EXHIBIT 10.1

 

APA OPTICS, INC.1

 

INDEMNIFICATION AGREEMENT

 

This INDEMNIFICATION AGREEMENT (the “Agreement”) is made as of ____________, by
and between APA Optics, Inc., a Minnesota corporation (the “Company”), and
____________ (“Indemnitee”).2

 

RECITALS

 

1.                  The Company desires to attract and retain qualified
directors, officers, employees and other agents, and to provide them with
protection against liability and expenses incurred while acting in that
capacity;

 

2.                  The Articles of Incorporation and Bylaws of the Company
contain provisions for indemnifying directors and officers of the Company, and
the Bylaws and Minnesota law contemplate that separate contracts may be entered
into between the Company and its directors and officers, employees and other
agents with respect to their indemnification by the Company;

 

3.                  The Company understands that Indemnitee has reservations
about serving or continuing to serve the Company without adequate protection
against personal liability arising from such service, and that it is also of
critical importance to Indemnitee that adequate provision be made for advancing
costs and expenses of legal defense; and

 

4.                  The Board of Directors of the Company has approved, as being
in the best interests of the Company, indemnity contracts substantially in the
form of this Agreement for directors and officers of the Company and its
subsidiaries and for certain other employees and agents of the Company
designated by the Board of Directors.

 

NOW, THEREFORE, in order to induce Indemnitee to serve or to continue to serve
as a director and/or officer of the Company, and in consideration of
Indemnitee’s service to the Company, the parties agree as follows:

 

1.                  Contractual Indemnity. The Company hereby agrees, subject to
the limitations of Sections 2 and 5 hereof and the limitations of Minnesota
Statute 302A.521:

 

______________________

 

1 APA Optics, Inc. is now known as Clearfield, Inc.

 

2 Current directors that are Indemnitee parties to this Agreement and dates of
the Agreement are: Ronald G. Roth dated February 5, 2002. Former
directors/officers that are Indemnitee parties to this Agreement and dates of
the Agreement are: Anil Jain dated February 5, 2002, Kenneth A. Olsen dated
February 5, 2002, Robert M. Ringstad dated February 5, 2002, Gregory Von Wald
dated February 5, 2002, Stephen A. Zuckerman, MD dated February 5, 2002 and John
G. Reddan dated November 14, 2002.

 

 

 

(a)                To indemnify, defend and hold Indemnitee harmless to the
greatest extent possible under applicable law from and against any and all
judgments, fines, penalties, amounts paid in settlement and any other amounts
reasonably incurred or suffered by Indemnitee (including attorneys’ fees) in
connection with any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, or investigative, including an action
by or in the right of the Company, to which Indemnitee is, was or at any time
becomes a party, or is threatened to be made a party, by reason of the fact that
Indemnitee is, was or at any time becomes a director, officer, employee or agent
of the Company or is or was serving or at any time serves at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise (collectively referred to
hereafter as a “Claim”), whether or not arising prior to the date of this
Agreement.

 

(b)               To pay any and all expenses reasonably incurred by Indemnitee
(i) in defending any Claim or Claims (including reasonable attorneys’ fees and
other reasonable costs of investigation and defense) or (ii) in appearing as a
witness for, or at the request of, or cooperating with or assisting the Company,
in connection with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, or investigative, including
an action by or in the right of the Company, as the same are incurred and in
advance of the final disposition of any such Claim or Claims; provided, however,
that advances pursuant to clause b(i) shall be made only upon receipt of an
undertaking by or on behalf of Indemnitee to reimburse such amounts if it shall
be ultimately determined that Indemnitee is not entitled to be indemnified by
the Company under this Agreement, and is not entitled to be indemnified by the
Company under the Articles of Incorporation, the Bylaws, or Minnesota law.

 

(c)                The termination of any action or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contenders or its
equivalent, shall not, of itself, create a presumption that (i) Indemnitee did
not act in good faith and in a manner which Indemnitee reasonably believed to be
in the best interests of the Company, or (ii) with respect to any criminal
action or proceeding, Indemnitee had reasonable cause to believe that
Indemnitee’s conduct was unlawful.

