Document:

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (“Agreement”) made and entered into as of March 18, 2008 (the “Execution Date”) and effective as of March 18, 2008 (the “Effective Date”), by and between Medistem Laboratories, Inc., a Nevada corporation (the “Company”), and Thomas Ichim (“Executive”).

ARTICLE I.

DUTIES AND TERM

1.1

Continued Employment

In consideration of their mutual covenants and other good and valuable consideration, the receipt, adequacy and sufficiency of which is hereby acknowledged, the Company agrees to employ Executive, and Executive agrees to remain in the employ of the Company, upon the terms and conditions herein provided.

1.2

Position and Responsibilities

(a)

Executive shall serve as the Chief Executive Officer of the Company reporting directly to the board of directors of the Company (the “Board”). Executive agrees to perform services commensurate with his position and involving duties of the scope, dignity and importance of a Chief Executive Officer as shall from time to time be assigned to him by the Board.

(b)

During the period of his employment hereunder, Executive shall devote his business time, attention, skill and efforts to the performance of his duties hereunder.

1.3

Term

The term of Executive’s employment under this Agreement shall commence on the Effective Date and shall continue as provided herein, unless terminated by either party. The period from the Effective Date until the termination of Executive’s employment under this Agreement is referred to as the “Term”.

1.4

Travel

Executive agrees to travel as reasonably required in the performance of his duties hereunder. Executive shall be entitled to Business Class travel and accommodations when traveling on the Company’s business.

  

ARTICLE II.

COMPENSATION

For all services rendered by Executive in any capacity during his employment under this Agreement, including, without limitation, services as a director, officer or member of any committee of the Board or of any subsidiary or affiliate of the Company, the Company shall compensate Executive as follows:

2.1

Salary

Commencing on the date of hire the executive shall be entitled to an annual salary of $110,000. In addition, Executive’s Salary shall be reviewed annually by the Board or a committee designated by the Board and the Board or such committee may, in its discretion, increase, but not decrease, Executive’s then current Salary. Notwithstanding the foregoing, in the event the Company institutes a salary reduction program which affects all of the Company’s employees by the same percentage, then Executive’s Salary may be reduced by such percentage. Executive’s Salary shall be paid in equal monthly installments. Executive’s salary as in effect from time to time is referred to in this Agreement as the “Salary.”

2.2

Annual Bonus

Executive shall be entitled to bonus payments at levels at least commensurate with bonuses paid to the Senior Executives, if any, as determined from time to time by the Board in its sole and absolute discretion (the “Annual Bonus”). Executive’s Annual Bonus will be paid in form and at the same time as bonuses are generally paid to the Senior Executives. For purposes of this Agreement, the term “Senior Executive” shall mean the five highest compensated employees of the Company determined in accordance with applicable SEC rules and regulations.

2.3

Future Equity Awards

Executive shall be entitled to participate in all Company long term incentive programs extended to the Senior Executives generally at levels commensurate with Executive’s position.

2.4

Reimbursement of Business Expenses

The Company shall, in accordance with standard Company policies, pay, or reimburse Executive for, all reasonable travel (including, without limitation, the costs of Business Class travel and accommodations pursuant to Section 1.4) and other expenses incurred by Executive in performing his obligations under this Agreement.

2.5

Vacations

Executive shall be entitled to 20 business days, excluding Company holidays, of paid vacation during each year of employment hereunder. Executive may not accrue and carry forward unused vacation days from any particular year of this Agreement to the next.

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2.6

Additional Benefits

Commencing on the Compensation Commencement Date, Executive shall be entitled to participate in all employee benefit and welfare programs, plans and arrangements (including, without limitation, bonus, pension, profit-sharing, supplemental pension and other retirement plans, insurance, hospitalization, medical and disability benefits, travel or accident insurance plans) and fringe benefits, such as club dues and fees of professional organizations and associations, which are from time to time available to the Company’s employees.

ARTICLE III.

