INDEMNIFICATION
AGREEMENT
This
Indemnification Agreement, dated as of September 1, 2009, is made
by and between ADDvantage Technologies Group, Inc., an Oklahoma
corporation (the "Corporation") and ________________ (the
"Indemnitee").
RECITALS
A. The
Corporation recognizes that competent and experienced persons are
increasingly reluctant to serve or to continue to serve as
directors or officers of corporations unless they are protected by
comprehensive liability insurance or indemnification, or both, due
to increased exposure to litigation costs and risks resulting from
their service to such corporations, and due to the
fact that the exposure frequently bears no reasonable
relationship to the compensation of such directors and
officers;
B. The
statutes and judicial decisions regarding the duties of directors
and officers are often difficult to apply, ambiguous, or
conflicting, and therefore fail to provide such directors and
officers with adequate, reliable knowledge of legal risks to which
they are exposed or information regarding the proper course of
action to take;
C. The
Corporation and Indemnitee recognize that plaintiffs often seek
damages in such large amounts and the costs of litigation may be so
enormous (whether or not the case is meritorious), that the defense
and/or settlement of such litigation is often beyond the personal
resources of directors and officers;
D. The
Corporation believes that it is unfair for its directors and
officers to assume the risk of huge judgments and other expenses
which may occur in cases in which the director or officer received
no personal profit and in cases where the director or officer was
not culpable;
E. The
Corporation, after reasonable investigation, has determined that
the liability insurance coverage presently available to the
Corporation may be inadequate in certain circumstances to cover all
possible exposure for which Indemnitee should be
protected. The Corporation believes that the interests
of the Corporation and its shareholders would best be served by a
combination of such insurance and the indemnification by the
Corporation of the directors and officers of the
Corporation;
F. The
Corporation's Bylaws require the Corporation to indemnify its
directors and officers to the fullest extent permitted by law. The
Bylaws expressly provide that the indemnification provisions set
forth therein are not exclusive, and contemplate that contracts may
be entered into between the Corporation and its directors and
officers with respect to indemnification;
G. Section
1031 ("Section 1031") of the Oklahoma General Corporation Act
("OGCA"), under which the Corporation is organized, empowers the
Corporation to indemnify its officers, directors, employees and
agents by agreement and to indemnify persons who serve, at the
request of the Corporation, as the directors, officers, employees
or agents of other corporations or enterprises, and expressly
provides that the indemnification provided by Section 1031 is not
exclusive;
H. Section
1006.B.7 of the OGCA allows a corporation to include in its
certificate of incorporation a provision eliminating or limiting
the personal liability of a director to the corporation or its
shareholders for monetary damages for breach of certain fiduciary
duties, and the Corporation has so provided in its Certificate of
Incorporation that each Director shall be exculpated from such
liability to the maximum extent permitted by law;
I. The
Board of Directors has determined that contractual indemnification
as set forth herein is not only reasonable and prudent but also
promotes the best interests of the Corporation and its
shareholders;
J. The
Corporation desires and has requested Indemnitee to serve or
continue to serve as a director or officer of the Corporation free
from undue concern for unwarranted claims for damages arising out
of or related to such services to the Corporation; and
K. Indemnitee
is willing to serve, continue to serve or to provide additional
service for or on behalf of the Corporation on the condition that
he is furnished the indemnity provided for herein.
AGREEMENT
NOW, THEREFORE,
in consideration of the mutual covenants and agreements set forth
below, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
Section 1.
Generally .
To the fullest
extent permitted by the laws of the State of Oklahoma:
(a) The
Corporation shall indemnify Indemnitee if Indemnitee was or is a
party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact
that Indemnitee is or was or has agreed to serve at the request of
the Corporation as a director, officer, employee or agent of the
Corporation, or while serving as a director or officer of the
Corporation, is or was serving or has agreed to serve at the
request of the Corporation as a director, officer, employee or
agent (which, for purposes hereof, shall include a trustee, partner
or manager or similar capacity) of another corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise, or by reason of any action alleged to have been taken
or omitted in such capacity. For the avoidance of doubt,
the foregoing indemnification obligation includes, without
limitation, claims for monetary damages against Indemnitee in
respect of an alleged breach of fiduciary duties, to the fullest
extent permitted under Section 1006.B.7 of the OGCA as in existence
on the date hereof.
(b) The
indemnification provided by this Section 1 shall be from and
against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
Indemnitee or on Indemnitee's behalf in connection with such
action, suit or proceeding and any appeal therefrom, but shall only
be provided if Indemnitee acted in good faith and in a manner
Indemnitee reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal
action, suit or proceeding, had no reasonable cause to believe
Indemnitee's conduct was unlawful.
(c)
Notwithstanding the foregoing provisions of this Section 1, in the
case of any threatened, pending or completed action or suit by or
in the right of the Corporation to procure a judgment in its favor
by reason of the fact that Indemnitee is or was a director,
officer, employee or agent of the Corporation, or while serving as
a director or officer of the Corporation, is or was serving or has
agreed to serve at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, no
indemnification shall be made in respect of any claim, issue or
matter as to which Indemnitee shall have been adjudged to be liable
to the Corporation unless, and only to the extent that, the court
in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view
of all the circumstances of the case, Indemnitee is fairly and
reasonably entitled to indemnity for such expenses which such court
shall deem proper.