 

2.                  Limitations on Contractual Indemnity. Indemnitee shall not
be entitled to indemnification or advancement of expenses under Section 1:

 

(a)                if a court of competent jurisdiction, by final judgment or
decree, shall determine that (i) the Claim or Claims in respect of which
indemnity is sought arise from Indemnitee’s fraudulent, dishonest or willful
misconduct, or (ii) such indemnity is not permitted under applicable law; or

 

(b)               on account of any suit in which judgment is rendered for an
accounting of profits made from the purchase or sale by Indemnitee of securities
of the Company in violation of the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar provisions of any
federal, state or local statutory law; or

 

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(c)                for any acts or omissions or transactions from which a
director may not be indemnified under the Minnesota Business Corporation Act; or

 

(d)               with respect to proceedings or claims initiated or brought
voluntarily by Indemnitee and not by way of defense, except (i) with respect to
proceedings brought in good faith to establish or enforce a right to
indemnification under this Agreement or any other statute or law, or (ii) at the
Company’s discretion, in specific cases if the Board of Directors of the Company
has approved the initiation or bringing of such suit; or

 

(e)                for expenses or liabilities of any type whatsoever
(including, but not limited to, judgments, fines, ERISA excise taxes or
penalties, and amounts paid in settlement) which have been paid directly to
Indemnitee by an insurance carrier under a policy of directors’ and officers’
liability insurance maintained by the Company; or

 

(f)                on account of any suit brought against Indemnitee for misuse
or misappropriation of non-public information, or otherwise involving
Indemnitee’s status as an “insider” of the Company, in connection with any
purchase or sale by Indemnitee of securities of the Company.

 

3.                  Continuation of Contractual Indemnity. Subject to the
termination provisions of Section 11, all agreements and obligations of the
Company contained herein shall continue for so long as Indemnitee shall be
subject to any possible action, suit, proceeding or other assertion of a Claim
or Claims.

 

4.                  Expenses; Indemnification Procedure. The Company shall
advance all expenses incurred by Indemnitee in connection with the
investigation, defense, settlement or appeal of any civil or criminal action or
proceeding referenced in Section 1 hereof (but not amounts actually paid in
settlement of any such action or proceeding). Indemnitee hereby undertakes to
repay such amounts advanced if, and to the extent that, it shall ultimately be
determined that Indemnitee is not entitled to be indemnified by the Company as
authorized hereby. The advances to be made hereunder shall be paid by the
Company to Indemnitee within twenty (20) days following delivery of a written
request therefor by Indemnitee to the Company.

 

5.                  Notification and Defense of Claim. If any action, suit,
proceeding or other Claim is brought against Indemnitee in respect of which
indemnity may be sought under this Agreement:

 

(a)                Indemnitee will promptly notify the Company in writing of the
commencement thereof, and the Company and any other indemnifying party similarly
notified will be entitled to participate therein at its own expense or to assume
the defense thereof and to employ counsel reasonably satisfactory to Indemnitee.
Notice to the Company shall be directed to the Chief Executive Officer of the
Company at the address shown on the signature page of this Agreement (or such
other address as the Company shall designate in writing to Indemnitee). Notice
shall be deemed received three (3) business days after the date postmarked if
sent by domestic certified or registered mail, properly addressed; otherwise
notice shall be deemed received when such notice shall actually be received by
the Company. Indemnitee shall have the right to employ its own counsel in
connection with any such Claim and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of Indemnitee
unless (i) the Company shall not have assumed the defense of the Claim and
employed counsel for such defense, or (ii) the named parties to any such action
(including any impleaded parties) include both Indemnitee and the Company, and
Indemnitee shall have reasonably concluded that joint representation is
inappropriate under applicable standards of professional conduct due to a
material conflict of interest between Indemnitee and the Company, in either of
which events the reasonable fees and expenses of such counsel to the Indemnitee
shall be borne by the Company upon delivery to the Company of the undertaking
referred to in subparagraph (b) of Section 1. However, in no event will the
Company be obligated to pay the fees or expenses of more than one firm of
attorneys representing Indemnitee and any other agents of the Company in
connection with any one Claim or separate but substantially similar or related
Claims in the same jurisdiction arising out of the same general allegations or
circumstances.