TERMINATION OF EMPLOYMENT

3.1

Death or Retirement of Executive

(a)

This Agreement shall automatically terminate upon death or Retirement of Executive. The term “Retirement” shall mean normal retirement at age 65 or in accordance with rules generally applicable to the Company’s executive employees in accordance with any other retirement arrangement established with Executive’s consent with respect to Executive.

3.2

By Executive

(a)

Executive shall be entitled to terminate this Agreement at any time by giving notice to the Company.

3.3

By Company

The Company shall be entitled to terminate this Agreement at any time by giving notice to Executive.

(a)

In the event Executive is terminated for Cause (as defined below), Executive shall be entitled to receive accrued and vested benefits up to the date of termination and shall be promptly reimbursed for all business expenses properly incurred by Executive prior to the date of termination.

(b)

In the event Executive is terminated without Cause, Executive shall be entitled to receive accrued and vested benefits up to the date of termination and shall be promptly reimbursed for all business expenses properly incurred by Executive prior to the date of termination. In addition, Executive shall have ninety (90) days from the date of termination to exercise any vested but unexercised options existing as of the termination date.

For purposes of this Agreement, the term “Cause” shall mean the occurrence of any of the following:

(i)

Executive’s gross and willful misconduct with regard to the Company which is materially injurious to the Company;

 
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(ii)

Executive has engaged in fraudulent conduct with respect to the Company’s business or in conduct of a criminal nature that will have an material adverse impact on the Company’s standing and reputation;

(iii)

the continued and unjustified willful failure or willful refusal by Executive to attempt to perform the duties required of him by this Agreement (other than any such failure or refusal resulting from incapacity due to physical or mental illness) which willful failure or willful refusal is not cured within fifteen (15) days following (A) receipt by Executive of written notice from the Board specifying the factors or events constituting such willful failure or willful refusal, and (B) a reasonable opportunity for Executive to correct such deficiencies; or

(iv)

Executive’s use of drugs and/or alcohol in material violation of the Company’s policy in effect on the Execution Date.

No event or condition described above shall constitute Cause unless (x) the Company first gives Executive a notice of termination no fewer than 30 days prior to the date of termination; and (y) Executive is provided the opportunity to appear before the Board, with or without legal representation at his election to present arguments on his own behalf.

No act or failure to act on Executive’s part will be considered “willful” unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that his action or omission was not adverse to the best interests of the Company.

ARTICLE IV.

RESTRICTIVE COVENANTS

4.1

Confidentiality

(a)

Executive covenants and agrees to hold in strictest confidence, and not disclose to any person without the express written consent of the Company, any and all of the Company’s Proprietary Information, except as such disclosure may be required or desirable in connection with his employment hereunder. Further, this Section 4.1(a) shall not prevent Executive from disclosing Proprietary Information in connection with any litigation, arbitration or mediation to enforce this Agreement, provided that such disclosure is necessary or reasonably desirable for Executive to assert any claim or defense in such proceeding. In addition, this Section 4.1(a) shall not apply to Proprietary Information that Executive is required to disclose by applicable law, regulation or legal process. This covenant and agreement shall survive this Agreement and continue to be binding upon Executive after the expiration or termination of this Agreement, whether by passage of time or otherwise, so long as such information and data shall remain Proprietary Information.

 
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(b)

Upon termination of this Agreement for any reason, Executive shall immediately turn over to the Company any Proprietary Information in his possession. Executive shall have no right to retain any copies of any material qualifying as Proprietary Information for any reason whatsoever after termination of his employment hereunder without the express written consent of the Company. Notwithstanding the foregoing, Executive shall be entitled to retain (i) papers and other materials of a personal nature, including, but not limited to, photographs, personal diaries, calendars and Rolodexes, (ii) information showing his compensation or relating to reimbursement of expenses, (iii) information that is required for the preparation of his personal income tax return, (iv) documents provided to him in his capacity as a participant in any employee benefit plan, policy or program of the Company and (v) this Agreement and any other agreement by and between him and the Company with regard to his employment or termination thereof.

