim, issue or matter after Indemnitee is finally adjudged to be liable
      to the Company by a court of competent jurisdiction due to gross
      negligence, fraud, knowing violation of the law or willful misconduct
      unless and to the extent that a court in which the action was heard
      determines that Indemnitee is entitled to indemnification for such amounts
      as the court deems proper; provided, that until such time as a final
      adjudication is made as to Indemnitee’s gross negligence, fraud, knowing
      violation of law or willful misconduct, the Company shall advance
      Indemnitee his Expenses in accordance with Section 3 herein, subject to
      repayment as described in Section 3 in the event of a final adjudication
      of gross negligence, fraud, knowing violation of law or willful
      misconduct;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              the
      reporting or accounting of profits made (1) for an improper personal
      profit without full and fair disclosure to the Company of all material
      conflicts of interest and not approved thereof by a majority of the
      disinterested members of the Board of Directors, or (2) from the purchase
      or sale by Indemnitee of securities of the Company within the meaning of
      Section 16 of the Securities Exchange Act of 1934 as amended, or similar
      provisions of any state statutory or common
law;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              any
      attempt to acquire, or obtain voting rights with respect to, at least
      fifty percent (50%) of the then outstanding voting stock of the Company,
      whether by tender offer, proxy solicitation or otherwise, if (a)
      Indemnitee attempted to acquire or obtain voting rights with respect to
      such stock or was or became a member of a group consisting of two or more
      persons that had agreed (whether formally or informally and whether or not
      in writing) to act together for the purpose of acquiring, obtaining voting
      rights with respect to, holding, voting or disposing of, such stock, and
      (b) such attempt to acquire or obtain voting rights with respect to such
      stock was not approved by a majority of the directors of the Company, for
      purposes of determining whether any tender offer,  proxy
      solicitation or other transaction constituted an attempt by Indemnitee, or
      a group (as described above) of which Indemnitee was or became a member,
      to acquire or obtain voting rights with respect to at least fifty percent
      (50%) of the then outstanding voting stock of the Company, there shall be
      counted toward the request number of shares of voting stock any shares
      which, immediately prior to the commencement of such tender offer, proxy
      solicitation or other transaction, (x) were owned by Indemnitee or any
      member of any such group, (y) Indemnitee or any member of any such group
      had the right to vote, or (z) Indemnitee or any member of any such group
      had the right to acquire;

            

    

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    
 

    
      	
               
      

            	
              (iv)

            	
              any
      solicitation of proxies by Indemnitee, or by a group of which he was or
      became a member consisting of two or more persons that had agreed (whether
      formally or informally and whether or not in writing) to act together for
      the purpose of soliciting proxies, in opposition to any solicitation of
      proxies approved by the Company’s Board of
  Directors;

            

    

    

    
      	
               
      

            	
              (vi)

            	
              any
      act or omission by Indemnitee that constitutes a breach of or default
      under any agreement between Indemnitee and the Company;
  or

            

    

    

    
      	
               
      

            	
              (vii)

            	
              to
      the extent it would be otherwise prohibited by law, if so established by a
      court having jurisdiction in the matter in a judgment or other final
      adjudication (and, in this respect, both the Company and Indemnitee have
      been advised that the U.S. Securities and Exchange Commission believes
      that indemnification for liabilities arising under the federal securities
      laws is against public policy and is, therefore,
      unenforceable).

            

    

    

    (c)           Indemnitee
shall be paid promptly by the Company all amounts necessary to effectuate the
indemnity described in Section 2(a).