 

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(b)               The Company shall not be liable to indemnify Indemnitee for
any amounts paid in settlement of any Claim effected without the Company’s
written consent, and the Company shall not settle any Claim in a manner which
would impose any penalty or limitation on Indemnitee without Indemnitee’s
written consent; provided, however, that neither the Company nor Indemnitee will
unreasonably withhold its consent to any proposed settlement and, provided
further, that if a claim is settled by the Indemnitee with the Company’s written
consent, or if there be a final judgment or decree for the plaintiff in
connection with the Claim by a court of competent jurisdiction, the Company
shall indemnify and hold harmless Indemnitee from and against any and all
losses, costs, expenses and liabilities incurred by reason of such settlement or
judgment.

 

(c)                Indemnitee shall give the Company such information and
cooperation as it may reasonably require and as shall be within Indemnitee’s
power.

 

(d)               Any indemnification provided for in Section 1 shall be made no
later than forty-five (45) days after receipt of the written request of
Indemnitee. If a Claim under this Agreement, under any statute, or under any
provision of the Company’s Articles of Incorporation or Bylaws providing for
indemnification, is not paid in full by the Company within forty-five (45) days
after a written request for payment thereof has first been received by the
Company, Indemnitee may, but need not, at any time thereafter bring an action
against the Company to recover the unpaid amount of the claim and, subject to
Section 13 of this Agreement, Indemnitee shall also be entitled to be reimbursed
for the expenses (including attorneys’ fees) of bringing such action. It shall
be a defense to any such action (other than an action brought to enforce a claim
for expenses incurred in connection with any action or proceeding in advance of
its final disposition) that Indemnitee has not met the standards of conduct
which make it permissible under applicable law for the Company to indemnify
Indemnitee for the amount claimed but the burden of proving such defense shall
be on the Company, and Indemnitee shall be entitled to receive interim payments
of expenses pursuant to Section 4 unless and until such defense may be finally
adjudicated by court order or judgment from which no further right of appeal
exists. It is the parties’ intention that if the Company contests Indemnitee’s
right to indemnification, the question of Indemnitee’s tight to indemnification
shall be for the court to decide, and neither the failure of the Company
(including its Board of Directors, any committee or subgroup of the Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination that indemnification of Indemnitee is proper in the circumstances
because Indemnitee has met the applicable standard of conduct required by
applicable law, nor an actual determination by the Company (including its Board
of Directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its stockholders) that Indemnitee has not met such applicable
standard of conduct, shall create a presumption that Indemnitee has or has not
met the applicable standard of conduct.

 

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(e)                If, at the time of the receipt of a notice of a Claim, the
Company has director and officer liability insurance in effect, the Company
shall give prompt notice of the commencement of such proceeding to the insurers
in accordance with the procedures set forth in the respective policies. The
Company shall thereafter take all necessary or desirable action to cause such
insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of
such proceeding in accordance with the terms of such policies.

 

6.                  Scope. Notwithstanding any other provision of this
Agreement, the Company hereby agrees to indemnify the Indemnitee against any
Claim to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other provisions of this
Agreement, the Company’s Articles of Incorporation, the Company’s Bylaws or by
statute. In the event of any change, after the date of this Agreement, in any
applicable law, statute or rule which expands the right of a Minnesota
corporation to indemnify a member of its board of directors, an officer or other
corporate agent, such changes shall be, ipso facto, within the purview of
Indemnitee’s rights and the Company’s obligations, under this Agreement. In the
event of any change in any applicable law, statute, or rule which narrows the
right of a Minnesota corporation to indemnify a member of its Board of
Directors, an officer, or other corporate agent, such changes, to the extent not
otherwise required by applicable law to be applied to this Agreement, shall have
no effect on this Agreement or the parties’ rights and obligations hereunder.

 

7.                  Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines or penalties actually or reasonably
incurred by him in the investigation, defense, appeal or settlement of any civil
or criminal action or proceeding, but not, however, for the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion of
such expenses, judgments, fines or penalties to which Indemnitee is entitled.

 

8.                  Public Policy. Both the Company and Indemnitee acknowledge
that in certain instances, Federal law or applicable public policy may prohibit
the Company from indemnifying its directors and officers under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company’s right under public
policy to indemnify Indemnitee.