(c)

For purposes of this Agreement, “Proprietary Information” means and includes the following: the identity of clients or customers or potential clients or customer of the Company or its affiliates; any written, typed or printed lists, or other materials identifying the clients or customers of the Company or its affiliates; any financial or other information supplied by clients or customers of the Company or its affiliates; any and all data or information involving the Company, its affiliates, programs, methods, or contacts employed by the Company or its affiliates in the conduct of their business; any lists, documents, manuals, records, forms, or other material used by the Company or its affiliates in the conduct of their business; and any other secret or confidential information concerning the Company’s or its affiliates’ business or affairs. The terms “list,” “document” or other equivalents, as used in this subparagraph (c), are not limited to a physical writing or compilation but also include any and all information whatsoever regarding the subject matter of the “list” or “document,” whether or not such compilation has been reduced to writing. “Proprietary Information” shall not include any information which: (i) is or becomes publicly available or generally known within the relevant trade or industry through no act or failure of Executive; (ii) was or is rightfully learned by Executive from a source other than the Company before being received from the Company; or (iii) becomes independently available to Executive as a matter of right from a third party, provided such third party is not to Executive’s knowledge subject to a confidentiality agreement with the Company. If only a portion of the Proprietary Information is or becomes publicly available, then only that portion shall not be Proprietary Information hereunder.

4.2

Competition

(a)

Executive acknowledges that he is the Chief Executive Officer of the Company and in such capacity he will be a representative of the Company with respect to clients and potential clients of the Company. Executive also acknowledges that he has had and will continue to have access to confidential information about the Company, its affiliates, and their clients and that Proprietary Information acquired by him at the expense of the Company is for use in its business. Executive’s management and operational services to the Company are special, unique, and extraordinary and the success or failure of the Company is dependent upon his discharge of his duties and obligations. Accordingly, by execution of this Agreement, Executive agrees that during his employment with the Company and for a period of twelve (12) months following the date of termination of his employment hereunder (the “Non-Competition Period”) for any reason (whether such termination shall be voluntary or involuntary), he shall not:

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(i)

except as a passive investor in publicly-held companies, and except for investments held as of the date hereof, directly or indirectly own, operate, manage, consult with, control, participate in the management or control of, be employed by, maintain or continue any interest whatsoever in any company that directly competes with the Company in the United States; or

(ii)

directly or indirectly solicit any business of a nature that is directly competitive with the business of the Company from any individual or entity that obtained such products or services from the Company or its affiliates at any time during his employment with the Company; provided, the foregoing shall not be violated by general advertising not targeted at such individuals or entity; or

(iii)

directly or indirectly solicit any business of a nature that is directly competitive with the business of the Company from any individual or entity solicited by him on behalf of the Company or its affiliates; provided, the foregoing shall not be violated by general advertising not targeted at such individuals or entity; or

(iv)

employ, or directly or indirectly solicit, or cause the solicitation of, any employees of the Company who are in the employ of the Company on the termination date of his employment hereunder for employment by others; provided, the foregoing shall not be violated by general advertising not targeted at Company employees nor by serving as a reference upon request.

(b)

Notwithstanding the foregoing, the Company agrees and acknowledges that Executive’s continued participation in the Permitted Businesses shall not be a violation of Section 5.2 (a).

(c)

Executive expressly agrees and acknowledges that:

(i)

the Company believes that it will require at least 12 months for the Company to locate, hire and train an appropriate individual to perform the functions and duties that Executive is performing hereunder;

(ii)

the Company has protected business interests throughout the Untied States of America and that competition with and against such business interests would be harmful to the Company;

(iii)

this covenant not to compete is reasonable as to time and geographical area and does not place any unreasonable burden upon him;

(iv)

the general public will not be harmed as a result of enforcement of this covenant not to compete;

(v)

his personal legal counsel has reviewed this covenant not to compete; and

 
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(vi)

he understands and hereby agrees to each and every term and condition of this covenant not to compete.

4.3

Non-Disparagement

During the Term and the Non-Competition Period, each party agrees not to disparage the other party.

4.4

Remedies

Executive acknowledges that the remedy at law for any breach or threatened breach of Sections 4.1, 4.2 and 4.3 will be inadequate and, accordingly, that the Company shall, in addition to all other available remedies (including without limitation, seeking such damages as it can show it has sustained by reason of such breach), be entitled to injunctive relief or specific performance without any bond or other security being required of any court.