    

    3.           Advancement of
Expenses.       All reasonable
Expenses incurred by or on behalf of Indemnitee shall be advanced from time to
time by the Company to him within thirty (30) days after the receipt by the
Company of a written request for an advance of Expenses, whether prior to or
after final disposition of a proceeding (except to the extent that there has
been a Final Adverse Determination that Indemnitee is not entitled to be
indemnified for such Expenses), including without limitation any proceeding
brought by or in the right of the Company; provided, however, that Indemnitee
shall not be entitled to the advancement of expenses in connection with any
proceeding relating to his termination by or resignation from the Company or
arising out of the circumstances described in Sections 2(b)(ii), 2(b)(iii) or
2(b)(iv).  The written request for and advancement of any and all
Expenses under this paragraph shall contain reasonable detail of the Expenses
incurred by Indemnitee and, if required by law at the time of such advance,
shall include or be preceded or accompanied by a written undertaking by or on
behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be
determined by a court of competent jurisdiction that Indemnitee is not entitled
to be indemnified against such Expenses.  If required by law at the
time of such advance, Indemnitee hereby agrees to repay any and all Expenses
advanced if it is ultimately determined that Indemnitee is not entitled to be
indemnified pursuant to the terms of the Agreement.

    

    4.           Additional
Limitations.   The foregoing indemnity and advancement of
Expenses shall apply only to the extent that Indemnitee has not been indemnified
and reimbursed pursuant to such insurance as the Company may maintain for
Indemnitee’s benefit, or otherwise; provided, however, that notwithstanding the
availability of such other indemnification and reimbursement, Indemnitee may
claim indemnification and advancement of Expenses pursuant to this Agreement by
assigning to the Company, at its request, Indemnitee’s claims under such
insurance to the extent Indemnitee has been paid by the
Company.

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    

    5.           Insurance and
Funding.  Within a commercially reasonable time from the date
hereof, the Company shall purchase and maintain insurance to protect itself
and/or Indemnitee against any Expenses and Liabilities in connection with any
proceeding to the fullest extent permitted by applicable laws.  The
Company may create a trust fund, grant and interest in assets or use other means
(including, without limitation, a letter of credit) to ensure the payment of
such amounts as may be necessary to effect indemnification or advancement of
Expenses as provided in this Agreement.

    

    6.           Procedure for Determination
of Entitlement to Indemnification.

    

    (a)           Whenever
Indemnitee believes that he is entitled to indemnification pursuant to this
Agreement, Indemnitee shall submit a written request for indemnification to the
Company.  Any request for indemnification shall include sufficient
documentation or information reasonably available to Indemnitee to support his
claim for indemnification.  Indemnitee shall submit his claim for
indemnification within a reasonable time not to exceed five years after any
judgment, order, settlement, dismissal, arbitration award, conviction,
acceptance of a plea of nolo contendere or its equivalent, final termination or
other disposition or partial disposition of any proceeding, whichever is the
later date for which Indemnitee requests indemnification.  The
president or the secretary or other appropriate officer of the Company shall,
promptly upon receipt of Indemnitee’s request for indemnification, advise the
Board of Directors of the Company in writing that Indemnitee has made such
request.  Determination of Indemnitee’s entitlement to indemnification
shall be made not later than sixty (60) days after the Company’s receipt of the
written request for such indemnification.

    

    (b)           The
majority of disinterested directors, or if such majority does not exist, the
full Board of Directors, shall be entitled to select the forum in which
Indemnitee’s request for indemnification will be heard, which selection shall be
transmitted to the Indemnitee in writing.  The forum shall be any one
of the following:

    

    
      	
               
      

            	
              (i)

            	
              The
      stockholders of the Company;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              A
      quorum of the Board of Directors consisting of disinterested
      directors;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              Independent
      legal counsel, who shall make the determination in a written opinion;
      or

            

    

    

    
      	
               
      

            	
              (iv)

            	
              A
      panel of three arbitrators, one selected by the Company, another by
      Indemnitee and the third by the first two arbitrators
      selected.  If for any reason three arbitrators are not selected
      within thirty (30) days after the appointment of the first arbitrator,
      then selection of additional arbitrators shall be made by the American
      Arbitration Association.  If any arbitrator resigns or is unable
      to serve in such capacity for any reason, the American Arbitration
      Association shall select such arbitrator’s replacement.  The
      arbitration shall be conducted pursuant to the commercial arbitration
      rules of the American Arbitration Association now in
    effect.