(d) The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that
Indemnitee 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 Corporation, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that
Indemnitee's conduct was unlawful.
Section 2.
Successful Defense; Partial Indemnification . To the extent
that Indemnitee has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Section 1
hereof or in defense of any claim, issue or matter therein,
Indemnitee shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred in connection
therewith. For purposes of this Agreement and without
limiting the foregoing, if any action, suit or proceeding is
disposed of, on the merits or otherwise (including a disposition
without prejudice), without (i) the disposition being adverse to
Indemnitee, (ii) an adjudication that Indemnitee was liable to the
Corporation, (iii) a plea of guilty or nolo contendere by
Indemnitee, (iv) an adjudication that Indemnitee did not act in
good faith and in a manner Indemnitee reasonably believed to be in
or not opposed to the best interests of the Corporation, and (v)
with respect to any criminal proceeding, an adjudication that
Indemnitee had reasonable cause to believe Indemnitee's conduct was
unlawful, Indemnitee shall be considered for the purposes hereof to
have been wholly successful with respect thereto.
If Indemnitee
is entitled under any provision of this Agreement to
indemnification by the Corporation for some or a portion of the
expenses (including attorneys' fees), judgments, fines or amounts
paid in settlement actually and reasonably incurred by Indemnitee
or on Indemnitee's behalf in connection with any action, suit,
proceeding or investigation, or in defense of any claim, issue or
matter therein, and any appeal therefrom but not, however, for the
total amount thereof, the Corporation shall nevertheless indemnify
Indemnitee for the portion of such expenses (including attorneys'
fees), judgments, fines or amounts paid in settlement to which
Indemnitee is entitled.
Section 3.
Determination That Indemnification Is Proper . Any
indemnification hereunder shall (unless otherwise ordered by a
court) be made by the Corporation unless a determination is made
that indemnification of such person is not proper in the
circumstances because he or she has not met the applicable standard
of conduct set forth in Section 1(b) hereof. Any such determination
shall be made (i) by a majority vote of the directors who are not
parties to the action, suit or proceeding in question
("disinterested directors"), even if less than a quorum, (ii) by a
majority vote of a committee of disinterested directors designated
by majority vote of disinterested directors, even if less than a
quorum, (iii) by a majority vote of a quorum of the outstanding
shares of stock of all classes entitled to vote on the matter,
voting as a single class, which quorum shall consist of
shareholders who are not at that time parties to the action, suit
or proceeding in question, (iv) by independent legal counsel, or
(v) by a court of competent jurisdiction.
Section 4.
Advance Payment of Expenses; Notification and Defense of
Claim .
(a) Expenses
(including attorneys' fees) incurred by Indemnitee in defending a
threatened or pending civil, criminal, administrative or
investigative action, suit or proceeding, or in connection with an
enforcement action pursuant to Section 5(b), shall be paid by
the Corporation in advance of the final disposition of such action,
suit or proceeding within thirty (30) days after receipt by the
Corporation of (i) a statement or statements from Indemnitee
requesting such advance or advances from time to time, and (ii) an
undertaking by or on behalf of Indemnitee to repay such amount or
amounts, only if, and to the extent that, it shall ultimately be
determined that Indemnitee is not entitled to be indemnified by the
Corporation as authorized by this Agreement or
otherwise. Such undertaking shall be accepted without
reference to the financial ability of Indemnitee to make such
repayment. Advances shall be unsecured and
interest-free.
(b) Promptly
after receipt by Indemnitee of notice of the commencement of any
action, suit or proceeding, Indemnitee shall, if a claim thereof is
to be made against the Corporation hereunder, notify the
Corporation of the commencement thereof. The failure to
promptly notify the Corporation of the commencement of the action,
suit or proceeding, or Indemnitee's request for indemnification,
will not relieve the Corporation from any liability that it may
have to Indemnitee hereunder, except to the extent the Corporation
is prejudiced in its defense of such action, suit or proceeding as
a result of such failure.
(c) In the
event the Corporation shall be obligated to pay the expenses of
Indemnitee with respect to an action, suit or proceeding, as
provided in this Agreement, the Corporation, if appropriate, shall
be entitled to assume the defense of such action, suit or
proceeding, with counsel reasonably acceptable to Indemnitee, upon
the delivery to Indemnitee of written notice of its election to do
so. After delivery of such notice, approval of such
counsel by Indemnitee and the retention of such counsel by the
Corporation, the Corporation will not be liable to Indemnitee under
this Agreement for any fees of counsel subsequently incurred by
Indemnitee with respect to the same action, suit or proceeding,
provided that (1) Indemnitee shall have the right to employ
Indemnitee's own counsel in such action, suit or proceeding at
Indemnitee's expense and (2) if (i) the employment of counsel by
Indemnitee has been previously authorized in writing by the
Corporation, (ii) counsel to the Corporation or Indemnitee shall
have reasonably concluded that there may be a conflict of interest
or position, or reasonably believes that a conflict is likely to
arise, on any significant issue between the Corporation and
Indemnitee in the conduct of any such defense or (iii) the
Corporation shall not, in fact, have employed counsel to assume the
defense of such action, suit or proceeding, then the fees and
expenses of Indemnitee's counsel shall be at the expense of the
Corporation, except as otherwise expressly provided by this
Agreement. The Corporation shall not be entitled,
without the consent of Indemnitee, to assume the defense of any
claim brought by or in