4.5

Agreement Confidential

During the Term and the Non-Competition Period, each party agrees not to disclose to any third party the conditions of Executive’s employment with the Company except as may be required in filings made pursuant to applicable law and the rules and regulations of the Securities and Exchange Commission; provided, Executive may disclose the terms of this Agreement to his accountants, attorneys, future and potential future employers and/or spouse, provided that they also agree to maintain the confidentiality of this Agreement.

4.6

Mitigation of Damages; Arbitration

(a)

The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against Executive or others. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not Executive obtains other employment. The Company agrees to pay promptly as incurred, to the full extent permitted by law, all legal fees and expense which Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee or performance thereof (including as a result of any contest by Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Code Section 1274(d) or any successor provision thereto, for an obligation with a term equal to the length of such delay.

 
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(b)

Any dispute or controversy arising from or relating to this Agreement and/or Executive’s employment or relationship with the Company shall be resolved by binding arbitration, to be held in Maricopa County, Arizona or in any other location mutually agreed to by the Company and Executive in accordance with the rules and procedures of the American Arbitration Association. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Executive and the Company agree that, in the event a dispute arises that concerns this Agreement, if Executive is the Prevailing Party, Executive shall be entitled to recover all of his reasonable fees and expenses, including, without limitation, reasonable attorneys’ fees and expenses, incurred in connection with the dispute. A Prevailing Party is one who is successful on any significant substantive issue in the action and achieves either a judgment in such party’s favor or some other affirmative recovery.

4.7

Successors; Binding Agreement

This Agreement shall be binding upon any successor to the Company and shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, beneficiaries, designees, executors, administrators, heirs, distributees, devisees and legatees.

4.8

Modification; No Waiver

This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto. No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument by the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any other term or condition.

4.9

Severability

The covenants and agreements contained herein are separate and severable and the invalidity or unenforceability of any one or more of such covenants or agreements, if not material to the employment arrangement that is the basis for this Agreement, shall not affect the validity or enforceability of any other covenant or agreement contained herein. If, in any judicial proceedings, a court shall refuse to enforce one or more of the covenants or agreements contained herein because the duration thereof is too long, or the scope thereof is too broad, it is expressly agreed between the parties hereto that such duration or scope shall be deemed reduced to the extent necessary to permit the enforcement of such covenants or agreements.

4.10

Notices

All notices and other communications required or permitted hereunder shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, to the parties hereto at the following addresses:

 
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If to the Company, to it at:

Medistem Laboratories, Inc.

2027 E. Cedar Street, Suite 102

Tempe, Arizona 85281

 

 

 

 

ATTN:  

with a copy to:

DLA Piper US LLP

2415 E. Camelback Road

Suite 700

Phoenix, Arizona 85016

ATTN: Gregory R. Hall, Esq.

If Executive, to him at the last address for Executive on the books of the Company.

4.11

Assignment

This Agreement and any rights hereunder shall not be assignable to either party without the prior written consent of the other party; provided, the Company may only assign this Agreement to an acquirer of all or substantially all of the assets of the Company who has assumed all of the Company’s obligations hereunder in a writing delivered to Executive and otherwise complies with the provisions of this Agreement with regard to such assumption.

4.12

Entire Understanding

This Agreement constitutes the entire understanding between the parties hereto and no agreement, representation, warranty or covenant has been made by either party except as expressly set forth herein.

4.13

Executive’s Representations

Executive represents and warrants that neither the execution and delivery of this Agreement nor the performance of his duties hereunder violates the provisions of any other agreement to which he is a party or by which he is bound.

4.14

Survivorship

Unless specifically stated to the contrary in this Agreement, the rights and obligations of Executive and Company intended to survive termination of Executive’s employment shall survive any termination of Executive’s employment or expiration of the Term.

4.15

Governing Law

This Agreement shall be construed in accordance with and governed for all purposes by the laws of the State of Arizona applicable to contracts executed and wholly performed within such state.