            

    

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    

    (c)           Upon
making a request for indemnification, Indemnitee shall be presumed to be
entitled to indemnification under this Agreement and the Company shall have the
burden of proof to overcome that presumption in reaching any contrary
determination.  The termination of any proceeding by judgment, order,
settlement, arbitration award or conviction, or upon a plea of nolo contendere
or its equivalent shall not affect this presumption or, except as provided in
Section 2 or 4 hereof, establish a presumption with regard to any factual matter
relevant to determining Indemnitee’s rights to indemnification
hereunder.

    

    7.           Fees and Expenses of
Independent Legal Counsel.  The Company agrees to pay the
reasonable fees and expenses of independent legal counsel or a panel of three
arbitrators should such counsel or such panel of arbitrators be retained to make
a determination of Indemnitee’s entitlement to indemnification pursuant to
Section 6 of this Agreement, and to fully indemnify such counsel arising out of
or relating to this Agreement or their engagement pursuant hereto, except with
respect to expenses and losses resulting from the negligence or willful
misconduct of such persons.

    

    
      	
               
      

            	
              8.

            	
              Remedies of
      Indemnitee.

            

    

    

    (a)           In
the event that (i) a determination pursuant to Section 6 hereof is made that
Indemnitee is not entitled to indemnification, (ii) advances of Expenses are not
made pursuant to this Agreement, (iii) no determination of entitlement to
indemnification shall have been made pursuant to Section 6(b) of this Agreement
within 60 days after receipt by the Company of the request for indemnification,
or (iv) payment has not been timely made following a determination of
entitlement to indemnification pursuant to this Agreement, Indemnitee shall be
entitled to a final adjudication in any court of competent jurisdiction of his
rights.  Indemnitee shall commence such proceeding seeking an
adjudication within 180 days following the date on which Indemnitee first has
the right to commence such proceeding pursuant to this Section
8(a).  The Company shall not oppose Indemnitee’s right to seek any
such adjudication.

    

    (b)           
In the event that a determination that Indemnitee is not entitled to
indemnification, in whole or in part, has been made pursuant to Section 6
hereof, the decision in the judicial proceeding provided in paragraph (a) of
this Section 8 shall be made de novo and Indemnitee shall not be prejudiced by
reason of a determination that he is not entitled to
indemnification.

    

    (c)           If
a determination that Indemnitee is entitled to indemnification has been made
pursuant to Section 6 hereof or otherwise pursuant to the terms of this
Agreement, the Company shall be bound by such determination in the absence of
(i) any misrepresentation of a material fact by Indemnitee or (ii) a specific
finding (which has become final) by a court of competent jurisdiction that all
or any part of such indemnification is expressly prohibited by Delaware
law.

    

    (d)           In
any court proceeding pursuant to this Section 8, the Company shall be precluded
from asserting that the procedures and presumptions of this Agreement are not
valid, binding and enforceable.  The Company shall stipulate in any
such court that the Company is bound by all provisions of this
Agreement.

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    

    9.            
Modification, Waiver,
Termination, and Cancellation.  No supplement, modification,
termination, cancellation or amendment of this Agreement shall be binding unless
executed in writing by both of the parties hereto.  No waiver of any
of the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provisions hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver.

    

    10.           Notice by Indemnitee and
Defense of Claim.  Indemnitee shall promptly notify the Company
in writing upon being served with any summons, citation, subpoena, complaint,
indictment, information or other document relating to any matter, whether civil,
criminal, administrative or investigative, but the omission to notify the
Company will not relieve the Company from any liability which it may have to
Indemnitee if such omission does not prejudice the Company’s
rights.  If such omission does prejudice the Company’s rights, the
Company will be relieved from liability only to the extent of such prejudice,
nor will such omission relieve the Company from any liability which it may have
to Indemnitee otherwise than under this Agreement.  With respect to
any proceeding as to which Indemnitee notifies the Company of the commencement
thereof;

    

    (a)           The
Company will be entitled to participate therein at its own expense;
and

    