 

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9.                  Insurance. The Company shall maintain insurance for the
purpose of indemnifying Indemnitee and other agents of the Company against
personal liability, including costs of legal defense, while Indemnitee continues
to serve the Company in an “official capacity” as defined in MSA 302A.521(1)(c).
The terms and liability limits of such insurance shall be solely within the
discretion of the Company.

 

10.              No Restrictions. The rights and remedies of Indemnitee under
this Agreement shall not be deemed to exclude or impair any other rights or
remedies to which Indemnitee may be entitled under the Certificate of
Incorporation or Bylaws of the Company, or under any other agreement, provision
of law or otherwise, nor shall anything contained herein restrict the right of
the Company to indemnify Indemnitee in any proper case even though not
specifically provided for in this Agreement, nor shall anything contained herein
restrict Indemnitee’s right to contribution as may be available under applicable
law.

 

11.              Termination. The Company may terminate this Agreement at any
time upon ninety (90) days’ written notice, but any such termination will not
affect Claims relating to events occurring prior to the effective date of
termination.

 

12.              Severability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.

 

13.              Attorneys’ Fees. In the event of any litigation or other action
or proceeding to enforce or interpret this Agreement, the prevailing party as
determined by the court shall be entitled to an award of its reasonable
attorneys’ fees and other costs, in addition to such relief as may be awarded by
a court or other tribunal.

 

14.              Further Assurances. The parties will do, execute and deliver,
or will cause to be done, executed and delivered, all such further acts,
documents and things as may be reasonably required for the purpose of giving
effect to this Agreement and the transactions contemplated hereby.

 

15.              Acknowledgment. The Company expressly acknowledges that it has
entered into this Agreement and assumed the obligations imposed on the Company
hereunder in order to induce Indemnitee to serve or to continue to serve as an
agent of the Company, and acknowledges that Indemnitee is relying on this
Agreement in serving or continuing to serve in such capacity.

 

16.              Construction of Certain Phrases.

 

(a)                “Company”: For purposes of this Agreement, references to the
“Company” shall also include, in addition to the resulting corporation in any
consolidation or merger to which The Company, Inc. is a party, any constituent
corporation (including any constituent of a constituent) absorbed in
consolidation or merger which, if its separate existence hid continued, would
have had power and authority to indemnify its directors, officers, employees or
agents, so that if Indemnitee is or was a director, officer, employee or agent
of such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, Indemnitee
shall stand in the same position under the provisions of this Agreement with
respect to the resulting or surviving corporation as Indemnitee would have with
respect to such constituent corporation if its separate existence had continued.

 

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(b)               Benefit Plans: References to “fines” contained in this
Agreement shall include any excise taxes assessed on Indemnitee with respect to
an employee benefit plan; and references to “serving at the request of the
Company” shall include any service as a director, officer, employee or agent of
the Company which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit plan, its
participants, or beneficiaries.

 

(c)                “Proceeding”: For purposes of this Agreement, “proceeding”
shall include any and all forms of “alternative dispute resolution,” including
without limitation arbitration and mediation.

 

17.              Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.

 

18.              Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee, on the date of such
receipt, or (ii) if mailed by domestic certified or registered mail with postage
prepaid, on the third business day after the date postmarked. Addresses for
notice to either party are as shown on the signature page of this Agreement, or
as subsequently modified by written notice.

 

19.              Governing Law; Binding Effect; Amendment.

 

(a)                This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Minnesota as applied to agreements
between Minnesota residents entered and to be performed entirely within
Minnesota (without regard to conflict of law provisions).

 

(b)               This Agreement shall be binding upon Indemnitee and the
Company, their successors and assigns, and shall inure to the benefit of
Indemnitee, his heirs, personal representatives and assigns and to the benefit
of the Company, its successors and assigns.

 

(c)                No amendment, modification, termination or cancellation of
this Agreement shall be effective unless in writing signed by both parties
hereto.

 

 

 

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

 

 

 

 

 

APA Optics, Inc.
a Minnesota corporation

 

      By:     Name:     Title:  

 

 

Address:

 

           

 

     

Indemnitee

 

     

(Signature of Indemnitee)

 

     

Address:

 

           

 

 

 

 

 

 

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