 
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4.16

Indemnification

The Company agrees to indemnify Executive pursuant to that certain Indemnification Agreement dated as of the date hereof.

4.17

Counterparts

This Agreement may be executed by either of the parties hereto in counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument.

4.18

Headings

The headings of sections herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

COMPANY:

MEDISTEM LABORATORIES, INC.,

a Nevada Corporation

By: ___________________________

Name: _________________________

Title: __________________________

By:

 

EXECUTIVE:

______________________________

Thomas Ichim

 

 

 

 
10INDEMNIFICATION AGREEMENT

This Indemnification Agreement (“Agreement”) is made and entered into as of March 18, 2008 (the “Effective Date”), by Medistem Laboratories, Inc., a Nevada corporation (the “Company”) and Thomas Ichim (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.

(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.

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.

 
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3.

Agreement to Indemnify.  The Company agrees to indemnify Indemnitee as follows:

4.

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.

(a)

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.

(b)

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.

(c)

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.

 
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5.

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

(vi)

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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6.

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 shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information that is not privileged or otherwise protected from disclosure and that is reasonably available to Indemnitee and reasonably necessary to such determination.  Any Independent Counsel, member of the Board, or stockholder of the Company shall act reasonably and in good faith in making a determination under this Agreement of the Indemnitee’s entitlement to indemnification.  Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

 
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(c)

Selection of Independent Counsel.  In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 5(b) hereof, the Independent Counsel shall be selected as provided in this Section 5(c).  If a Change of Control shall not have occurred, the Board shall select the Independent Counsel and the Company shall give written notice to Indemnitee advising Indemnitee of the identity of the Independent Counsel so selected.  If a Change of Control shall have occurred, Indemnitee shall select the Independent Counsel, subject to approval by the Company promptly after Indemnitee notifies the Company of the identity of the Independent Counsel so selected (which approval shall not be unreasonably withheld or delayed).  If, within twenty (20) days after submission by Indemnitee of a written request for indemnification pursuant to Section 5(a) hereof, no Independent Counsel shall have been selected by Indemnitee and approved by the Company, either the Company or Indemnitee may petition a court of the State of Arizona or other court of competent jurisdiction for resolution of any objection that shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 5(b) hereof.  The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 5(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of Section 9(a), regardless of the manner in which such Independent Counsel was selected or appointed.  Upon the due commencement of any judicial proceeding pursuant to Section 9(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

(d)

Change of Control.  For purposes of this Section 5, a “Change in Control” shall be deemed to have occurred if and when

(i)

any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), together with all “affiliates” and “associates” (as defined under Rule 12b-2 promulgated under the Exchange Act) of such person becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly of equity securities of the Company representing 50 percent or more of the combined voting power of the Company’s then-outstanding equity securities without the prior approval of at least a majority of the members of the Board in office immediately prior to such person(s) attaining such percentage interest and who are not affiliates or associates of such person(s), provided that this Section 5(d)(i) shall not apply to beneficial ownership by (1) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, (2) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the Company, (3) the Company or any Subsidiary, (4) Indemnitee, together with all affiliates and associates of Indemnitee, or (5) any person that, together with any affiliate thereof, is such a 50% beneficial owner as of the date hereof, unless after the date of this Agreement such person has beneficial ownership of less than 50% of the combined voting power of the Company’s then-outstanding equity securities and thereafter acquires beneficial ownership of more than 50% of the combined voting power of the Company’s then-outstanding equity securities; or

 
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(ii)

the Company is a party to a merger, consolidation, sale of assets, plan of liquidation or other reorganization (in a single transaction or a series of transactions) not approved by at least two-thirds of the members of the Board then in office, as a consequence of which members of the Board in office immediately prior to such transaction or event constitute less than a majority of the Board thereafter; or

(iii)

during any period of two consecutive years, other than as a result of an event described in Section 5(d)(ii), individuals who at the beginning of such period constituted the Board (including for this purpose any new director whose election or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board.

7.

Indemnification for Expenses of a Party Who is Partly Successful.  Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a party to a Proceeding and is not wholly successful in such Proceeding, but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter.  For purposes of this Agreement, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

8.