    (b)           The
Company jointly with any other indemnifying party similarly notified will be
entitled to assume the defense thereof, with counsel reasonably satisfactory to
Indemnitee; provided, however, that the Company shall not be entitled to assume
the defense of any proceeding if there has been a Change of Control or if
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee with respect to such
proceeding.  After notice from the Company to Indemnitee of its
election to assume the defense thereof, the Company will not be liable to
Indemnitee under this Agreement for any Expenses subsequently incurred by
Indemnitee in connection with the defense thereof, other than reasonable costs
of investigation or as otherwise provided below.  Indemnitee shall
have the right to employ its own counsel in such proceeding but the fees and
expenses of such counsel incurred after notice from the Company of its
assumption of the defense thereof shall be at the expense of Indemnitee
unless;

    

    
      	
               
      

            	
              (i)

            	
              The
      employment of counsel by Indemnitee has been authorized by the
      Company;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              Indemnitee
      shall have reasonably concluded on the advice of counsel that there may be
      a conflict of interest between the Company and Indemnitee with respect to
      such proceeding; or

            

    

    

    
      	
               
      

            	
              (iii)

            	
              The
      Company shall not in fact have employed counsel to assume the defense in
      such proceeding or shall not in fact have assumed such defense and be
      acting in connection therewith with reasonable diligence; in each of which
      cases the fees and expenses of such counsel shall be at the expense of the
      Company.

            

    

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    

    (c)           The
Company shall not be liable to indemnify Indemnitee under this Agreement for any
amounts paid in settlement of any action or claim effected without its written
consent.  The Company shall not settle any proceeding in any manner
which would subject Indemnitee to a penalty or cost without Indemnitee’s written
consent.  Neither the Company nor Indemnitee will unreasonably
withhold its or his consent to any proposed settlement.

    

    11.           Notices.  All
notices, requests, demands, and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally or
by overnight courier such as Federal Express, or sent by certified or registered
mail with postage prepaid, addressed

    

    
      
        
          
            
              
                	
                        If
      to Indemnitee, to:

                      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                        If
      to the Company, to:

                      	 
      	
                        Bacterin
      International Holdings, Inc.

                      
	 
      	 
      	
                        600
      Cruiser Lane

                      
	 
      	 
      	
                        Belgrade,
      Montana 59714

                      
	 
      	 
      	
                        Attention:
      General Counsel

                      
	 
      	 
      	
                        Telephone
      No.: (406) 388-0480

                      
	 
      	 
      	
                        Facsimile
      No.: (406) 388-1354

                      
	 
      	 
      	 
      
	
                        with
      a copy to:

                      	 
      	
                        Greenberg
      Traurig, LLP

                      
	  
      	 
      	
                        1200
      17th
      Street, Suite 2400

                      
	 
      	 
      	
                        Denver,
      Colorado 80202

                      
	 
      	 
      	
                        Attention:
      Marc J. Musyl, Esq.

                      
	 
      	 
      	
                        Telephone
      No.: (303) 572-6585

                      
	 
      	 
      	
                        Facsimile
      No.: (720)
904-7685

                      

              

            

          

        

      

    

    

    or to
such other address as may have been furnished to Indemnitee by the Company or to
the Company by Indemnitee, as the case may be.  Notices given as set
forth herein shall be conclusively deemed to have been received by the party to
whom addressed upon receipt, if delivered personally or by overnight courier,
and three business days after the same is deposited in the United States mail if
sent by certified or registered mail.

    

    12.           Nonexclusivity.  The
rights of Indemnitee hereunder shall not be deemed exclusive of any other rights
to which Indemnitee may now or in the future be entitled under Delaware
corporation law, the Company’s Articles of Incorporation or bylaws and
amendments thereto, or any agreements, vote of stockholders, resolution of the
Board of Directors or otherwise.
   