Effect of Certain Resolutions.  Neither the settlement or termination of any Proceeding nor the failure of the Company to award indemnification or to determine that indemnification is payable shall create an adverse presumption that Indemnitee is not entitled to indemnification hereunder.  In addition, the termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not create a presumption that Indemnitee is liable under Section 78.138 or did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal action or proceeding, had reasonable cause to believe that Indemnitee’s conduct was unlawful.

9.

Advancement of Expenses.

(a)

Conditions.  Subject to Section 8(b), the Company shall pay to Indemnitee all Indemnifiable Expenses actually incurred by Indemnitee in connection with any Proceeding, including a Proceeding by or in the right of the Company, in advance of the final disposition of such Proceeding, as the same are incurred.  To the extent required by Nevada law, Indemnitee hereby undertakes to repay the amount of Indemnifiable Expenses paid to Indemnitee if it is ultimately determined by a court of competent jurisdiction that Indemnitee is not entitled under this Agreement to indemnification with respect to such Expenses.  This undertaking is an unlimited general obligation of Indemnitee.

 
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(b)

Procedure for Advance Payment of Expenses.  Indemnitee shall submit to the Company a written request specifying the Indemnifiable Expenses for which Indemnitee seeks an advancement under Section 8(a) of this Agreement, together with documentation evidencing that Indemnitee has incurred such Indemnifiable Expenses.  Payment of Indemnifiable Expenses under Section 8(a) shall be made no later than 15 calendar days after the Company’s receipt of such request.

10.

Remedies of Indemnitee.

(a)

Right to Petition Court.  In the event that Indemnitee makes a request for payment of Indemnifiable Amounts under Sections 3 and 5 above or a request for an advancement of Indemnifiable Expenses under Section 8 above, and the Company fails to make such payment or advancement in a timely manner pursuant to the terms of this Agreement, Indemnitee may petition a court of law to enforce the Company’s obligations under this Agreement.

(b)

Expenses.  If Indemnitee is successful under any claim or action brought under Section 9(a), the Company agrees to reimburse Indemnitee in full for any Expenses incurred by Indemnitee in connection with investigating, preparing for, litigating, defending or settling any action brought by Indemnitee under Section 9(a) above, or in connection with any claim or counterclaim brought by the Company in connection therewith.

(c)

Validity of Agreement.  The Company shall be precluded from asserting in any Proceeding, including, without limitation, an action under Section 9(a) above, that the provisions of this Agreement are not valid, binding, and enforceable or that there is insufficient consideration for this Agreement and shall stipulate in court that the Company is bound by all the provisions of this Agreement.

(d)

Failure to Act Not a Defense.  The failure of the Company (including its Board or any committee thereof) to make a determination concerning the permissibility of the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses under this Agreement shall not be a defense in any action brought under Section 9(a) above, and shall not create a presumption that such payment or advancement is not permissible.

11.

Representations and Warranties of the Company.  The Company hereby represents and warrants to Indemnitee as follows:

(a)

Authority.  The Company has all necessary power and authority to enter into, and be bound by the terms of, this Agreement, and the execution, delivery, and performance of the undertakings contemplated by this Agreement have been duly authorized by the Company.

(b)

Enforceability.  This Agreement, when executed and delivered by the Company in accordance with the provisions hereof, shall be a legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the enforcement of creditors’ rights generally.

 
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12.

Insurance.  To the extent that the Company maintains an insurance policy or policies providing officers’ and directors’ liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any officer or director of the Company.

13.

Contract Rights Not Exclusive.  The rights to payment of Indemnifiable Amounts and advancement of Indemnifiable Expenses provided by this Agreement shall be in addition to, but not exclusive of, any other rights which Indemnitee may have at any time under applicable law, the Company’s Articles of Incorporation, Bylaws, or any other agreement, vote of stockholders or directors (or a committee of directors), or otherwise, both as to action in Indemnitee’s official capacity and as to action in any other capacity as a result of Indemnitee’s Corporate Status.

14.

Binding Nature of Agreement; Successors.  This Agreement shall be (a) binding upon all successors and assigns of the Company (including any transferee of all or a substantial portion of the business, stock and/or assets of the Company and any direct or indirect successor by merger or consolidation or otherwise by operation of law) and (b) binding on and shall inure to the benefit of the heirs, personal representatives, executors, and administrators of Indemnitee.  This Agreement shall continue for the benefit of Indemnitee and such heirs, personal representatives, executors, and administrators after Indemnitee has ceased to have Corporate Status.

15.

Subrogation.  In the event of any payment of Indemnifiable Amounts under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of contribution or recovery of Indemnitee against other persons, and Indemnitee shall take, at the request of the Company, all reasonable action necessary to secure such rights, including the execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

16.

Notice by Indemnitee.  Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of expenses covered under this Agreement.

17.

Miscellaneous.

(a)

Notices.  All notices, requests, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made, and received (i) if personally delivered, on the date of delivery, (ii) if by facsimile transmission, upon receipt, (iii) if mailed, three days after deposit in the United States mail, registered or certified, return receipt requested, postage prepaid or (iv) if by a courier delivery service providing overnight or “next-day” delivery, on the next business day after deposit with such service, in each case addressed as follows:

 
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(1)

If to the Company:

                with a copy to:

Medistem Laboratories, Inc.

                DLA Piper US LLP

2027 E.  Cedar Street

                2415 E. Camelback Road, Suite 700

Tempe, Arizona 85281

                Phoenix, Arizona 85018

Attention: __________

               
Attention:  Gregory R. Hall, Esq.

Fax: 480-756-8906

                Fax: 480-606-5528

 

(2)

If to Indemnitee, at the address set forth below Indemnittee’s name on the signature page of this Agreement.

Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this Section 16(a) for the giving of notice.

(b)

Entire Agreement; Amendments.  This Agreement contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, inducements, and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof.  The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof.  This Agreement may not be modified or amended other than by an agreement in writing signed by the party or parties to be bound.

(c)

Controlling Law; Jurisdiction and Venue.  This Agreement and all questions relating to its validity, interpretation, performance, and enforcement shall be governed by and construed, interpreted, and enforced in accordance with the laws of the State of Nevada, notwithstanding any Nevada, or other conflict-of-law provisions to the contrary.  The Company and Indemnitee irrevocably submit, consent, and require that the state and federal courts located in Maricopa County, Arizona, and the appellate forums for these courts, shall have sole jurisdiction over any dispute arising under this Agreement, and the parties hereby consent to the personal jurisdiction of such courts and to extraterritorial service of process.

(d)

Indulgences, Not Waivers.  Neither the failure nor any delay on the part of either party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence.  No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

(e)

Section Headings.  The titles of sections and subsections contained in this Agreement are for convenience only.  They form no part of this Agreement and they are not to be used in the construction or interpretation of this Agreement.

 
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(f)

Execution in Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument.  This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of the parties reflected hereon as the signatories.  Any photographic or xerographic copy of this Agreement, with all signatures reproduced on one or more sets of signature pages, shall be considered for all purposes as if it were an executed counterpart of this Agreement.  Signatures may be given by facsimile or other electronic transmission, and such signatures shall be fully binding on the party sending the same.

(g)

Provisions Severable.  The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.  Further, if a court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable as written, such court may interpret, construe, rewrite or revise such provision, to the fullest extent allowed by law, so as to make it valid and enforceable consistent with the intent of the parties.

(h)

Construction.  Each party hereto acknowledges that it was represented by legal counsel (or had the opportunity to be represented by legal counsel) in connection with this Agreement and that such party and his, her or its counsel have reviewed and revised this Agreement, or have had an opportunity to do so, and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments or any Exhibits or Schedules hereto or thereto.

 

 

[Signature page follows.]

 

 

 
11

 

IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the Effective Date.

COMPANY:

MEDISTEM LABORATORIES, INC.

By:

By: ___________________________

Name: _________________________

Title: __________________________

By:

 

INDEMNITEE:

_____________________________

Thomas Ichim

Address: ______________________

Facsimile No.: __________________

By:

 

 

 

 

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