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

      

    
      13.           Certain Definitions.

       

      (a)           “Change in Control” shall be
deemed to have occurred if:

    

      

    
      	
               
      

            	
              (i)

            	
              Any
      person (as such term is used in Sections 13(d) and 14(d) of the Securities
      Exchange Act of 1934, as amended), other than a trustee or other fiduciary
      holding securities under an employee benefit plan of the Company or a
      corporation owned directly or indirectly by the stockholders of the
      Company in substantially the same proportions as their ownership of stock
      of the Company, hereafter becomes the “beneficial owner” (as defined in
      Rule 13d-3 under said Act), directly or indirectly, of securities of the
      Company representing more than fifty percent (50%) of the total voting
      power represented by the Company’s then outstanding voting securities;
      or

            

    

    

    
      	
               
      

            	
              (ii)

            	
              The
      stockholders of the Company approve a merger or consolidation of the
      Company with any other corporation, other than a merger or consolidation
      which would result in the voting securities of the Company outstanding
      immediately prior thereto continuing to represent (either by remaining
      outstanding or by being converted into voting securities of the surviving
      entity) at least eighty percent (80%) of the total voting power
      represented by the voting securities of the Company or such surviving
      entity outstanding immediately after such merger or consolidation,
      or

            

    

    

    
      	
               
      

            	
              (iii)

            	
              The
      stockholders of the Company approve a plan of complete liquidation of the
      Company or an agreement for the sale or disposition by the Company of all
      or substantially all of the Company’s assets, provided, however, that any
      other provision of this Section 13(a) notwithstanding, the term "Change in
      Control" shall not include a transaction, if undertaken at the election of
      the Company, the result of which is to sell all or substantially all of
      the assets of the Company to another corporation (the "surviving
      corporation"); provided that the surviving corporation is owned directly
      or indirectly by the stockholders of the corporation immediately following
      such transaction in substantially the same proportions as
      their  ownership of the Company's common stock immediately
      preceding such transaction; and provided, further, that the surviving
      corporation expressly assumes this
Agreement.

            

    

    

    (b)           “Disinterested Director” shall
mean a director of the Company who is not or was not a party to the proceeding
in respect of which indemnification is being sought by Indemnitee.

    

    (c)           “Expenses” shall include all
direct and indirect costs (including, without limitation, attorneys fees,
retainers, court costs, transcripts, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, all other disbursements or out of pocket
expenses and reasonable compensation for time spent by Indemnitee for which he
is otherwise not compensated by the Company) actually and reasonably incurred in
connection with a proceeding or establishing or enforcing a right to
indemnification under this Agreement, applicable law or otherwise; provided,
however, that Expenses shall not include any liabilities.

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    

    (d)           “Final Adverse Determination”
shall mean that a determination that Indemnitee is not entitled to
indemnification shall have been made pursuant to Section 6 hereof and either (i)
a final adjudication in a court of competent jurisdiction pursuant to Section
8(a) hereof shall have denied Indemnitee’s right to indemnification hereunder,
or (ii) Indemnitee shall have failed to file a complaint in a court of competent
jurisdiction pursuant to Section 8(a) for a period of one hundred eighty (180)
days after the determination made pursuant to Section 6 hereof.

    

    (e)           “Indemnification Period” shall
mean the period of time during which Indemnitee shall continue to serve as a
director of the Company, and thereafter so long as Indemnitee shall be subject
to any possible proceeding arising out of acts or omissions
of  Indemnitee as a director of the Company.

    

    (f)           “Independent Legal Counsel”
shall mean a law firm or a member of a law firm selected by the Company and
approved by Indemnitee (which approval shall not be unreasonably withheld) and
that neither is presently nor in the past five years has been retained to
represent; (i) the Company or any of its subsidiaries or affiliates, or
Indemnitee or any corporation as to which Indemnitee was or is a director,
officer, employee or agent, or any subsidiary or affiliate of such a
corporation, in any material matter, or (ii) any other party to the proceeding
giving rise to a claim for indemnification hereunder.  Notwithstanding
the foregoing, the term Independent Legal Counsel shall not include any person
who, under the applicable standards of professional conduct then prevailing,
would have a conflict of interest in representing the Company or Indemnitee in
an action to determine Indemnitee’s right to indemnification under this
Agreement.

    

    (g)           “Liabilities” shall mean
liabilities of any type whatsoever including, but not limited to, any judgments,
fines, ERISA excise taxes and penalties, penalties and amounts paid in
settlement (including all interest assessments and other charges paid or payable
in connection with or in respect of such judgments, fines, penalties or amounts
paid in settlement) of any proceeding.

    

    (h)           “Proceeding” shall mean any
threatened, pending or completed action, claim, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or any other
proceeding whether civil, criminal, administrative or investigative, including
any appeal therefrom.

    

    14.           Binding Effect, Duration and
Scope of Agreement.   This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns (including any direct or indirect successor by
purchase, merger, consolidation or otherwise to all or substantially all of the
business or assets of the Company), spouses, heirs and personal and legal
representatives.  This Agreement shall continue in effect during the
Indemnification Period, regardless of whether Indemnitee continues to serve as a
director.

    15.           Severability.   If
any provision or provisions of this Agreement (or any portion thereof) shall be
held to be invalid, illegal or unenforceable for any reason
whatsoever:

    

    (a)           the
validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby; and

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

     (b)           to
the fullest extent legally possible, the provisions of this Agreement shall be
construed so as to give effect to the intent of any provision held invalid,
illegal or unenforceable.

    

    16.           Governing Law and
Interpretation of Agreements.  This Agreement shall be governed
by and construed and enforced in accordance with the laws of the State of
Delaware applicable to contracts made and to be performed in such state without
giving effect to the principles of conflicts of laws.

    

    17.           Consent to
Jurisdiction.  The Company and Indemnitee irrevocably consent
to the jurisdiction of the courts of the State of Delaware for all purposes in
connection with any action or proceeding which arises out of or relates to this
Agreement.

    

    18.           Attorneys
Fees.  In any proceeding brought to enforce any provision of
this Agreement, or to seek damages for a breach of any provision hereof, or when
any provision hereof is validly asserted as a defense, the prevailing party
shall be entitled to receive from the other party all reasonable attorneys fees
and costs in connection therewith.

    

    19.           Authorization.  Company
has all necessary power and authority to enter into and perform its obligations
under this Agreement, and the execution, delivery and performance of this
Agreement have been duly authorized by all necessary action on the part of the
Company and its officers, directors and shareholders.  No
authorization, consent or approval of or filing with any governmental authority
or any other person is required to be obtained or made by Company in connection
with the execution, delivery or performance of this Agreement.

    

    20.           Confidentiality.  Unless
otherwise required by law, Company agrees to, and shall undertake all necessary
action required to, keep confidential all information which relates to any
Expense or any transaction or defense or indemnity arising out of this Agreement
which relates to Indemnitee.

    

    21.           Maintenance of Obligation to
Indemnify.  Company hereby covenants and agrees that it shall
not permit the indemnification provided to Indemnitee as set forth in this
Agreement to be compromised, restricted, limited, or eliminated in any manner,
including by way of amendment of Company’s bylaws and other governing
documents.

    

    22.           Further
Assurances.  Each party shall execute such instruments and
other documents, and take such action as may be required, as the other party may
reasonably request, for the purpose of carrying out or evidencing the
transactions contemplated hereby.

    

    23.           Entire
Agreement.  This Agreement represents the entire agreement
between the parties hereto, and there are no other agreements, contracts or
understandings between the parties hereto with respect to the subject matter of
this Agreement, except as specifically referred to herein or as provided in
Section 12 hereof.

    

    24.           Counterparts.    This
Agreement may be executed in one or more counterparts, each of which shall for
all purposes be deemed to be an original but all of which together shall
constitute one and the same Agreement.

    

    [SIGNATURE
PAGE FOLLOWS]

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    

    IN
WITNESS WHEROF, the undersigned have executed this Agreement as of the day and
year first written above.

    

    
      
        
          
            
              
                
                  
                    
                      	
                              COMPANY:

                            
	 
      	 
      
	
                              BACTERIN
      INTERNATIONAL HOLDINGS, INC., f/k/a K-KITZ, INC., a Delaware
      corporation

                            
	 
      	 
      
	
                              By:

                            	 
      
	
                              Name:

                            	 
      
	
                              Title:

                            	 
      
	 
      	 
      
	
                              INDEMNITEE:

                            
	 
      	 
      
	
                              By:

                            	 
      
	
                              Name:

                            	 
      
	
                              Title:

                            	 
      

                    

                  

                

              

            

          

        

      

    

     

    
      Signature
Page to Indemnification Agreement

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